[Cwizard]

How is the comparison to GDP relevant? GDP is the amount of good and services a country produced in a year expressed in some currency. An endowment is an amount of money? Totally different things I would say? But I have seen this type of phrasing a lot in the media. I don’t understand the connection.

[gt565k]

It's not really a comparison, but more so used to show you the perspective of the university's deep pockets and just how deep they are.

If a single university has a bigger endowment than the entire monetary value of produced goods and services of a country for a whole year, it gives you perspective on what that money can do when poured specifically into a single purpose (education, R&D, attracting academic talent, etc)

[importantbrian]

Well having a large endowment allows you to have a larger budget and spend more on salaries, research, instruction, etc. For example, Harvard with the largest endowment had ~$5 billion in operating expenses in 2021. That alone is more than the entire GDP of more than 50 countries. So Harvard by itself spent more money than the entire economies of 24% of the worlds countries.

[fezfight]

It's about expectations. Most folks expect that the GDP of a country would be a larger number than the endowment of any one thing. It's no deeper than that.

[unmole]

How do you feel about comparing debt to GDP?

[Cwizard]

It’s a better metric because GDP gives some insight in the potential income of a country. Although it must be coupled with current tax % to be really useful. Debt usually has monthly or yearly payments, GDP refers to yearly income. In that sense I see a relation. An endowment is just a pile of money, I don’t see a time element there.

[unmole]

> Debt usually has monthly or yearly payments

Sovereign debt, the kind that is typically compared to GDP only pays out interest periodically, not the principal.