Investment in Early Childhood Education Yields Substantial Gains for the Economy

Yves here. It says a lot for the state of policy thinking that the justification for educating children from disadvantaged families is that “it’s good for the economy” as opposed to “it reduces inequality” or (heavens!) “it increases social stability by increasing the perception of fairness and legitimacy of the leadership class.”

Bear in mind that the question of whether classes that focus on giving low-income kids a better chance, like Head Start, actually pay off has been contested. The nay-sayers argument goes that even though Head Start students show better educational results, they fade over time. That makes sense: if you send kids to a good school when they are young, and then to crap schools later, the lack of access to good education and a supportive peer group when they are learning more advanced material means they are unlikely to be able to continue to excel.

But there are other potential gains from early and more extensive pre-elementary education. Nobel prize winner James Heckman found that students that got GEDs (as in passed a high school equivalency test rather than getting a diploma_ did less well in terms of lifetime earnings and job stability than high school graduates. His belief that part of the value of school is socialization (which includes learning to comply, like show up to classes on time, get papers completed on schedule).

One of the advantages of the sort of longer-lived pre-elementary education touted in this study is likely to be softening class markers, such as accents. A colleague recently met with some field officials from a Federal regulator. They were smart and feisty, but he also noticed that many has very heavy outer borough accents. He said even though they were likely more capable technically than lawyers at firms like Kirkland & Ellis (not even terribly white shoe), their accents would have kept them from getting in the door. So one of the benefits of these early programs may be, effectively, to teach young children what amounts to a middle/upper middle class dialect that they can hopefully access later in life.

Having said all of that, another benefit of more extensive early education is that mothers can work more regularly. Higher household incomes (and less parental stress) also improve economic and educational results.

Originally published at the Institute for New Economic Thinking website

A groundbreaking study published has found that high-quality birth-to-five programs for disadvantaged children can deliver a 13% per child, per year return on investment through better outcomes in education, health, social behaviors and employment — which reduce long-term taxpayer costs and equip country’s workforce for a competitive future. Nobel economics laureate and Institute for New Economic Thinking Advisory Board member Professor James Heckman and colleagues from the University of Chicago and the University of Southern California’s Schaeffer Center have released their findings in a Human Capital and Economic Opportunity working group paper titled The Lifecycle Benefits of an Influential Early Childhood Program.

Heckman, Jorge Luis García, Duncan Ermini Leaf and María José analyzed the effects of two identical, random-controlled preschool studies conducted in North Carolina in the early 1970’s: The Carolina Abecedarian Project (ABC) and the Carolina Approach to Responsive Education (CARE). Heckman had previously established a 7-10% return on investment based on the analysis of  the Perry Preschool program, which served 3- and 4-year-olds. ABC/CARE was a comprehensive model from birth to age 5 which combined health, nutrition, family engagement, child care and early learning and in turn provided long-term benefits that far outweigh the costs.

By calculating the value of child care in helping mothers enter the workforce and of ABC/CARE’s health benefits, the researchers confirmed a higher rate of return over the long term. The beneficial adult health outcomes, particularly the reduction in metabolic syndrome among males, were quantified by Heckman’s colleagues at the USC Schaeffer Center. The researchers also found that ABC/CARE was one of the few programs that permanently boosted IQ. According to Heckman, “that lasting effect in cognition, combined with increased social and emotional skills that are known to drive achievement, were factors in better outcomes and returns on investment.”

Heckman and his colleagues believe their findings underscore the need for increased access to comprehensive, high-quality child care and preschool options for disadvantaged children and families. “High-quality early childhood programs can boost the upward mobility of two generations by freeing working parents to build their careers and increase wages over time while their child develops a broad range of foundational skills that lead to lifelong success,” noted Heckman. “The data speaks for itself. Investing in the continuum of learning from birth to age 5 not only impacts each child, but it also strengthens our country’s workforce today and prepares future generations to be competitive in the global economy tomorrow.”

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  1. Chris

    Thank you for posting this!

    I always wonder how much of the resistance to a national policy on pre-school and early education for disadvantaged children is due to the stigma of “women’s work” that teachers labor under. And then there’s the high cost of reasonable, certified, state approved care, which middle and upper middle class people pay in many of the urban areas where such programs could do so much good. The argument seems to be, “it’s not valuable work and we can’t let them into the same programs that my children are enrolled in, so we shouldn’t have it at all.”

