College Destinations: How We Rank Them

2014-2015 College Destinations Index
Appendix (1)
Appendix (2)
Appendix (3)

AIER’s College Destination Index (CDI) evaluates destinations based on Metropolitan Statistical Areas (MSA’s), as established by the U.S. Office of Management and Budget. These areas are defined by a central population with strong economic ties to surrounding areas. AIER selects destinations with 10,000 students or more, as determined by U.S. Census data. For 2014-2015, there were 271 such destinations.

 

After a full review of the measures and measurement techniques, we made some improvements to the existing methodology. These improvements can be found in the measures Innovation Producers, Entrepreneurial Activity, R&D Per Student, College Educated, and Earning Potential. The changes are noted in the descriptions below.

Measure Definition and Sources

Student Concentration is the number of college students per 1,000 people in the population.

(Graduate Students + Undergraduate Students) x 1,000 / Total Population

Sources: U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S1401; using American FactFinder; <http://factfinder2.census.gov>; (2 July 2014).
U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table B01003; using American FactFinder; <http://factfinder2.census.gov>; (1 July 2014).

Cost of Housing is the fair market rent for a two-bedroom apartment. Previously this measure was titled “Cost of Living.” We changed the name to more accurately reflect what the data measure.

Source: U.S. Department of Housing and Urban Development; Fair Market Rents; FY2014 Final Fair Market Rents; < http://www.huduser.org/ >; (7 July 2014).

City Accessibility is the percentage of workers over the age of 16 who commute by public transportation, bike, or walk.

Percentage That Take Public Transportation + Percentage That Walk +  Percentage That Bike

Sources: U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S0801; using American FactFinder; <http://factfinder2.census.gov>; (2 July 2014).

Arts and Leisure is the number of arts, entertainment, and recreation establishments per 100,000 people in the population in the industries. 

(Number of Establishments x 100,000) / Populations

Sources: U.S. Census Bureau; American Community Survey, 2011 American Community Survey 1-Year Estimates, Table B01003; using American FactFinder; <http://factfinder2.census.gov>; (2 July 2014).
U.S. Census Bureau; Statistics of U.S. Businesses, Latest SUSB Annual Data 2011, Metropolitan Statistical Areas (MSA’s), NAICS code 71; <http://www.census.gov/econ/susb/>; (1 July 2014).

International Students is the percentage of the student population that holds foreign passports. Previously this measure was titled “Student Diversity.” We changed the name to more accurately reflect what the data measure.

International Students / Total Students

Sources: National Center for Education Statistics; Integrated Postsecondary Education Data System Data Center, 2012; <http://nces.ed.gov/ipeds/datacenter>; (15 July 2014).

Innovation Producers is the percentage of workers in computer and mathematical occupations (Occ Code 15-0000), architecture and engineering occupations (Occ Code 17-0000), life, physical, and social science occupations (Occ Code 19-0000), and arts, design, entertainment, sports, and media occupations (Occ Code 27-0000). Note the denominator is Occ Code 00-0000. Previously titled “Creative Class,” this measure has been redefined to narrow the focus to specific innovative careers. In earlier versions of the CDI, this measure  included many more occupations and was highly correlated with the College Educated measure.

Summation of Selected Occupations / All Occupations Total

Where data were missing for individual groups of occupations we coded these as 0, that is, no incumbents in these occupations for that MSA.

Sources: Bureau of Labor Statistics; Occupational Employment Statistics, 2013; <http://www.bls.gov/>; (29 July 2014).

Unemployment Rate is the percent of the workforce that is not employed.

Source: Bureau of Labor Statistics; Local Area Unemployment Statistics, Annual Average Unemployment Rate, Metropolitan Areas, 2013;< http://www.bls.gov/ >; (1 July 2014).

Entrepreneurial Activity is a three-year average of the net annual change in total number of business establishments per 100,000 people in the population.

For instance, the net change in 2009 would be calculated as:

Number of Firms 2009 - Number of Firms 2008

The net annual increases for 2009, 2010, and 2011 are averaged. This measure was previously captured on an annual basis. It now uses a three-year moving average, helping to smooth annual randomness.

Source: U.S. Small Business Administration, State, MSA, County Dynamic Data, 2008 to 2011; < http://www.sba.gov/>; (15 July 2014).

