Reforming higher education finance to align the incentives of colleges, students, and taxpayers

Good morning, Chairman Coats, Ranking Member Maloney, and distinguished Members of the Committee, and thank you for giving me the opportunity to share my views on the concept of financing higher education.

My name is Andrew Kelly and I am the director of the Center on Higher Education Reform at the American Enterprise Institute, a non-profit, non-partisan public policy research organization based here in Washington, DC. My comments today are my own and do not necessarily reflect the views of AEI.

I’m here today to discuss important concerns about our current approach to student financial aid and to identify some possible solutions, both reforms to current policy and opportunities to leverage private financing more effectively.

The federal government now hands out more than $150 billion a year in grants, loans, and tax credits—up from $93 billion just ten years earlier.[i] On a per-pupil basis, federal aid disbursements increased from just over $7,450 in 2003-04 to more than $10,900 in 2013-14 (in constant 2013 dollars).[ii] Yet net prices—what students pay after grants and scholarships—and out-of-pocket costs are at all-time highs.[iii] Though we are spending about twice as much on the Pell Grant program as we did prior to the Great Recession, the purchasing power of the grant is at an all-time low.[iv] Meanwhile, new data on loan repayment suggests that many students are borrowing too much for programs that do not pay off in the labor market.[v]

What explains these trends? Many analysts have argued that the problem is not that federal aid has failed to keep up with the price of tuition, but that federal aid itself may be one of the forces driving those increases. Grants, loans, and tax credits bring down the out-of-pocket price for students, thereby enabling them to afford more than they would have in the absence of the aid. But these programs provide colleges with little incentive to contain their costs, and may provide reason to increase them. How much a student can borrow is based on the cost of attendance, which is set by colleges themselves; the higher their prices, the more aid their students are eligible for. While undergraduate loans have annual and lifetime borrowing limits, federal loans to parents and graduate students allow for unlimited borrowing up to the cost of attendance.

Research on the causal effect of federal aid on tuition prices—popularly named the “Bennett Hypothesis” after former Secretary of Education William Bennett—has tended to produce mixed findings across sectors, aid programs, and time periods. A handful of recent, well-designed studies suggest that federal aid does lead at least some types of colleges to change their sticker and net prices. This literature suggests that different aid programs—loans versus grants, for instance—have different effects on tuition prices, and that different types of colleges will vary in their response to changes in federal aid programs.

In this testimony, I will argue that while the Bennett Hypothesis has been a useful lens in explaining why expansions in federal aid have failed to keep out-of-pocket prices low, it examines just one facet of the challenges facing federal policymakers. On the positive side, it has helped to clarify the incentives colleges face and why simply spending more is unlikely to bend the cost curve. In the extreme, it warns us that federal aid is doing the opposite of what it was designed to do: inflating prices rather than reducing them.

But the focus on price increases pays too little attention to a more pressing problem—the failure of student aid policy to promote educational quality. Put another way, tuition inflation is one important symptom of a broader problem: federal aid provides loans to high school graduates with essentially no questions asked, and allows those loan dollars to flow to any accredited college regardless of whether they provide a valuable education. Easy credit with no underwriting and imperfect information leads to a scenario where—per the Bennett Hypothesis—colleges can raise tuition prices without changing the quality of the education and still attract paying customers. Federal loans also allow students to enroll in low-value programs—those that are overpriced relative to their quality. Even if these institutions do not raise their prices in response to changes in federal aid, the availability of loans enables them to charge more for their programs than they would be able to in the absence of that aid.

Note that in both scenarios—Bennett’s “greedy colleges” that raise tuition to capture federal aid and the poor programs that are able to overcharge—public money designed to make college more affordable only serves to make it more expensive than it should be. But while solutions to the former—stricter loan limits or an elimination of the loan programs altogether—may reduce tuition prices, they may not help students navigate to the most valuable options.

In the remainder of this document, I discuss the four major design flaws in the student aid system before summarizing the evidence on the so-called Bennett Hypothesis. I then discuss what I see as a crisis of value in American higher education and conclude with a discussion of potential solutions to these problems: stricter loan limits, better data for prospective students, improved federal accountability policies, and private sector financing alternatives.

 

Read the PDF.

[i] College Board, “Total Student Aid and Nonfederal Loans in 2013 Dollars over Time,” Trends in Student Aid, 2014, http://ift.tt/1NDFnFe.

[ii] College Board, “Federal Aid Per Full-Time Equivalent (FTE) Student in 2013 Dollars, 1993-94 to 2013-14,” Trends in Student Aid, 2014, http://ift.tt/1Gh1uZx.

[iii] U.S. Department of Education, National Center for Education Statistics, “Out-of-Pocket Net Price for College,” April 2014, http://ift.tt/1Gh1uZz.

[iv] Congressional Budget Office, The Federal Pell Grant Program: Recent Growth and Policy Options, September 2013, http://ift.tt/1l2jChW.

[v] U.S. Department of Education, Better Information for Better College Choice & Institutional Performance, September 2015, http://ift.tt/1Olekgj.

from AEI » Latest Content http://ift.tt/1jyosXm

A Clintonian misdirection on drug prices

Hillary Clinton’s prescription to soothe the economic hangover consumers have from ObamaCare’s regulatory binge is a single ingredient: more regulation. Mrs. Clinton begins her treatment plan by focusing on “price gouging” by pharmaceutical companies and the need for price regulation.

Major biotech indexes are down about 20% since Mrs. Clinton first tweeted news of her plan on Sept. 21. What she fails to comprehend is that the high drug prices she decries aren’t the result of market forces gone wild. Rather, they are the result of bad regulation that has created market failures and shortages.

