The Economic Impact of Michigan State University

Michigan State University, located in East Lansing, Michigan retained Anderson Economic Group to conduct an analysis of the net economic impact of the University’s activities on the State of Michigan.

We identified four categories of economic benefits from MSU:  (1) expenditures and income, (2) human capital, (3) economic development and research, and (4) culture and entertainment. We define net economic impact as the new economic activity directly or indirectly caused by MSU, excluding any economic activity associated with MSU that merely replaces or displaces other activity in the state. In calculating these benefits, we follow a careful methodology that counts expenditures only once, takes into account substitution of one activity within the state by another, and uses very conservative multipliers for indirectly-caused activity.

Our analysis concluded that Michigan residents are $2 billion richer annually due to the operational expenditures by the University, additional earnings as a result of increased human capital of graduates, and the graduate medical education payments that MSU has helped bring to state hospitals. The University provides many more economic benefits that we were able to describe, but not quantify. These include important activities of MSU Extension, the Michigan Agricultural Experiment Station, the Office of Intellectual Property, and departmental and center research conducted throughout the University.

Michigan State contributes to the cultural endowment of the state of Michigan through its many art and entertainment activities in East Lansing and throughout the state. These activities improve the lives of residents and make the area attractive to talented workers and entrepreneurs. Another benefit of the University’s cultural offerings is the economic impact these activities have on the state of Michigan. Our analysis found that the net economic impact of MSU’s Wharton Center’s activities during the 2005-06 season on the tri-county region was $4.67 million.

We presented our findings in a detailed report complete with an executive summary and several data appendices, and in a presentation to MSU’s president.

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