The Student Consumer Price Index Project is a research project run by the LSESU Economics Society, and the third edition of the report will soon be published. The project aims to analyse the expenditure behaviour of students at LSE and to provide an estimate of inflation amongst LSE students, as measured by a consumer price index.
The SCPI project also provides a way for students to implement what they have learnt in their courses by taking part in an empirical project, which is especially but not exclusively beneficial for students with some experience of econometrics.
Our first task was to collect the data for analysis. This was collected from a sample of the LSE population during the week 28th November to 4th December 2011.
Participants were asked to fill in a questionnaire about themselves and to keep a record of their expenditure for that week. A lucky draw with three prizes of £100 provided an incentive. With 271 questionnaires and 81 expenditure diaries, the sample size was significantly larger than last year, and this allowed for more thorough analysis.
After analysing the data we estimated the Student Consumer Price Index to be 5.71 per cent – significantly above the UK CPI of 4.4 per cent during our sample period. Potential explanations for this difference may include a difference in the spending behaviour of students in comparison to the general UK population or a difference between inflation in London and in the UK as a whole.
To analyse the expenditure patterns of LSE students, we used econometric analysis in the form of OLS regressions.
Some interesting findings were that Economics students spend more on average than students who do not study economics, especially on travel and alcohol and tobacco and that there appears to be no significant difference between the expenditure patterns of international and domestic students. We also found a significant positive effect of age on total spending.
The project will be continued next year and we hope to improve it further. One focus will be on increasing the sample size, as this should allow for more robust analysis. We also hope to be able to use more advanced econometric techniques in order to gain further insights.
Interested readers will soon be able to access the full report, which details all of our findings and provides more information on methodology, on the LSESU Economics Society Website.