Unexpectedly Intriguing!
September 23, 2010

When we discovered that the average cost of tuition at four-year higher education institutions was largely pacing the growth of total federal government spending in the United States, that was a very surprising result. The reason why that's surprising is because of how most universities are funded.

U.S. Total Federal Outlays and Average Annual College Tuition (multiplied by a scale factor of 243) vs Median Household Income, 1976 through 2008 According to Table 5 of the Digest of Education Statistics 2009, as of the 2007-08 school year, there were 2,675 Title IV degree-granting institutions (aka "colleges and universities") in the U.S. Of these, 653 were public institutions (mainly state universities) and the remaining 2,022 were private institutions.

But it is the size of the institutions that matters, not their numbers. In the U.S., 92 of the top 100 universities by enrollment are public, state-supported universities and 77% of all college students attend state-supported institutions. As a result, we would then expect the average tuition figures for four-year public institutions to closely follow state-level government spending and not the federal government's total level spending from year-to-year.

And since many states have been cutting back expenditures supporting their post-secondary education institutions, a process that has been ongoing for some time, we would expect tuition to fall, or at least hold level as the institutions adapt by cutting low demand, high cost programs and other expenses.

But the average tuition at a four-year institution is neither falling back nor holding level. It's directly tracking total federal spending, with small deviations that are likely attributable to natural variation.

Average Annual College Tuition vs Total Federal Government Spending, 1976-2008 That much is made clear in our next chart, where we've shown the relationship between the average tuition at a four-year post-secondary education institution against the total level of federal spending for each year from 1976 through 2008.

Here we find that for the years from 1976 to 1992, the change in total federal spending has a correlation coefficient of 0.984. Or to describe what that means in simpler terms, the change in total federal spending "explains" some 98.4% of the change in the average cost of tuition at a four-year institution.

We next see a transition period running from 1992 to 1996, after which, changes in total federal spending would appear to "explain" some 99.4% of the recorded changes in the average cost of college tuition, all the way up through the 2008-09 academic school year.

These high and increasing levels of correlation between total federal spending and the average cost of college tuition strongly indicates that the federal government is directly responsible for the escalating cost of attending college for the vast majority of students.

So much for the cost explosion of college educations in recent years being unexplainable.

And you do realize that with this kind of relationship, a tool you can use to predict what the average cost of college will be several years into the future can't be far behind....

Update 24 September 2010: Welcome Instapundit readers! Picking up on Glenn's point, we're well aware that correlation is not causation, which is why the words "explain" and "explains" appear in quotes above. Still, we appear to have something that we might be able to use to project what the average U.S. college tuition cost will be in the future, provided we have a good idea of how much money the federal government might be likely to spend.

And since "the boss" pointed you here, if you'd like to see the biggest political issue of 2010 presented in one chart, here it is!

Labels:

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.