High Economic Impacts of Higher Education

Oct 17, 2020 | Finance

Universities and colleges contribute significantly to state and local economies across the country. For most institutions the magnitude of their economic impacts has not been calculated. This uncertainty may contribute to reduced support from state governments when budgets are tough to balance. According to a member of the Arizona Board of Regents, Taylor Robson, “In the public policy arena, education is sometimes looked at as an expense and not an investment.”

However, a number of higher-ed institutions have begun to conduct economic impact studies and the results are startling. For example, a new report found Penn State contributes $11.6 billion to Pennsylvania’s economy, where 95 percent of the State’s residents live within 30 miles of a Penn State campus. In Arizona, its three public universities are responsible for $11.1 billion in economic output and more than 84,000 jobs.

Smaller institutions have a bigger impact

Smaller and more rural institutions are feeling the financial pinch more than others. They do not have the large endowments that are a financial security blanket for major institutions. They are experiencing competition from community colleges, which are expanding low cost offerings in suburban and urban locations. Furthermore, online education continues to expand, intensifying competition for students. With enrollment dropping as a result of intensified competition, many are feeling a severe financial pinch.

However, few people realize that smaller institutions generally have a disproportionally larger impact on their local communities. A study by Dr Paul Holden of the Enterprise Research Institute, a Gunnison Colorado based consulting company, determined the total direct and indirect economic impact of Western Colorado University to be over $70 million, equivalent to 20 percent of the net earnings of Gunnison County residents. The findings confirm the huge importance of rural institutions of higher learning to the communities in which they are situated.

More data and better models

Access to more data and improved economic modelling techniques are necessary tools for conducting economic impact analysis. IMPLAN is one example of a data model that estimates direct and indirect outputs, job creation, and tax revenue generation. Quantifying the economic benefits of four-year institutions will place their contributions to local economies in perspective and would provide key inputs into developing effective growth strategies.

Recent Posts

AREVIA POWER SEALS LANDMARK POWER PURCHASE AGREEMENT

AREVIA POWER SEALS LANDMARK POWER PURCHASE AGREEMENT

Arevia Power has signed a landmark power purchase agreement with NV Energy for the largest solar energy and battery storage project in Nevada, valued at over $2.3 billion. The Libra Solar project, expected to be operational by 2027, will feature a 700 MW solar system...

Affordable Housing Econometrics

Affordable Housing Econometrics

The lack of affordable housing plagues communities and economies across the globe. Elected officials and municipal leaders everywhere know they have the problem. Research to assess the problem can provide some insight and inform policy. Solving the problem requires...

Modeling Tourism Marketing Strategies

Modeling Tourism Marketing Strategies

The tourism industry has changed. Destination Marketing Organization (DMO) tools have changed too. To compete in today's industry, a DMO must have the latest marketing technology. Over-tourism, with too many people descending on destinations during peak seasons, and...

Remote Workers Are Moving to Resorts

Remote Workers Are Moving to Resorts

The impacts of the global coronavirus pandemic have not been distributed equally. Some sectors of the economy have been devastated. Unemployment skyrocketed to 14 percent in April. Other sectors have seen business increases and many people have learned by experience...

Assessing Community Health

Assessing Community Health

Community health needs assessments (CHNA) ensure that local health care providers have the information necessary to improve decision making and resource allocation as they strive to improve their community’s health. A CHNA is a systematic evaluation of a region’s...

Solar Energy Economics

Solar Energy Economics

Solar energy has evolved from an environmental green to the color of money. As the result of rapidly declining module prices and increasing development productivity, solar energy is no longer just good for the planet. Solar is now important for business economics. In...