Norfolk Public Library (NPL) partnered with the students of Old Dominion University’s (ODU) Strome College of Business Department of Economics to assess the economic impact of the libraries in Norfolk and...
Norfolk Public Library (NPL) partnered with the students of Old Dominion University’s (ODU) Strome College of Business Department of Economics to assess the economic impact of the libraries in Norfolk and expand on the previous calculations of the return on investment (ROI) for the City of Norfolk.
The study identified direct and tangible benefits such as books, magazines, computers and online databases and indirect benefits, including employee wages, equipment and contracts as well as induced expenditures such as library employee spending at local businesses. Additionally, intangible benefits including study and meeting spaces, improvement of human capital and critical thinking skills, fulfillment and culture.
“We regularly review our operations to ensure we are providing the most value to our community. Working with ODU provided an outside evaluation that confirmed NPL is effectively using its resources,” stated Sonal Rastogi, Director of Libraries.
Quantifying the value of tangible products and services that are used annually by NPL’s patrons has been complemented by quantifying the intangible and indirect benefits. ODU’s study incorporated three methods: a Value Calculator (in use by NPL since 2014), a 95% Confidence Interval (two standard deviations) and a Regression Analysis (seven socio-economic factors).
The Value Calculator assigns dollar amounts to products and services provided by NPL, multiplies the dollar value by the number of times each product or service is used then sums the values to obtain a total value. This was used along with the Indirect Economic Impact Formula to calculate the indirect economic impact of the library, including the original non-material expenditures and induced expenditures. The total ROI is then the sum of the Value Calculator and Indirect Economic Impact Formula. For NPL, that total is $3.33, meaning for every dollar invested in the system, the return is $3.33.
The second method studied was a 95% Confidence Interval, which provides a range of values within which 95% of observations lie. A total of 37 library systems were used for analysis to determine a range of values. The study showed an average ROI of $5.23 and median of $4.99 with a sample standard deviation of $2.17. Based on this analysis, NPL’s ROI lies within a range between $0.89 and $9.57.
The final method used was Regression Analysis to study the socioeconomic variables effects on NPL’s ROI. Using the RIO and socioeconomic data for 37 public library systems as well as Norfolk’s, a model was created to estimate the ROI for NPL. This showed that for every dollar invested in NPL, a total benefit provided is $4.72.
The overall economic study completed by ODU’s students reveals the positive return on investment, including both direct and indirect benefits. NPL provides more than the tangible and measurable products and services and the inclusion of these additional benefits provides a better true value of the system to the community.
Value Calculator and
Indirect Economic Impact Formula
$1.91 $1.42 = $3.33
95% Confidence Interval
$0.89 to $9.57
Average = $5.23
Source: Seay, Jennifer and Chase Brasher, Timothy Premo, Michael Harris, Grant Johnson. “The Return on Investment of the Norfolk Public Library.” 2017.