Take Turing Pharmaceuticals, which has come under fire for raising the price of Daraprim, a drug used for decades to treat toxoplasmosis and more recently to treat AIDS and cancer patients, to $750 from $13.50 a tablet. In a Sept. 20 interview, Turing CEO Martin Shkreli said the increase was needed to stay in business and research new medicines. “This drug was doing $5 million in revenue,” he said, “and I don’t think you could find a drug company on this planet that could make money on $5 million of revenue.”

The full text of this article can be found in The Wall Street Journal.

from AEI » Latest Content http://ift.tt/1VmUzKM

What say you? Questions (and answers) that should be heard at the next debate

The United States Census Bureau released a disappointing report in September showing that for the fourth year in a row more than 45 million Americans are living in poverty. That number is more than 9 million higher than before the recession and 15 million higher than in 2000.

Median household income is still 6.5 percent — lower than before the recession began. It has especially fallen for African-Americans, the demographic group farthest behind economically in the United States. Their median household income is an inflation adjusted 13 percent lower than it was in 2000.

Indeed, judging just from the Census Bureau’s report, African-Americans are worse off than they were before President Obama was elected. Adjusted for inflation, median income is down from $57,357 in 2007 to $53,657 in 2014. The poverty rate among black adults age 18-64 is 2.8 percentage points higher than in 2007. And the poverty rate for African-American children is 2.6 percentage points higher than in 2007.

These are important issues that demand discussion and require leadership. The Census Bureau’s report came out as the presidential debate season began to heat up. And that made me think how much better it would be if instead of questions about secret service code names, or Donald Trump’s insults, the moderator would ask:

1. What would your administration do to reduce poverty and increase economic mobility?

Here are the answers I would like to hear:

– I will make helping people get full time jobs our highest priority.

– I will insist that programs which provide assistance such as food stamps, health insurance or child care also ask unemployed adults: Can we help you get back to work?

– I will make sure that government assistance meant to help people stay in the workforce by supplementing wages does just that, and doesn’t instead discourage work by making unemployment more attractive than getting a job or working full time. Too often these days, Americans are choosing to forego a higher salary and a better job because they don’t want to lose their benefits.

– At the same time, I will end government rules and regulations, including those in the Affordable Care Act, which lead employers to limit the hours of their workers. It takes full-time work to support a family in the United States today and too often I hear workers say, “I want more hours but my employer won’t offer them.” This scourge of what is coldly called “involuntary part time work” needs to end.

– Over the long run, I will help to reduce poverty by reminding Americans that children do better with two married parents. No serious person who cares about helping struggling children does not now accept that we would be much more successful in alleviating poverty and increasing opportunity if more kids were born into families with two parents. I will not be afraid to say that — not to stigmatize or to impose my personal values, but to provide honest advice to families and young people who have been misled by the false promise made by people who believe government can solve all problems.

– I will tackle the budget issues that are slowly eating away at our ability to fund important efforts to help the poor move up. If we do not rein in the growth of entitlements and handouts to the well-off, we have no hope of providing support to the struggling Americans who need help most.

– And finally, I will get our country growing again creating jobs and opportunities for all. I prefer a president who “focuses like a laser beam” on the economy; who understands that for most Americans “it’s the economy, stupid,” and who promises to “get this country moving again.” Poor Americans do not need, and will be hurt by, a president who says 2 percent growth is the best we can do.

– In the past, when we had more success fighting poverty than we do now, we combined strong work requirements in welfare, generous work supports that make low wages go farther, and a growing economy. And it worked. But during the past six years work requirements in welfare have been skirted, work supports have not been tied to full-time work, and the economic recovery has been anemic. For the sake of the 45 million Americans in poverty, we need to change that.

Robert Doar is the Morgridge Fellow in Poverty Studies at the American Enterprise Institute. From 2007-2013, he was the commissioner of the New York City Human Resources Administration

 

from AEI » Latest Content http://ift.tt/1jy4g7T

Need to Know: Sept. 30, 2015

Fresh useful insights for people advancing quality, innovative and sustainable journalism

OFF THE TOP

You might have heard: Axel Springer is buying a controlling stake in Business Insider for $343 million (New York Times)

But did you know: Axel Springer’s price for Business Insider sets a new high mark in digital publisher sales, beating out AOL’s 2011 purchase of The Huffington Post (Re/code)
Axel Springer’s deal to buy 88 percent of Business Insider for $343 million sets a new high mark for a digital publisher sale, Peter Kafka writes. The mark was previously held by The Huffington Post, which was acquired by AOL in 2011 for $315 million. The deal values Business Insider at $442 million, as Axel Springer already owned 9 percent of the company and Amazon’s Jeff Bezos will keep his investment in the company.

+ Ken Doctor writes that the deal shows Axel Springer has learned what Google and The New York Times already know: You need to be first or second in your field because “digital business doesn’t reward also-rans, and that often means third-place players and lower” (Politico Media) and a rundown of what you need to know about the German publisher, such as it publishes Bild, the highest-circulation European newspaper, and its ambition is to go from a German print company to a global digital company (Digiday)

The smart way to start your day

Each morning we scour the web for fresh useful insights in our Need to Know newsletter. Sign up below.

+ Noted: Al Jazeera America will not voluntarily recognize union, leading to a vote of digital staff administered by National Labor Relations Board (International Business Times); Comcast launched Watchable on Tuesday with 30 content partners, including Vox, BuzzFeed and Vice (Variety); In redesigning its Top Doctors feature, Washingtonian puts user experience at the core, and the redesign of Top Doctors is a preview of a redesign to the rest of the website that will roll out later this year (Medium); Stanford University is searching for a new director for the John S. Knight Journalism Fellowships Program (John S. Knight Journalism Fellowships at Stanford)

API UPDATE

How Millennials Get News: Paying for content
Today we are releasing a new report that finds the vast majority of the Millennial generation use significant amounts of paid content and there’s reason for optimism, but selling news to young people remains difficult. The report — a product of our Media Insight Project partnership with the Associated Press-NORC Center for Public Affairs Research — found that 40 percent of Millennials personally paid for news products or services out of their own pocket, and their willingness to pay is correlated with their broader beliefs about the value of news.

