E-NEWSLETTER / SPECIAL EDITION
VOLUME 6, ISSUE 5
THE TALKING POINT
BIOGRAPHY
Dollars and Sense:
The Long-Term Economic Value of Higher Education and Research
By Eduardo Segarra and Sukant Misra
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 decisionmaking 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
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
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
A GLOBAL PRIORITY: Education and
Research in Agricultural Sciences &
Natural Resources by Sukant Misra
ABOUT THE COLLEGE
 1,437 undergraduates
 348 graduate students
 75 tenured/tenure-track faculty
 $37 million total endowment
 15 endowed professorships
 $1.5 million in scholarship awards
 38 percent of students receiving
scholarships
 Over $14 million in research grants
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 longterm 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.
Administrative Council
DR. JOHN BURNS
Dean
john.burns@ttu.edu
DR. STEVE FRAZE
Agricultural Education
& Communications
steven.fraze@ttu.edu
DR. NORMAN HOPPER
Executive Associate Dean
for Academic & Student Programs
n.hopper@ttu.edu
DR. LESLIE THOMPSON
Animal & Food Sciences
leslie.thompson@ttu.edu
DR. ALON KVASHNY
Landscape Architecture
alon.kvashny@ttu.edu
DR. SUKANT MISRA
Associate Dean for Research
sukant.misra@ttu.edu
DR. EDUARDO SEGARRA
Agricultural & Applied Economics
eduardo.segarra@ttu.edu
DR. MARK WALLACE
Natural Resources Management
mark.wallace@ttu.edu
College of Agricultural Sciences and Natural Resources
PO Box 42123
Lubbock, Texas 79409-2123
806.742.2808 phone
806.742.2836 fax
DR. THOMAS THOMPSON
Plant & Soil Science
thomas.thompson@ttu.edu
DR. CINDY AKERS
Student Services Center
cindy.akers@ttu.edu
JANE PIERCY
Development & Alumni Relations
jane.piercy@ttu.edu
NORMAN MARTIN
Marketing & Communications
norman.martin@ttu.edu