In this memo, Hopewell's mayor recommends that in order to stimulate the town's economy and boost tax revenues Hopewell should build a new golf course and resort hotel, just as the town of Ocean view did two years ago. To support this recommendation the mayor points out that in Ocean View during the last two years tourism has increased, new businesses have opened, and tax revenues have increased by 30%. I find the mayor's argument unconvincing in several important respects.

  First of all, it is possible that mayor have confused cause with effect respecting the recent developments in Ocean View. Perhaps Ocean View's construction of a new golf course and hotel was a response to previous increases in tourism and business development--increases that have simply continued during the most recent two years. Since the mayor has failed to account for this possibility, the claim that Hopewell would boost its economy by also constructing a golf course and hotel is completely unwarranted.

  Secondly, the mayor fails to account for other possible causes of the trends in Ocean View during the last two years. The increase in tourism might have been due to improving economic conditions nationwide, or to unusually pleasant weather in the region. The new businesses that have opened in Ocean View might have opened there irrespective of the new golf course and hotel. And, the 30% increase in tax revenues might have been the result of an increase in tax rates, or the addition of a new type of municipal tax. Without ruling out theses and other alternative explanations for the three recent trends in Ocean view, the mayor cannot reasonably infer based on those trends that Hopewell's economy would benefit by following Ocean view's example.

  Thirdly, even if the recent trends in Ocean View are attributable to the construction of the new golf course and hotel there, the mayor assumes too hastily that the golf course and hotel will continue to benefit that town's overall economy. The mayor has not accounted for the possibility that increased tourism will begin to drive residents away during tourist season, or that new business development will result in the town's losing its appeal as a place to visit or to live. Unless the mayor can convince me that these scenarios are unlikely I cannot accept the mayor's recommendation that Hopewell follow Ocean View's example.

  Finally, the mayor's argument rests on the unsubstantiated assumption that Hopewell and Ocean View are sufficiently alike in ways that might affect the economic impact of a new golf course and hotel. Hopewell might lack the sort of natural environment that would attract more tourists and new business of the town--regardless of its new golf course and hotel. For that matter, perhaps Hopewell already contains several resort hotels and golf courses that are not utilized to their capacity. If so, building yet another golf course and hotel might amount to a misallocation of the town's resources--and actually harm the town's overall economy.

  In sum, the mayor's recommendation is not well supported. To bolster it the mayor must provide better evidence that Ocean View's new golf course and hotel--and not some other phenomenon--has been responsible for boosting Ocean View's economy during the last two years. To better assess the recommendation I would need to know why Ocean View decided to construct its new golf course and hotel in the first place--specifically, what events prior to construction might have prompted that decision. I would also need to thoroughly compare Hopewell with Ocean View--especially in terms of their appeal to tourists and businesses-- to determine whether the same course of action that appears to have boosted Ocean View's economy would also boost Hopewell's economy.