TRY THIS AT HOME

Craig Silverman’s 4 basic verification tactics journalists should know (Medium)
With 20 minutes and four basic fact-checking tactics, Craig Silverman writes that journalists can uncover important information about a piece of digital content, including news stories, images and videos. Go back to the original source of the piece of content, looking at the sharer’s bio and the kinds of things they tend to share, and look at their profiles across social networks. To find the original source, reverse image search can help find where an image was first shared.

+ Lessons from The Huffington Post’s redesign: Branding is important in a world of distributed content, and it’s important to balance editorial features against site performance (Digiday)

OFFSHORE

Al Jazeera journalists request a pardon from Egypt’s president after being convicted of terror-related charges (Guardian)
Seven Al Jazeera journalists convicted of terror-related crimes are requesting pardons from Egypt’s president Abdel Fatah al-Sisi. Last week, two Al Jazeera journalists were granted pardons by the president after spending two years in prison, which Oliver Laughland says clears the way for pardons for the seven other journalists. Australian reporter Peter Greste, one of the seven requesting a pardon, says: “Once I was released from prison, I thought I was going to be free. It turns out that I’m not. I still have this conviction and all of its consequences hanging over my head.”

+ Financial Times CEO talks to The New Yorker about FT’s acquisition and why many metropolitan mid-sized newspapers are struggling: “The newspaper industry shot itself in the foot by going for massive reach, low-quality circulation” (New Yorker)

OFFBEAT

Twitter is building a new product that will let users go beyond the 140-character limit (Re/code)
Kurt Wagner and Jason Del Rey report that Twitter is building a new product that will allow users to share updates longer than 140 characters. That will allow users to post long-form content to Twitter, Wagner and Del Rey write. Twitter is also reportedly reconsidering how it measures 140 characters and may remove things such as links and Twitter accounts from the count. While the 140-character limit has been one of Twitter’s key features, users currently get around the character limit by posting images of text attached to tweets.

UP FOR DEBATE

Why reader comments may be essential if local journalism is going to succeed online (David Higgerson)
The comment section has been getting a bad reputation lately, David Higgerson writes, but it may be essential if digital local journalism is going to thrive. Higgerson says that a solution begins with treating comments with the respect they deserve, in ways such as encouraging journalists to get involved in the comment sections on their stories or including an opening question at the end of an article. Higgerson writes: “For any newsroom moaning about the quality of the comments under their stories, I suspect they are probably getting comments which reflect the effort being spent attracting the right commenters, and the time spent creating the right environment for the right community to grow.”

+ Interactive Advertising Bureau is forming an Ad Blocking Working Group, which will distribute a code that small publishers can use to detect whether a user has an ad blocker enabled, allowing those publishers to tailor messages to ad-blocking users (AdExchanger)

SHAREABLE

Snapchat is trying to inject a little bit of news into users’ experiences through Live Stories around news events (Nieman Lab)
Snapchat users may have noticed a Live Story recently about the Hajj, an annual pilgrimage of Muslims to Mecca. Snapchat is using Live Stories, a feature that allows users in a specific location to submit photos and videos that editors curate into a story shown to Snapchat users, to include a bit of news in Snapchat users’ experiences. Snapchat’s head of news Peter Hamby says: “A 19-year-old may not come across what the Iran deal is, but if it’s in their face in Snapchat, where they’re living all day, I kind of see that as a social good.”

The smart way to start your day

Each morning we scour the web for fresh useful insights in our Need to Know newsletter. Sign up below.

 

The post Need to Know: Sept. 30, 2015 appeared first on American Press Institute.

from American Press Institute http://ift.tt/1QKVUEz

The US-China cyber deal shouldn’t halt ongoing action against Chinese cyber criminals

On Friday, President Obama and Chinese President Xi Jinping announced a new cybersecurity “understanding” between the two countries. The Wall Street Journal promptly labeled it a “mirage,” while Robert Knake, a cybersecurity expert at the Council on Foreign Relations robustly calls it “masterful diplomacy” on the part of the Obama administration. Despite the biting WSJ scorn and the effusive plaudits of Mr. Knacke, the truth is there is no way at this point to make a final, serious judgment. But whatever the ultimate meaning of the summit, the Obama administration should not be deflected from its announced determination to retaliate against ongoing Chinese economic cyber-espionage.

What is in the agreement?

First, a review of the widely reported exchanges between President Xi and President Obama, as reflected in their verbal statements and the separate Fact Sheets issues by the two governments. Obama stated at the joint news conference: “The United States government does not engage in cyber-economic espionage for commercial gain. And today, I can announce that our two countries have reached a common understanding on the way forward. We’ve agreed that neither the US or the Chinese government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage.”

In response, Xi stated: “Both sides agree to step up crime cases, investigation assistance and information-sharing. And both government[s] will not be engaged in or knowingly support online theft of intellectual properties…China strongly opposes and combats the theft of commercial secrets and other kinds of hacking attacks.” While initially there was some concern that the Chinese fact sheet might not reflect these verbal commitments, subsequently it was found that it pretty much mirrored Xi’s comments: “China and the United States agree that neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”

As I and others have noted previously, these are exactly the limits on economic espionage that the US has been pushing for some years; thus, Obama and Xi’s statements at least represent important verbal commitments, though they are not legally binding obligations. Still, there is room for caution on the deal. As the WSJ points out, enforcement is based on the “respective national laws” of each country, opening a potentially wide loophole for the Chinese if they want to exploit it. And of course, there is the fact that Chinese officials – from Xi on down – continue to deny responsibility for any cyber-espionage, with one Foreign Ministry spokesman still angrily demanding that the US “stop its groundless attacks against China” regarding cyber-espionage. And finally, conspicuously left out of future implementing sessions was the People’s Liberation Army (PLA), which has been at the center of China’s cyber-espionage. Whether President Xi can or even wants to curb the extensive military-directed espionage operations remains an open question.

