Eduardo Segarra is professor and chairman of Texas Tech University’s Department of Agricultural and Applied Economics. In addition to his teaching and administrative duties, his research has focused on improving decision-making by the consideration of emerging technologies, changes in public policy, and environmental and resource constraints that are likely to affect society at large. He received his bachelor’s degree from Universidad Autonoma de Nuevo Leon-Mexico and his master’s from the University of Missouri-Columbia. His doctorate is from Virginia Tech.
Sukant Misra is associate dean for research in Texas Tech University’s College of Agricultural Sciences and Natural Resources. He’s served the university in various faculty and administrative capacities since his initial employment as a faculty member in the Department of Agricultural and Applied Economics in 1993. His bachelor and master’s degrees in analytical and applied economics are from Utkal University, India. His doctorate in agricultural economics is from Mississippi State University.
OP-ED ON FILE
- A Vital Resource For the Future: Baccalaureate degrees in Texas Tech University’s College of Agricultural Sciences and Natural Resources are key to providing the science-based expertise necessary to ensure economic viability. By Michael Galyean
- The Greatest Challenge Facing Agriculture: ‘If there is no guarantee the farmers can keep their land, then no farmer will be concerned with any long-term benefits from the land.’ By Kevin Redwine
- Career Opportunities in Agriculture: ‘We need professionals that can stand up for the agriculture industry to protect the quality of life for our growing society.’ By Lori Dudley
- Boosting Student Retention: CASNR’s Student-Centered Programs, Faculty-Based Advising Key Student Success By Rachel Bobbitt
- Dollars and Sense: The Long-Term Economic Value of Higher Education and Research By Eduardo Segarra and Sukant Misra
- A Historical Perspective: America’s Founding Fathers Established the Importance of Agricultural Education by Steve Fraze
- The Ties That Bind: Forging New Links from the Farm to Natural Resource Management by Philip Gipson
- Agricultural Research: Carrying the Water for U.S. Competitiveness by Darren Hudson
- A Global Priority: Education and Research in Agricultural Sciences & Natural Resources by Sukant Misra
ABOUT THE COLLEGE
- 1,522 Undergraduates
- 344 Graduate Students
- 76 Tenured/Tenure-Track Faculty
- $40.8 Million Total Endowment
- 16 Endowed Professorships & Chairs
- $2.1 Million Scholarship Awards
- $14.6 Million Research Funding
Dollars and Sense:
The Long-Term Economic Value
of Higher Education and Research
By Eduardo Segarra and Sukant Misra
Given the magnitude of the current economic downturn nationally, there’s been considerable debate regarding how to address state revenue shortfalls. Several states have been dealing with these issues for years, but for Texas, it’s a new phenomenon.
Current revenue projections for Texas highlight the necessity to scrutinize any and all state expenditures … higher education included. Let’s look at one example, a case study if you will, of higher education’s economic value using Texas Tech’s College of Agricultural Sciences and Natural Resources. Overall it’s a small slice of the budget pie, but one that packs some surprising economic punch.
The South Plains-based academic unit is home to more than 1,200 undergraduate students and some 300 graduate students, almost 80 faculty members, and over 100 staff members. It produces two basic outputs or products, graduates – students who earn their bachelor’s, master’s or doctoral degrees – and research which in one way or another enhances somebody’s decision-making at some point.
Education Pays. A College Board study, which highlighted the value or benefits of higher education for individuals and society, found that the discounted NET (net of the cost of higher education) present value of income over an individual’s lifetime with high school education was $615,464; for an undergraduate degree it was $1,063,330; a master’s degree was $1,220,092; and a doctorate was $1,630,706.
In other words, the study suggests that an undergraduate education is worth over $440,000 more than high school education over the lifetime of an individual. Similarly, a master’s degree is worth over $600,000 more and a doctorate degree is worth over $1 million more than high school education.
Now, if we assume that the median starting incomes for a CASNR graduate is 80 percent of the national average, the value of an undergraduate degree, masters degree, and doctorate degree from CASNR over the lifetime of each CASNR graduate would be about $357,000, $480,000, and $810,000, respectively. By multiplying these figures by the number of degrees awarded in CASNR for 2008-2009 (243 undergraduates, 68 master, and 14 doctorate graduates), we find that for 2008-2009 the overall impact or value of CASNR academic programs is over $130 million.
R&D Value. In terms of CASNR’s research, it’s well documented from a variety sources dating back to the 1950s and 1960s that the Internal Rate of Return of “Agriculturally Related Research” is around 40 percent. That is, if we were to assume a 4 percent long-run real yield of U.S. government held securities as a proxy for the cost of social capital, then the benefit-cost ratio of agricultural research is calculated to be 10 to 1.
Put simply, for every $1 spent on agricultural research, a $10 impact will result in the long-run. Given that the 2008-2009 level of research expenditure in CASNR was approximately $8 million and using a 10:1 ratio implies that the total expected impact of CASNR research in 2008-2009 is $80 million.
So, getting down to just plain dollars and cents, the economic value of CASNR’s two direct outputs produced in 2008-2009 is estimated at more than $210 million. But that’s not the end of it. There’s economic value from other tangible outputs from CASNR and its faculty in terms of outreach and engagement activities both inside and outside the university. That puts the economic value of CASNR’s programs even higher.
Tangible Output. The state’s contribution to Tech’s College of Agricultural Sciences and Natural Resources’ operation in 2008-2009 was less than $10 million. That suggests that the state invested $10 million in CASNR, and in return the benefit to the society was over $210 million.
This analysis can be further extended to encompass all colleges of Texas Tech University if we assume that the above multipliers provide a good rough approximation regardless of disciplinary differences. Multiplying the education multipliers by the number of degrees awarded by Texas Tech for 2008-2009 (4,478 undergraduates, 1,034 master, and 201 doctorate graduates), we find that for 2008-2009 the overall impact or value of Texas Tech’s academic programs (not including Law and Medical School) is about $2.3 billion.
Similarly, assuming a benefit-cost ratio of research of 10 to 1, and given that the 2008-2009 level of research expenditure at Texas Tech was approximately $80 million, the total expected long-term impact of research conducted at Texas Tech during 2008-2009 is $800 million. Thus, the long-term economic value of Texas Tech’s two direct outputs produced in 2008-2009 is estimated at more than $3 billion. The state’s contribution to Tech’s operation in 2008-2009 was less than $140 million. That suggests that the state invested $140 million in Texas Tech, and in return the benefit to society was over $3 billion.
Good investment; you be the judge.