$5 is what the University at Buffalo, SUNY, claims that it creates for every dollar of state funding - or so the alumni newsletter trumpets.
Who the hell are they kidding?
Perhaps kidding isn't the right word. Instead they are only telling part of the story.
UB suggests that it has a multiplier of 5. If they did, this would be like the goose that laid the golden egg. My gosh, all they'd have to do is appropriate $140B to UB, and they could pay for the whole $700 Federal bailout.
In reality, neither UB, nor any other university has a multiplier of 5. One is a a reasonable starting point for a multiplier. Estimates of multipliers for schools that dominate rural areas come in just below 3. UB can't dream of having that sort of economic impact on a more diverse urban area.
Instead, what UB actually does is collect some state money - about 27% of their budget, combine it with money from other sources, and produce a self-reported economic impact of $1.5B.
That's a hefty chunk of change, and experience with the lean budgets at UB over the years makes me think that they make this go further than a lot of other schools.
But ... to claim a 5 to 1 benefit (I actually get 7 to 1 from the numbers I found) is to ignore all the other inputs to UB. This is kind of like Wal-Mart attributing all their revenue to their tire centers.
A more telling multiplier is the economic impact divided by the whole UB budget of $832M, to get a multiplier of 1.8. I think that seems a lot more reasonable than 5 to 1. An even more telling multiplier would include all funding sources of $1.3B, for a multiplier of less than 1.2. That's very realistic when the cynical interpretation of government finance is that they tax the right pocket to pay the left one, for a multiplier of 1.
And ... all of this ignores that what is crucial is the multiplier on marginal dollars, not the average multiplier that we can piece together from accounting data.
N.B. I have 3 degrees from the University at Buffalo, SUNY, so this sort of exaggeration is more than annoying. It's a good school ... but not that good.