To his credit, the president underscored the fact that the US is not foreclosing unilateral action against IP or trade secrets cyber theft in the future, noting the US has a variety of law enforcement and other tools to combat cyber theft: “I did indicate to President Xi that we will apply those and whatever other tools we have in our toolkit to go after cyber criminals, either retrospectively or prospectively. Those are tools generally that are not directed at governments; they are directed at entities or individuals that we can identify.”

The US should still advance announced action against Chinese cyber criminals

This brings us to the crux of this blog post. Despite the potential breakthrough in this deal, the argument here is that it would be a great mistake for the administration not to go forward with already-planned law enforcement actions against Chines entities or individuals. This is not as a means of poking Chinese leaders in the eye, but to follow through on the administration’s announced intentions. For weeks before the summit, administration officials had signaled that Chinese cyber espionage was continuing and that it would identify the culprits and bring the full force of US laws against them. One has to assume that the FBI and the Justice Department have built a solid case of facts regarding stolen intellectual property or trade secrets and the exploitation of such information by Chinese companies or individuals. Further, it must also be assumed that the US government stands ready to supply the information necessary to back up the indictments, including at least some intelligence data.

While one can hope that the summit did indeed mark a turning point on Chinese cyber theft, there are two reason for going forward with the legal action: first, it would underscore the seriousness with which the US holds these incursions. Cliché or not, actions do speak louder than words. And second, without leveling any cheap shots against the diplomacy of the Obama administration, it is a fair point to note that the world has seen the US blow past a number of “red lines.” In this case, after promising action, follow-through could help to redress that record.

from AEI » Latest Content http://ift.tt/1iKJBwI

How Millennials Get News: Paying for content

This research was conducted by the Media Insight Project, an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research.

Introduction

Despite growing up amid abundant free online entertainment and news, today’s young adults still use significant amounts of paid content. Selling news to young people remains difficult, but the data from a new study finds reasons for optimism and suggests new ways to think about the challenge.

The vast majority of the Millennial Generation, those Americans age 18 to 34, regularly use paid content for entertainment or news, whether they personally pay for the subscriptions themselves or someone else pays the bill, according to a new report on Millennials’ news habits.¹

While use of paid entertainment content, including music, movies, television, and video games, is most common among Millennials, 53 percent report regularly using paid news content — in print, digital, or combined formats — in the last year.

40%of Millennials personally paid for news products or services out of their own pockets.

Furthermore, 40 percent of Millennials personally paid for news products or services out of their own pockets. Millennials over age 21, those most likely to be on their own or out of school, are twice as likely as those age 18-21 to personally pay for news (more than 4 in 10 vs. 2 in 10).

A younger adult’s willingness to pay for news is correlated with his or her broader beliefs about the value of news. The people who want to stay connected with the world, who are interested in news, and who are more engaged with news on social networks are the most likely to be willing to personally pay for news. That “news orientation” is the biggest driver of a person’s willingness to pay for news, more so than a person’s age or socioeconomic status.

These basic findings — Millennials do regularly use and often personally pay for news content — challenge the notion that Millennials believe everything on the web must be free. But there are still significant obstacles, according to the data, that will make a paid or subscription model a challenge for publishers looking to reach the next generation of news consumers. For example, even among those Millennials who say keeping up with the news is very important to them, only half personally pay for news content. And, even among Millennials who do pay for news, free services like Facebook and search engines are their most common sources for obtaining news on many topics.

These are findings of a new study of Millennials by the Media Insight Project, a collaboration of the American Press Institute and The Associated Press-NORC Center for Public Affairs Research. The new report on paying for news is a deeper examination, with new analysis and data, of a larger study of Millennials released earlier this year.

The study included a nationally representative survey of adults age 18 to 34 and in-depth interviews with several small groups of Millennials. These small group discussions highlight two potential reasons why some Millennials may not pay for news: there is so much free news it’s hard to see the value of paying, and a belief that access to news should be free to facilitate being an informed citizen.

“

These basic findings — Millennials do regularly use and often personally pay for news content — challenge the notion that Millennials believe everything on the web must be free.

”

Among the study’s other findings:

• In all, 87 percent of Millennials personally pay for some type of subscription service, including news or entertainment services.
• The most popular content Millennials pay for personally is downloaded, rented, or streamed movies and television (55 percent) and music (48 percent).
• More Millennials pay for print magazines (21 percent) and newspapers (15 percent) than digital magazines (11 percent) and newspaper media content online (10 percent).
• Older Millennials are more likely than younger Millennials to pay out of their own pocket for a news subscription (roughly 45 percent over age 21 vs. 23 percent age 18-21).
• There are no major socioeconomic differences between those who pay for news and those who do not pay for such services.
• Ninety percent of those who pay for news also pay for entertainment.
• Those who personally pay for news are more likely than those who do not pay to use news for personal or professional reasons such as helping them with their job (29 percent vs. 20 percent).
• Yet only half of Millennials who say keeping up with the news is important personally pay for news products or services.
• Millennials who pay for news are more likely to follow sports (56 percent vs. 44 percent) and current events such as national politics (51 percent vs. 38 percent) than those who do not pay for news.
• Those who pay for news tend to also engage more with news on free platforms such as Facebook and Twitter.
• Even among Millennials who pay for news, Facebook and search engines are their most common sources for obtaining news on many topics.

The first section of this report describes the Millennials who use and pay for news subscriptions, and the second section describes how subscribers’ news habits differ from those of non-subscribers.