    I think the problems of perception will have to be handled before we deal with issues of how you scale this kind of thing up to a national level. Studies like this giving education advocates a chance to defend their position with terms business people understand are a great step in that direction.

    1. Ray Phenicie

      I agree about the optical aspect of so called assistance programs; the same analysis could be applied to: Medicaid, Food Stamps, Rent vouchers, disability benefits, unemployment benefits, Mass Transit (where buses are the main form of transport): Lordie, Lordie the list goes on and on. The stigma attached to riding the bus system here in SE Mich almost made me fearful or using it when I was forced out onto it. I believe there is a fear factor attached to all of the programs mentioned above and including Head Start-people are leery of utilizing the assistance for fear of being stigmatized for having to go to the lengths of using the programs. It may as well be a Scarlet Letter being plastered on your head as to admit to utilizing Medicaid, riding the bus system to work and accepting a rent voucher.

      1. Carla

        Our fear and loathing of poverty in this country translates to a naked fear and loathing of poor people. It never fails to amaze me, and I think it may be our most profound collective failing. Also, it may well be inextricable from our racism.

  2. Fco

    The best childcare is with the mother herself.
    However, the downside to this is that after the children are raised, nurtured, educated and living lives on their own, the mother is pressured to go out and work when all she has is a ” blank” resume. Employers today don’t necessarily want to hire a middle aged woman who has stayed home the past 20 or so years.

    1. Sandy

      Depends on the mother. Mothers are not infallible. Letting kids out of the home and into educational and social programs early gives a chance to those kids who are being raised in ignorant or abusive environments to receive critical education early on when the home is not providing it.

      1. Cry Shop


        One of the observations many educators in Asia have picked from studies here and in North America is how often even percieved “good” parents, particularly mothers, can be detrimental to their child’s development. Parents project a great deal of their own goals and asperations on a child, instead of finding what is the child’s native, natural interests and ability.

        Some of the happiest, most ballanced and sucessfull expat kids I have met in Asia were products of hippy parents who participated in the (non-religious) kibbutz movements of the 1960-80s, where day-time creche activities start soon after birth.

        1. tony

          Humans are pack animals. Human children have for almost all of our evolutionary history been raised by a community of a hundred or so people.This was true even for prehumans, although the groups were smaller.

          1. Moneta

            My father always said that it takes a village to raise a child… not just a mother.

            When I became mother I got very anxious… what will happen to them if something happens to me? So I made sure my children were attached to many people.

  3. funemployed

    As an education person, I have to push back on this one. The “education” component has very little to do with the increased gains, and imnsho, frequently has a counterproductive effect when young children are forced to do academic work (which is virtually always rote and boring at this level), instead of what they do naturally, which is learn about everything in their environment at rate utterly incomprehensible to us adults.

    There were actually two major studies of statewide pre-k programs published in the last few years (sorry, have to pack, can’t find links right now – will try to find later if there’s interest here), that showed that gains didn’t only disappear within a few years, but that by third grade those children who had been enrolled in pre-k were actually behind their peers by the measures (questionable in their own right) by which these things are deemed successful.

    Finland, who everybody wants to be like, doesn’t begin academic education until children are 7, because they understand child development, and so rightly focus on social and emotional development, and providing rich and stimulating environments. They also understand that whether a child speaks in complex sentences at 3 or not until 6, or learns to read at 8 instead of 4, really doesn’t matter in the long term. Brains just develop that way. (Einstein was a pretty late bloomer, and turned out ok). Children need food, rest, love, respect, organic and pleasant exposure to language and knowledge and culture, and a rich and stimulating environment to explore as they see fit for the most part. Spelling and cursive can always be learned more easily later when they get that stuff. We don’t need high-quality pre-K education, just high-quality free public daycare run by someone who really gets child development (a development psychologist usually, not an educator). This, of course, would be socialism, whereas somehow pre-k isn’t perceived as such.

    The reason for this is an inference embedded in the dominant rhetoric, which this post doesn’t specifically hold to, but is worth explicitly rejecting given the context. Education can fix poverty for an individual, or a group of individuals, but only relative to others. If the distribution of income and wealth in a society is such that 20% of children are in poverty, education cannot effect that except insofar as it acts to genuinely distribute real power (it was designed to do the opposite, which is why those of us who follow the teachings of Dewey are almost entirely marginalized). Absent that, for every poor child who gets out of poverty, another gets tossed in. That’s why day care is socialism and early “education” isn’t. Only the latter allows us to continue blaming the poor for their own situation. The sad truth is the only macro, long term way to boost the scores and life chances of poor children is to lift them out of poverty, but instead we use our meritocratic faith in education and bootstraps to justify keeping them there.