Brain Gain or Drain is the year-over-year ratio of the population with bachelor’s degree living in the area. 

(People with Bachelor's Degrees + People with Professional Degrees + People with Doctorates) / Total Population Over 25

The percentage from 2012 was divided by the percentage from 2011 to calculate the ratio.

Sources: U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S1501; using American FactFinder; <http://factfinder2.census.gov>; (21 July 2014).
U.S. Census Bureau; American Community Survey, 2011 American Community Survey 1-Year Estimates, Table S1501; using American FactFinder; <http://factfinder2.census.gov>; (21 July 2014).

R&D per Student is the academic research and development expenditure per student. Previously titled “Research Capacity,” this measure is now measured on a per-student basis instead of a per-resident basis.

Summation of R&D of Institutions in an MSA / Total Number of Students in an MSA

Sources: National Science Foundation; National Center for Science and Engineering Statistics, Academic Institution Profiles, Total R&D Expenditures, 2012; <http://www.nsf.gov/ >; (21 July 2014).
National Center for Education Statistics; Integrated Postsecondary Education Data System Data Center, 2012; <http://nces.ed.gov/ipeds/datacenter>; (15 July 2014).
U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S1401; using American FactFinder; <http://factfinder2.census.gov>; (2 July 2014).

College Educated is the percent of people 25 years old and older with a bachelor’s degree or higher. Previously titled “Degree Attainment,” this measure has been adjusted to include a larger swath of the population. Instead of considering only at the proportion of college educated people aged 25 to 34, it now includes all adults 25 years and older that hold a college degree.

Sources: U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S1501; using American FactFinder; <http://factfinder2.census.gov>; (15 July 2014).

Earning Potential is the median individual earnings. This measure previously calculated the income per capita, which included non-earnings income such as financial income or Social Security income. The new measure measures the median earnings per capita, a more meaningful metric to compare expected earnings for young college graduates.

Sources: U.S. Census Bureau; American Community Survey, 2012 American Community Survey 1-Year Estimates, Table S2001; using American FactFinder; <http://factfinder2.census.gov>; (2 July 2014).

Destination Classification

We classified all MSAs with at least 10,000 college (i.e., undergraduate and graduate) students into four destination classifications. Please note that in prior years we classified MSAs with at least 15,000 college students.

Destination Classification

Population

Major Metros

More than 2.5 Million

Mid-Sized Metros

1 Million to 2.5 Million

Small Metros

250,000 to 999,999

College Towns

Less Than 250,000

Normalization

The measures come in different units—dollars, people, establishments—so it’s hard to make comparisons. To accommodate all of these different measurement units, we normalized each data series. This normalization process enables a simple comparison across all measures in the CDI. 

We are still normalizing the different measures in the same way that we have in the past except that we are separating the MSA’s into size classifications first. This means that college towns are only compared to other college towns and that the major metropolitan areas are only compared to other major metropolitan areas.

First, we calculate the average and standard deviation for each measure by destination classification. We then determine individual destination values by calculating how many standard deviations from the mean the individual data point lays.

For example, College Station, Tex., has a student concentration of 235.9. The average student concentration for all College Towns is 121.9, with a standard deviation of 63.1. This means that College Station lays 1.82 standard deviations above average for all College Towns:

235.9 = 121.9 + (1.82 x 63.1)

As such, each destination has 12 normalized measures, typically ranging between about minus 3 and plus 3.

Ranking the Destinations

The normalized measures are averaged to calculate a final score, which is used to rank the destinations. Since the 12 statistics are averaged to generate the score, they are equally weighted in the ranking.

Where there is an N/A for a certain area, it means there is no information available. If an MSA lacks information for one measurement, the other 11 are averaged. The MSA’s are not punished for missing data. No MSA is missing data for more than two variables. Only four MSA’s are missing any data.


To download your free 2014-2015 College Destinations Index pdf brochure ranking all 75 top destinations, click here.

2014-2015 College Destinations Index
Appendix (1)
Appendix (2)
Appendix (3)

Luke F. Delorme

Luke F. Delorme is Director of Financial Planning for American Investment Services. Articles do not constitute personal investment advice. Please seek the advice of a professional before implementing any financial decision. Luke can be reached at LukeD@americaninvestment.com.