Study methods

The findings in this report are based on both in-depth interviews and a survey conducted by the Media Insight Project, an initiative of the American Press Institute and The Associated Press-NORC Center for Public Affairs Research. The nationally representative survey of 1,045 adults between the ages of 18 and 34 was conducted between January 5 and February 2, 2015. The final response rate was 14 percent, and the overall margin of error was +/- 3.8 percentage points. In addition to the survey, the research included 10 semi-structured, in-person interviews with small groups of Millennials to understand their news habits.

1. The terms subscriptions, services, and paid content are used interchangeably in this report to refer to the items asked about on the survey including: “music you download or stream on iTunes, Spotify or other platforms,” “cable television,” “print magazines,” “digital subscriptions for magazines,” “print newspapers,” “digital subscriptions to newspapers,” “movies or television shows you download, rent or stream on iTunes, Netflix, or other services,” “video games or gaming apps,” “digital news apps,” “other apps,” “an email newsletter,” “a subscription service for ebooks or audiobooks such as Kindle unlimited or Audible,” “an e-learning service or online course,” or “a sample-box service such as Birchbox or Goodebox.” ↩

The post How Millennials Get News: Paying for content appeared first on American Press Institute.

from American Press Institute http://ift.tt/1GgbHph

Who uses and pays for news in the Millennial generation

Most Millennials use paid subscription services, and about half use some kind of news-specific service

Contrary to the idea that Millennials think the web is free, the vast majority of Millennials used some kind of paid product or service in the past year, including a majority who use at least one for news.

To get at this, the study conducted in-depth interviews about what kinds of paid content people used, which informed the list of products and services asked about in the survey. The survey instrument then asked people about 14 different types of paid entertainment, news, or educational products and services. For each service, the survey distinguished whether the respondent pays for it themselves or if they use someone else’s paid subscription.

Overall, 93 percent of Millennials say they regularly use some sort of paid content of any kind (whether they pay for it personally or use someone else’s subscription), and 87 percent have personally paid for such a subscription.

93%of Millennials say they regularly use some sort of paid content.

The two most popular types of paid subscriptions regularly used by Millennials are those that access online movies and TV (77 percent) and cable television (69 percent). A majority of Millennials also use paid content for music (54 percent) and video games (51 percent).

The most popular paid news subscriptions regularly used by Millennials are print magazines (30 percent) and print newspapers (29 percent). Fewer than 1 in 5 Millennials regularly use paid access to a digital news app (19 percent), a digital newspaper (15 percent), a digital magazine (15 percent), or an email newsletter (15 percent).

In terms of educational or commercial services, fewer than 1 in 4 Millennials regularly use a fee-based e-learning service (25 percent), an eBook or audio book subscription (21 percent), or a sample-box service (9 percent).

	Pay personally	Someone else pays
Movies or TV downloads	55%	23%
Cable TV	41%	28%
Music	48%	6%
Video games	46%	5%
Other apps	38%	5%
Print magazine	21%	9%
Print newspaper	15%	13%
E-learning service or online course	18%	6%
Ebooks or audiobooks	18%	3%
Digital news apps	14%	5%
Digital magazine	11%	5%
Digital newspaper	10%	6%
Email newsletter	10%	5%
Sample box	7%	2%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.¹

Media Insight Project

While it is true that many paid print subscriptions come as a bundled package of print and digital access, the data reveal that more Millennials are using the print versions. If we look more closely at those who use paid subscriptions for news, they fall into three categories: those who regularly use paid news only when it’s in print (38 percent), those who regularly use paid news both in print and digital form (41 percent), and those who regularly use paid news only when it’s digital (21 percent).

	Percent
Use subscriptions only for print news only	38%
Use subscriptions for both print and digital news	41%
Use subscriptions only for digital news	21%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

When it comes to using print news subscriptions, there are very few demographic differences among Millennials. The one notable exception is that Hispanics are less likely than whites to use print subscriptions (33 percent vs. 47 percent). In comparison, about 39 percent of African Americans use print subscriptions.

Millennials are more likely to personally pay for entertainment than news

Most of the entertainment services used by Millennials are paid for out of their own pockets — not by using someone else’s subscription. Indeed, fully 78 percent of Millennials personally pay for at least one of three different entertainment services (movies or TV, music, or video games).

That is nearly double the number of Millennials who pay out of their own pocket for news. Here, 40 percent of Millennials personally pay for at least one of six news-related subscriptions (print magazine, digital magazine, print newspaper, digital newspaper, email newsletter, or digital news app). An additional 13 percent of Millennials use a news-related subscription paid for by someone else.

Age is associated with using a news subscription paid for by someone else. Those age 18-21 are more likely to only use a subscription that someone else pays for (23 percent) than those 22-24 years old (12 percent), those 25-29 years old (10 percent), and those 30-34 years old (9 percent).

“

Most of the entertainment services used by Millennials are paid for out of their own pockets — not by using someone else’s subscription.

”

One reason for the difference between rates of paying personally for entertainment versus news content, however, may not be a lack of interest in news as much as a sense that the news is both already free and that, because of its civic nature, citizens shouldn’t have to pay for it. These are both concepts that we heard in our in-depth interviews with Millennials around the country.

During the interviews, Megan, a freshman at the University of Mary Washington, agreed with the general notion that it is not necessary to pay for news because it is so widely available for free online, but she says that she would be willing to pay for “something hands on” such as a print magazine with an annual subscription because “that’s probably worth it.”

Likewise, Connor, a sophomore at the University of Mary Washington, says, “I don’t think I would pay for it just because there’s so much availability of news on the internet for free that I feel like, if I have to pay for something somewhere, I’ll just look for it free somewhere else.”

