Analysis of the Return on Investment and Economic Impact of Education

Appendix 6: Alternative Education Variable

In a scenario where the college did not exist, some of its students would still be able to avail themselves of an alternative comparable education. These students create benefits in the county even in the absence of the college. The alternative education variable accounts for these students and is used to discount the benefits we attribute to the college. Recall this analysis considers only relevant economic information regarding the college. Considering the existence of various other academic institutions surrounding the college, we have to assume that a portion of the students could find alternative educations and either remain in or return to the county. For example, some students may participate in online programs while remaining in the county. Others may attend an out-of-county institution and return to the county upon completing their studies. For these students – who would have found an alternative education and produced benefits in the county regardless of the presence of

the college – we discount the benefits attributed to the college. An important distinction must be made here: the benefits from students who would find alternative educations outside the county and not return to the county are not discounted. Because these benefits would not occur in the county without the presence of the college, they must be included. In the absence of the college, we assume 15% of the college’s students would find alternative education opportunities and remain in or return to the county. We account for this by discounting the alumni impact, the benefits to taxpayers, and the benefits to society in the county in sections 2 and 3 by 15%. In other words, we assume 15% of the benefits created by the college’s students would have occurred anyways in the counterfactual scenario where the college did not exist. A sensitivity analysis of this adjustment is presented in chapter 4.

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