Phoenix-On May 12, 2003, the Goldwater Institute released "Does Spending on Higher Education Drive Economic Growth? 20 Years of Evidence Reviewed," by Jon Sanders, higher education policy analyst for the John Locke Foundation. In his study, Sanders examined data from all 50 states spanning more than two decades to test the correlation between increased state spending on higher education and economic growth. Given the claims of higher education spending advocates, Sanders expected to find a robust correlation between state funding of higher education and economic growth. Instead, his regression analyses yielded only weak and inconsistent correlations.
Released at a time when the Legislature is planning to spend $800 million on research labs at Arizona universities, the Sanders study has been the subject of controversy (for a synopsis of the arguments on both sides, see Robert Robb, "Eggheads dig in on spending Issue," Arizona Republic, May 21, 2003). One key critic has been Michael Crow, President of Arizona State University, the principal lobbyist for the funding initiative. On May 15, Crow released an open letter to Goldwater Institute President Darcy Olsen, criticizing the Sanders study.
In a memo released today by the Goldwater Institute, Sanders addresses Crow's criticisms. Following Crow's suggestions, Sanders increased the number of lagged variables to 15, ran the model both with and without the concurrent variable, and summed the coefficients. Sanders again found no consistent, statistically significant impact of higher education appropriations on states' economic growth. Readers interested in reading Sanders' analysis and viewing the regression data can see the memo on the Institute's website. To receive a copy of the memo via fax, contact Vicki Murray at (602) 462-5000 x 229.