While Millennials with more education and those with jobs are more likely to personally pay for at least one type of subscription, income itself is not a significant predictor of whether Millennials personally pay for news content or not. Likewise, income is not a significant factor in whether Millennials personally pay for entertainment content. However, men and those with jobs are more likely to pay for entertainment.

Among Millennials who personally pay for news, many pay for print subscriptions

The study also challenges to some degree the notion that Millennials have no interest in paying for print media, though the numbers here are nuanced.

About 1 in 5 Millennials personally pay for a print magazine (21 percent) and 15 percent pay for a print newspaper, which makes such print subscriptions the two most popular forms of paid news.

At the same time, 14 percent of Millennials personally pay for a digital news app, 11 percent pay for a digital magazine, 10 percent pay for a digital newspaper, and 10 percent pay for an email newsletter.

In total, 29 percent of Millennials pay for any print subscription, and 25 percent pay for some type of digital news.

	Percent
Print magazine	21%
Print newspaper	15%
Digital news app	14%
Digital magazine	11%
Digital newspaper	10%
Email newsletter	10%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

While Hispanic ethnicity was the only demographic factor that predicted the use of paid print content (whether paying for the content personally or using someone else’s subscription), age is a factor in predicting whether people personally pay for that print news content. Older Millennials are more likely to personally pay for print news than their younger peers. Among Millennials age 18-21, just 15 percent of those age 18-21 pay for print news, compared to 30 percent of those 22-24 years old, 33 percent of those 25-29 years old, and 35 percent of those 30-34 years old.

Older Millennials are more likely to personally pay for a news subscription

Does age also relate to more willingness to pay for news in general?

The answer is yes.

Older Millennials — that is those over age 21 — are about twice as likely as those age 18-21 to pay for news personally. Forty-four percent of those age 30-34 pay for news out of their own pocket, as do 46 percent of those 25-29 years old, and 45 percent of those 22-24 years old, compared to 23 percent of those 18-21 years old.

Age	Percent
18-21	23%
22-24	45%
25-29	46%
30-34	44%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

Even taking into consideration use of subscriptions that other people pay for, the youngest Millennials are still significantly less likely than their older peers to use a paid news subscription. In this case, 46 percent of those age 18-21 use a news subscription, whereas more than half of older Millennials use a news subscription (57 percent of 22-24 year olds, 57 percent of 25-29 year olds, and 53 percent of 30-34 year olds).

Younger Millennials are also less likely to pay personally for certain types of news. In particular, younger Millennials are less likely than older ones to pay for print newspapers out of pocket (7 percent of 18-21 year olds, 15 percent of 22-24 year olds, 18 percent of 25-29 year olds, and 20 percent of 30-34 year olds) and print magazines (9 percent of 18-21 year olds, 22 percent of 22-24 year olds, 25 percent of 25-29 year olds, and 26 percent of 30-34 year olds).

Importantly, however, there are no age differences when it comes to paying personally for digital magazines, digital newspapers, news apps, and email newsletters. In other words, older Millennials are more likely to personally pay for print, but not digital, news.

	Pay personally for print newspaper	Pay personally for print magazine
18-21	7%	9%
22-24	15%	22%
25-29	18%	25%
30-34	20%	26%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

Millennials who believe it is important to keep up with the news are more likely to personally pay for news subscriptions; however, even among these engaged consumers only half pay for their news

Besides age, what factors are associated with whether someone pays for news? There are various attitudinal factors that the study reveals may influence willingness to pay.

Believing news is important is a factor. Millennials who believe keeping up with the news is extremely or very important are significantly more likely to personally pay for news than those who do not (50 percent vs. 34 percent).

But it would be a mistake to think that simply persuading people that news is important will lead people to want to pay for it. And the more salient data point here may be that even half of those who believe following the news is extremely or very important still do not pay for any news themselves.

Among Millennials who say following the news is important, age plays a significant factor in whether they pay for news themselves. In particular, Millennials of college age (18-21 years old) who say following the news is important are less likely to pay for news themselves (31 percent) than those 22-34 years old who say following the news is important (55 percent).

	Percent
Keeping up with news is extremely or very important	50%
Keeping up with news is somewhat important	35%
Keeping up with news is not very or not at all important	32%

Data Source: Question: How important is it to you personally to keep up with the news, if at all? Not at all important, not very important, somewhat important, very important, or extremely important.
Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

Just as we heard in interviews that the prevalence of news being free is one obstacle to people wanting to pay for it, another obstacle we heard is that the importance of the news itself is a reason not to pay for it.

In one case, Lauren, age 23 in Chicago, told us her feelings about the civic importance of keeping up with the news. “Another reason I watch and read the news is because I feel a social responsibility to do so…. I keep up with world news for similar reasons, more so leaning on that idea of civic responsibility to do so. I don’t want to live in a bubble where I only know what’s happening here in the United States.” However, when we asked later in the discussion whether she pays for any of that news content, she said she does not.

Even more to the point, we heard from Sam, age 19 in San Francisco, who said, “I really wouldn’t pay for any type of news because as a citizen it’s my right to know the news.”

Millennials who say keeping up with the news is important are more likely to personally pay for certain types of news products and services than others. In particular, they are more than twice as likely to pay for a news app (22 percent vs. 10 percent) and also significantly more likely to pay for any digital news subscriptions (34 percent vs. 20 percent).

	Keeping up with news is not very or not at all important	Keeping up with news is somewhat important	Keeping up with news is extremely or very important
Digital news subscription	18%	21%	34%
Digital news app	5%	11%	22%

Data Source: Question: How important is it to you personally to keep up with the news, if at all? Not at all important, not very important, somewhat important, very important, or extremely important.
Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

While nearly half of Millennials personally pay for only entertainment content, a sizeable minority (nearly 4 in 10) personally pay for both entertainment and news

Another finding that may offer some hint for the future of the news industry is that there seems to be a connection between being willing to personally pay for subscriptions of any kind and paying for news.

