Data and Measures
FOR THE STUDY, I combine college-level longitudinal data on endowments, spending, and enrollments from two sources. I use only data on colleges that enroll undergraduates given my interest in perceived excesses in elite undergraduate education. First, I draw data on endowment assets and spending from the National Association of College and University Business Officers (NACUBO) endowment survey from 1977, 1986, and all years from 1990 to 2012. I used OCR and manual data entry to construct the first machine readable database of this data for years prior to 2003. I then merged the NACUBO database with enrollment and financial data from the Integrated Postsecondary Education Data System (IPEDS) for all years. This provides endowment and enrollment data for 800 plus schools for most years. Endowment asset data from NACUBO is only available for 144 institutions in 1977 and 260 institutions in 1986. Among the wealthiest 5 percent of institutions, however, endowment data is available for all but three institutions for all years. This allows for examination of trends among the wealthiest institutions without any sample bias.
Endowment spending per student
Just as national wealth is measured in gross domestic product per capita, I use endowment resources per student to define endowment wealth as relative to the number of persons relying on the endowment. To make endowment resources per student less abstract, I use annual per-student spending on university operations from the endowment as the measure of endowment resources. To calculate endowment spending, I used reported spending rates for endowments in the NACUBO Endowment Survey from 2003 to 2012. For years prior to 2003, I use the average spending rate for the given institution from 2003 to 2007 as an indicator of normal spending rates prior to the 2008 financial crisis. For institutions that did not report spending rates, I used the average public or non-profit spending rate for endowments depending on the institution’s type of control. Such spending rates are consistently between 4 and 6 percent across all endowments with lower average spending rates for public and poorer endowments. Spending rates are reported for all institutions in the top 5 percent of private schools. So the use of average endowment spending rates for poorer institutions that did not report spending rates may lead to a slight overestimate of spending from the endowment.