      1. FriarTuck

        Two minutes in Google can reveal that those “blanket statements” about Finland are indeed supported by a variety of sources.

        Compare your country: Finland (PISA)

        “From Finland, an Intriguing School-Reform Model”

        “Why Are Finland’s Schools Successful?”

        “The Children Must Play”

        “The Joyful, Illiterate Kindergartners of Finland”

        Finnish Lessons: What Can the World Learn from Educational Change in Finland?

        Early childhood education and care, Finnish National Board of Education

        So let’s review: a country has decided to take advantage of the natural inclination of children to explore and learn at their own pace and not force them into becoming drones. And the result is that they have a more successful education system than the US’.

        Such ideas are dangerous? Please.

      2. Michael

        You’re not contradicting funemployed; if the real thing that improves kids’ cognitive development is stimulation, age-appropriate exposure to concepts, and stability, then formal pre-K and more sensible daycare will show similar results, if the formal pre-K is smart enough to basically just be daycare (which most is).

      3. Carol Black

        A Brookings Institution paper has data showing that supporting families directly — as many Northern European nations do — is more effective than pre-K at boosting children’s outcomes: “Empirical comparisons of the impact on school achievement of boosting family income vs. providing free pre-K for four-year-olds, summarized in this paper, suggest that supporting family income is a more cost effective expenditure. A policy midpoint between more money for families vs. more money for pre-K is more money for families to spend on their young children.”

    1. Steve

      Academic performance does converge as noted in the article. What perseveres are the softer societal skills. Heckman has shown this, in other research, that children with early childhood eduction are significantly less likely to have drug problems, be in jail, have children out of wedlock, etc.

      Just looking at academic performance is inadequate. Will be fun to see if Charles Murray has a response…

    2. H. Alexander Ivey

      As a fellow education person, I wholeheartedly agree. Your posting is spot on and commendably free of rant (except for the Dewey aside, I’ll have to look that one up).

      Yes, in the US with its elites soaking in the neo-liberal mindset of everything is relative to the dollar, ‘education’ is always, improperly, measured in terms of its economic potential. Your last paragraph is the proper response to the US’s idea of pre-K education. (Puts me in mind of Pink Floyd’s lyrics from Another Brick In The Wall: “Hey! Teachers! Leave them kids alone! … All in all you’re just another brick in the wall.”

  4. funemployed

    Had to dig these up a while back, thought readers of NC might be interested in education spending in the US.
    Roughly 650 billion – Federal + state + local government
    Roughly 2 billion – personal teacher expenditures on school supplies
    Roughly 1 billion – Foundation giving
    A lot, but nobody knows how much – Community fundraising, fees (sports, technology, etc), and donations of time and stuff by community members.

  5. JohnnyGL

    Many families and neighborhoods are demographically different these days than many years ago.

    1) There’s a lot more aging baby-boomer neighbors who can’t/won’t help with childcare. Also, not nearly as many people have kids at all these days.

    2) Larger distances from, and weaker relationships with, extended families.

    3) Staying home with kids is generally more common among the working classes who can’t earn the wages to justify paying for very expensive childcare, who are often more socially isolated because of 1) and 2). You can see this in the EPOP ratio, which has disproportionately fallen for prime child-bearing aged women, last time I looked at it.

    We definitely need more publicly funded child care. Again, make it universal, not targeted, so that it’s not seen as “welfare”.

    Personally, my 2 year old is a lot more bratty and clingy to mom when she’s at home with mom all day. And by the time I get home, both of them are in foul moods from battling each other all day. Get the little one off to day care so she can play and get mom out of the house to work! Everyone ends up happier!

    1. FluffytheObeseCat

      The midcentury sentimentalists on this board, and entering the White House, are not going to listen to you. They like the idea of children at home with dear mother; the reality of isolation and boredom does not appeal to them. And if an isolated, single family dwelling is boring, well…… it’s the mother’s fault! Her inappropriate aspirations are damaging you see.

      My kid didn’t speak or potty train until I went back to work part time as an adjunct at a community college. It was light, part time work; she was in a Head Start program for 3-4 hours, 3-4 days a week. And speaking in complete sentences above her age level before the end of her first semester. Most developmentally normal children benefit from active, communal environments. They are usually safest in extended family settings. Lacking those, part time exposure to small groups (like in Head Start) helps them.