Just under half of Millennials (42 percent), for instance, pay only for entertainment products and services and no news content. Virtually none pay just for news and not entertainment (just 4 percent). Yet nearly all of the Millennials who personally pay for news also pay for some entertainment online.

And in sharp contrast to the idea that Millennials won’t pay for online content at all, only 18 percent do not personally pay for entertainment or news subscriptions of any kind.

	Percent
Entertainment only	42%
Both news and entertainment	36%
Neither	18%
News only	4%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

The 78 percent of Millennials who personally pay for an entertainment service are more likely to personally pay for news

Indeed, those who personally pay for entertainment are three times more likely to pay for a news subscription (46 percent) than those who do not pay for any entertainment content (18 percent).

	Percent
Pay for entertainment subscription	46%
Do not pay for entertainment subscription	18%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

The connection between Millennials personally paying for entertainment and paying for news, moreover, holds across each type of news subscription. Those who personally pay for entertainment products or services are more likely than those who do not to pay for a print magazine (25 percent vs. 8 percent), digital magazine (13 percent vs. 3 percent), digital newspaper (12 percent vs. 2 percent), print newspaper (17 percent vs. 8 percent), email newsletter (12 percent vs. 2 percent), and digital news app (17 percent vs. 4 percent).

	Do not pay for entertainment content	Pay for entertainment content
Print magazine	8%	25%
Print newspaper	8%	17%
Digital news app	4%	17%
Digital magazine	3%	13%
Digital newspaper	2%	12%
Email newsletter	2%	12%

Data Source: Question: Please select any of the following types of paid products or services that you have regularly used in the past year. For each one, please check whether you pay for the product or service yourself, someone else pays for it, or both.

Media Insight Project

Millennials interviewed have mixed feelings toward advertising in entertainment and news sources

The challenge of subscriptions for news is only intensified by the mixed feelings Millennials have about advertising. In our interviews in particular, we heard a range of opinions about whether people were willing to accept advertising in exchange for free content.

As Connor, a sophomore at the University of Mary Washington, says, “If I’m on YouTube or something and an ad pops up, I’m like well you know what? I’m okay with this. It is 15 seconds. If there’s something on a sidebar, I’ll just ignore it.”

But for others, advertisements are enough to drive them away. Marwa, age 25 in Chicago, reports, “You can tell if it’s a low-quality article if it has all these ads and then all this junk all around it.”

And for some, if the exchange is explicit — paying a price for a commercial-free environment or accepting advertising — the choice becomes easier. They would rather not pay a subscription.

Haley, age 22 from San Francisco, said that she’d rather deal with commercials than pay the nominal fee for the commercial-free premium version of a music streaming service.

“It depends on how many ads pop up or how many commercials are played. If it’s taking so long for me to watch the news or to listen to the song, I might just say forget it or I might go ahead and pay to take them all down. But I think my first vibe is just to be like forget it. I don’t even want to see it anymore,” says Eric, age 22 in Chicago.

1. The “pay for it yourself” and “both” answer categories were combined to form the pay personally category. ↩

The post Who uses and pays for news in the Millennial generation appeared first on American Press Institute.

from American Press Institute http://ift.tt/1P512Vx

How Millennial subscribers’ news habits differ from those of non-subscribers

About the study

This survey was conducted by the Media Insight Project, an initiative of the American Press Institute (API) and The Associated Press-NORC Center for Public Affairs Research. The survey was conducted from January 5 through February 2, 2015. The survey was funded by API. The API, NORC at the University of Chicago, and AP staff collaborated on all aspects of the study.

The study included multiple modes of data collection. The portion of the survey involving screening for age eligibility and recruitment was completed by telephone, while the main portion of the questionnaire was administered online. The telephone component included only cell phone numbers (no landlines), and used both random-digit-dial (RDD) and age-targeted list sample from the 50 states and the District of Columbia. During recruitment efforts, a total of 6,635 adults provided age information, and 2,297 (35 percent) were deemed eligible because they fell between the ages of 18 and 34. Of those 2,297, a total of 1,759 respondents (77 percent) went on to complete the recruitment phase of the survey, which involved agreeing to receive an invitation for the web survey either by email or text message, and providing one’s email address or cell phone number. Of the recruited participants, 1,045 (59 percent) completed the web survey. The final response rate was 14 percent, based on the American Association for Public Opinion Research Response Rate 3 method.

Respondents were offered one small monetary incentive for participating in the telephone portion of the survey, as compensation for phone usage charges, and another small monetary incentive for participating in the web portion of the survey. Interviews were conducted in both English and Spanish, depending on respondent preference. All telephone recruitments were completed by professional interviewers who were carefully trained on the specific survey for this study.

The RDD sample was provided by a third-party vendor, Marketing Systems Group. The age-targeted list sample was provided by a second vendor, Scientific Telephone Samples. The sample design aimed to ensure the sample representativeness of the population in a time- and cost-efficient manner. The sampling frame utilizes the standard cell phone RDD frame, with a supplemental sample of cell phone numbers targeting adults between the ages of 18 and 34. The targeted sample was pulled from a number of different commercial consumer databases and demographic data.

Sampling weights were appropriately adjusted to account for potential bias introduced by using the targeted sample. Sampling weights were calculated to adjust for sample design aspects (such as unequal probabilities of selection) and for nonresponse bias arising from differential response rates across various demographic groups and for no coverage of the population without access to cell phones. Post stratification variables included age, sex, race/ethnicity, region, and education. The weighted data, which thus reflect the U.S. population of 18- to 34-year-old adults, were used for all analyses. The overall margin of error was +/- 3.8 percentage points, including the design effect resulting from the complex sample design.

