Article: REAL Report quantifies economic impact of Tech students

Jul 8, 2021 | Business, Impact

Note: This article originally appeared in the Ruston Daily Leader on July 8, 2021. 
Written by Caleb Daniel

Nearly one tenth of all sales tax revenues for taxing authorities in Lincoln Parish is generated because of Louisiana Tech students.

That’s according to a study published in the latest Regional Economic Analysis of Louisiana (REAL) Report by Tech’s Center for Economic Research.

The REAL Report is designed to provide insights into recent economic developments in the state. This year’s issue, written by four College of Business students and assistant professor of economics Patrick Scott, includes an analysis by Scott of the impact a Louisiana Tech student makes on the local economy.

Scott, who holds a doctorate in economics and serves as director of the research center, used an economic model to simulate the “shocks” on the local economy produced by a hypothetical Tech student who lives on campus for nine months out of the year, works a part-time job during that time, and pays tuition and all other living expenses.

His findings indicate that the economic multiplier of such a student is 2.84, meaning that for every dollar spent, $2.84 is generated and recirculated into the local economy.

For Louisiana’s unique economy, Scott believes that’s a solid number.

“Nationally, it would be about average,” he said. “Around here, I’m like, ‘Yay! Something good.’”

He said a 2.84 multiplier is especially good in Louisiana because economic impacts tend to “leak” out of state faster here than in other parts of the country.

According to the report, each tech student induces about $932 in sales tax revenue each year for taxing bodies throughout the parish.

That totals to $1.9 million for the on-campus student body as a whole, or roughly 9.5% of total sales tax revenues for
the parish.

“This indicates that Tech is a vitally important part of this economy,” Scott said. “We kind of knew that going in, but I did not envision that students alone, being here nine months out of the year, were responsible for that much of sales taxes. That was a surprise to me.”

These figures don’t solely come from the money students spend and earn themselves. Those are what’s known
as the direct effects, but there are also indirect and induced effects.

“You earn a paycheck, and you spend that paycheck,” Scott said. “What you spend it on becomes small, marginal increases in income for a whole bunch of other individuals and industries, and then that spurs on additional rounds of spending.”

So the economic effects of a Tech student come from their own spending (direct effect), the tiny changes to the supply chain caused by that increased demand (indirect effect) and the ensuing increases in consumer spending that follow (induced effect).

“It’s like throwing a rock into a still pond,” Scott said. “It creates many different waves, and each subsequent wave outside of the epicenter is marginally smaller.”

As perhaps could be expected, the REAL Report analysis finds that a Tech’s students economic impact is felt by far the most in the retail industry, making up about 44% of the total impact. In second place is education at 9% of the total.

In addition, each fulltime Tech student supports approximately 1.15 full-time equivalent jobs on average. That comes partially from the direct work students do at their own jobs, plus the amount of jobs in the area that can only exist because of the business Tech students provide.

“One individual student doesn’t do much,” Scott said. “But collectively, it’s a tidal wave.”