Cost-Benefit Evaluation for the Sponsor a Scholar Program

Nia Harrison, Nikola Juris, Dori Stern, and Steven Stern

 

 

            The Capital Region Sponsor-a-Scholar Program was founded by civic leaders and social entrepreneurs in 1996 in the Philadelphia region and provides mentors, academic tutoring, and other social interactions for selected students of the public high school system.  These students are selected based on their motivation to achieve academically and their potential for benefiting from the additional support.  The goal of the Sponsor-a-Scholar Program is to encourage low-income students to reach their full potential by graduating high school and attending college (Capital Region Sponsor-a-Scholar, 2007).  For this program, we evaluated costs and benefits (as seen in Table 1), using an evaluation of the program by Johnson (1999), in order to estimate the net benefit of the program.  These are discussed below.  Then we performed a number of sensitivity analyses to measure the robustness of our results.[1]

 

            Johnson (1999) estimates that the Sponsor-a-Scholar Program increases the probability of a program participant’s attending college by 18%, regardless of gender.  We assumed that an average male (female) high school graduate earns $15.00 ($13.50) per hour.  Assuming one works 2000 hours per year, we have base annual earnings of $30,000 ($27,000) for males (females).  Johnson (1999) also estimates the cost of the program to be $1,485 for both males and females.  In our base scenario, we assume that the cost is incurred only for one year.  Card (1999) and Hinton et al. (2007) report that the annual percentage increase in wages associated with attaining a college degree is 26.8%, implying that the increase in annual earnings would be $8,035 ($7,251) for males (females).

 

Table 1

 

 

 

Boys

Girls

Effect on the Probability of Attending College

0.18

0.18

Average Post-High School Wage Rate per Hour

$15.00

$13.50

Annual Earnings

$30,000

$27,000

Cost of the Program

$1,485

$1,485

Annual Benefit of Gaining a College Degree

$8,035

$7,251

Discount Factor

0.9

0.9

Long Term Benefit of Attending College

$14,502

$13,052

Net Benefit of the Program

$13,017

$11,567

 

 

In order to translate this benefit into long-term benefits, we assumed that the annual discount factor was 0.9.  We calculated the long term benefit of attending college as the increased likelihood of attending college, multiplied by the annual benefit of gaining a college degree, and then added up the increased earnings, discounted, over the rest of the individual’s life.  This resulted in long-term benefits of $14,502 ($13,052) for males (females).  Subtracting the cost of the program from the long-term benefit of attending college resulted in a net long-term benefit of $13,017 ($11,567) for males (females).

 

            Table 2 shows the results of various changes in assumptions associated with analysis of the Sponsor-a-Scholar Program.  Each experiment is a marginal change, holding all other assumptions at the base case discussed above.  First, we examined the sensitivity of our estimate to a change in the assumed average high school graduate hourly wage rate by doubling the assumed rate.  This resulted in a new net benefit of $27,519 ($24,619) for males (females).  Then, we focused on the discount factor, changing it from 0.9 to 0.8, leading to a new net benefit of $5,766 ($5,041) for males (females).[2]

 

Table 2

 

 

 Net Benefit of the Program

Average High School Wage

Boys

$15

$13,017

 

 

$30

$27,519

 

Girls

$14

$11,567

 

 

$27

$24,619

Discount Factor

Boys

0.9

$13,017

 

 

0.8

$5,766

 

Girls

0.9

$11,567

 

 

0.8

$5,041

Cost of the Program

Boys

$1,485

$13,017

 

 

$4,024

$10,478

 

Girls

$1,485

$11,567

 

 

$4,024

$9,028

 

 

            For some of the other programs analyzed, there was significant concern that the benefits of the program would dissipate over time.  Those concerns do not apply here because  Johnson (1999) is a long-term analysis.

 

            By examining the net benefit of the program in all the sensitivity analyses, the data indicate that the Sponsor-a-Scholar Program is very advantageous, yielding high benefits.  The source of the benefits is the significant increase in probability of going to college and the large, long-term benefits associated with going to college.

 

 

 

References

 

Capital Region Sponsor-a-Scholar (2007). http://www.crsas.org/pages/program/overview.asp.

Card, David (1999). “The Causal Effect of Education on Earnings.”  In O. Ashenfelter and D. Card (Eds.), Handbook of Labor Economics, 3: 1801-1863.  Amsterdam:North-Holland.

Hinton, Ivora, Jessica Howell, Elizabeth Merwin, Steven Stern, Sarah Turner, Ishan Williams, and Melvin Wilson (2007). “The Educational Pipeline for Health Care Professionals:  Understanding the Source of Racial Differences.” Unpublished manuscript.

Harrison, Nia, Nikola Juris, Dori Stern, and Steven Stern (2008). “Methodology for Youth Development Cost-Benefit Analyses.”  http://www.people.virginia.edu/~sns5r/ccfstf/youthdevmethodology.pdf.

Johnson, A.W. (1997). “Mentoring At-Risk Youth: A Research Review and Evaluation of the Impacts of the Sponsor-A-Scholar Program on Student Performance.” Ph.D. dissertation, University of Pennsylvania, United StatesPennsylvania.

 



[1] Details of Methodology are available at Harrison, Juris, Stern, and Stern (2008).

[2] We returned the average wage rates to $15.00 and $13.50 for men and women respectively.