All analyses were conducted using STATA (version 13), which allows for adjustment of standard errors for complex sample designs. All differences reported between subgroups of the U.S. population are at the 95 percent level of statistical significance, meaning that there is only a 5 percent (or less) probability that the observed differences could be attributed to chance variation in sampling. Additionally, bivariate differences between subgroups are only reported when they also remain robust in a multivariate model controlling for other demographic, political, and socioeconomic covariates. A comprehensive listing of all study questions, complete with tabulations of top-level results for each question, is available on the Media Insight Project’s website: www.mediainsight.org.

Qualitative group interviews

The Associated Press-NORC Center for Public Affairs Research, in collaboration with the American Press Institute, conducted 10 semi-structured interviews with groups of Millennials, age 18-34. Three group interviews were conducted in Chicago, Illinois, on December 11, 2014; two were conducted in San Francisco, California, on January 7, 2015; two were conducted in Oakland, California, on January 7-8, 2015; and three were conducted in Fredericksburg, Virginia, on January 22, 2015.

Select participants in each of the locations also consented to completing follow-up activities. These activities included: 1) a self-reflection, interview, and essay exercise, and 2) a data diary. These exercises were intended to gather additional information about how these Millennials think about news and information, what news and information is important to them, and how they follow a news story of interest.

All participants received a monetary incentive for the discussion and an additional incentive to complete the follow-up activities. With the consent of the participants, all but one of the interviews were videotaped. There was a lead moderator for each group, and additional researchers asked probing questions. While there was a moderator guide to provide some direction, the interviews were meant to simulate a casual conversation to learn more about 1) how Millennials conceptualize news, 2) what topics and types of news Millennials value and why, and 3) how Millennials engage with news—or not—and how this has changed for them over their lifetime.

Across all sites, 17 Millennials between the ages of 18-24, and six between the ages of 25-34, were interviewed. The Chicago interviews took place in a coffee shop downtown. The San Francisco interviews took place in a coffee shop in the Financial District. The Oakland interviews were conducted in a downtown coffee shop. The Fredericksburg interviews took place outside a dining hall in a university building.

Chicago, Illinois

For the Chicago interviews, The AP-NORC Center commissioned a recruiter, FocusScope, to pre-recruit “friend groups” of Millennials, age 18-34. In each group, one participant was initially recruited by FocusScope, and he or she was asked to bring a friend or two to the discussion. The participants were recruited based on age, and to achieve a mix of demographics—income, education, race/ethnicity, and gender. All of the recruited respondents reported that they read, hear, or watch the news at least once a day.

Bay Area—San Francisco and Oakland, California

For the Bay Area interviews conducted in San Francisco and Oakland, AP-NORC commissioned Nichols Research to pre-recruit four friend groups. Again, recruiting was done based on age, a mix of demographic groups were recruited, and all recruited respondents reported that they read, hear, or watch the news at least once a day. In addition, there was an emphasis on finding respondents in San Francisco who identified as being always online and connected, as well as extremely tech-savvy. For the Oakland groups, respondents who were not always online were targeted, and they were not recruited based on the tech-savvy criteria.

Fredericksburg, Virginia—University of Mary Washington

For interviews conducted in Fredericksburg, AP-NORC staff used an intercept approach where participants were recruited onsite at a student center at the University of Mary Washington. Groups of friends were approached and asked if they were available to participate in the interviews in the next half hour. Three groups of participants were recruited this way, two pairs and one group of three.

Contributing researchers

From the American Press Institute

Tom Rosenstiel
Jeff Sonderman
Kevin Loker
Liz Worthington

From The Associated Press

Emily Swanson

From NORC at the University of Chicago

David Sterrett
Jennifer Titus
Jennifer Benz
Trevor Tompson
Dan Malato
Rebecca Reimer

About the Media Insight Project

The Media Insight Project is a collaboration of the American Press Institute and The AP-NORC Center for Public Affairs Research with the objective of conducting high-quality, innovative research meant to inform the news industry and the public about various important issues facing journalism and the news business. The Media Insight Project brings together the expertise of both organizations and their respective partners, and involves collaborations among key staff at API, NORC at the University of Chicago, and The Associated Press.

About the American Press Institute

The American Press Institute (API) conducts research and training, convenes thought leaders, and creates tools to help chart a path ahead for journalism in the 21st century. API is an educational non-advocacy 501(c)3 nonprofit organization affiliated with the Newspaper Association of America. It aims to help the news media, especially local publishers and newspaper media, advance in the digital age.

About The Associated Press-NORC Center for Public Affairs Research

The AP-NORC Center for Public Affairs Research taps into the power of social science research and the highest-quality journalism to bring key information to people across the nation and throughout the world.

The Associated Press (AP) is the world’s essential news organization, bringing fast, unbiased news to all media platforms and formats.

NORC at the University of Chicago is one of the oldest and most respected, independent research institutions in the world.

The two organizations have established The AP-NORC Center for Public Affairs Research to conduct, analyze, and distribute social science research in the public interest on newsworthy topics, and to use the power of journalism to tell the stories that research reveals.

The founding principles of The AP-NORC Center include a mandate to carefully preserve and protect the scientific integrity and objectivity of NORC and the journalistic independence of AP. All work conducted by the Center conforms to the highest levels of scientific integrity to prevent any real or perceived bias in the research. All of the work of the Center is subject to review by its advisory committee to help ensure it meets these standards. The Center will publicize the results of all studies and make all datasets and study documentation available to scholars and the public.

The post About the study appeared first on American Press Institute.

from American Press Institute http://ift.tt/1P514Nl

Download a PDF or topline results

For printing and offline viewing, a PDF version of this report and the topline survey results are available for download.

The post Download a PDF or topline results appeared first on American Press Institute.

from American Press Institute http://ift.tt/1GgbHp5