      Dislike of Head Start etc. is a characteristic of the right wing subset of the over-credentialed. Just like excessive love of government meddling is a characteristic of the other subset. The knowledgeable non-idiotologues are too busy trying to find kind and decent childcare to post on boards like this one.

      1. jrs

        I don’t’ know school is pretty boring as well, who doesn’t remember being bored out of their mind in school.

      2. Katharine

        I would have hoped someone who is qualified to teach college students would have developed enough intellectual honesty to avoid generalizing about mid-century sentimentalists. Not only false, it sounds rather snotty.

  6. Jim Haygood

    “One of the benefits of these early programs may be, effectively, to teach young children what amounts to a middle/upper middle class dialect.”

    I was smarter than most, and I could choose
    Learned to talk like the man on the six o’clock news
    When I was eighteen, Lord, I hit the road
    But it really doesn’t matter how far I go

    — Don Williams, “Good Ol’ Boys Like Me”

    Kids with a bit of personal panache might aspire to be rappers or country singers (as the case may be) and just forget about mastering Received Pronunciation.

    The rain in Spain stays mainly in the plain, Eliza.

  7. Anonymous

    Education may be the only occupation that requires you to donate $ to the organization you work for in order to be successful in actually accomplishing your goal of educating other people’s children.

    1. skylark

      A joke among teachers: Teaching is the only profession where you steal stuff from home and bring it in to work.

  8. Kris Alman

    None of the research is new. Investments in “human capital” and “economic opportunity” gave birth to social impact bonds.
    The first of the constraints is around financing. This problem is twofold. First, budgets allocated to early childhood development are often far below the levels needed for the quality programming necessary to ensure that children reach their greatest potential later in life. Second, a focus on inputs alone leads to sub-optimal levels of service quality, which results in children not receiving the proper health care, education and social protection needed for them to develop to their highest capacity.

    Philanthrocapitalists privatize Head Start with social impact bonds.

    From 2003 to 2005, I worked on a long-term research project for civic group, Portland (OR) City Club. Report available here:
    The Early Years: A City Club Report on the Care and Education of Children from Birth to Age Five
    Mar 16, 2006 7:00 PM; Volume: 87 Issue: 42

    Little did I know that the Board of Governors had an agenda for research and interviews. Lots of smart, “liberal” people on the committee–including one young man who was planted by the Oregon Business Council (OBC) those specific years. His job there lasted the same length of time we convened the committee.

    I made the not-so-startling conclusion that poor and middle class working mothers can’t afford quality childcare. I suggested that we ask the Oregon Legislative Revenue Office to estimate costs and to advocate for a corporate income tax to fund it. The young man brought this idea to the OBC and they promptly vetoed it. End of story! I left the committee before we finalized the report, unable to sign on to it.

  9. dbk

    There was an interminable discussion across three posts concerning charters/voucher schools on crookedtimber last week, and this issue arose several times. There were nearly 400 comments across three threads, many of them extending to short essay length, including several by yours truly. One of the discouraging aspects of the discussion was that some commenters couldn’t grasp the role of poverty in contributing to the failure of inner-city schools, despite repeated attempts to point this out. “Give them choice”, and all will be well. Or not – cf. the fate of the Detroit, Flint, Newark systems under the choice regime.

    One of the commenters, Leo Casey, is an expert in educational research, and his remarks are really worth reading. The scientific case for early-childhood care (creche, daycare, preschool, etc.) derives from the evidence of neurologically-based cognitive/social development and is considered sound (assuming you believe in science, of course).

    Anyway, I suspect this discussion is moot now. As others have been following the nominations for State, Commerce, Treasury, Labor, Interior, EPA, I’ve been following the nominee for Secretary of Education, who has actively supported and sponsored for-profit charters and vouchers over two decades in her native state of Michigan. I anticipate a movement away from public schools to charters and private religious institutions through the use of vouchers, with especially strong support for Christian for-profits.

  10. diptherio

    It says a lot for the state of policy thinking that the justification for educating children from disadvantaged families is that “it’s good for the economy” as opposed to “it reduces inequality” or (heavens!) “it increases social stability by increasing the perception of fairness and legitimacy of the leadership class.”

    I was thinking, “how about it’s good for children?” All things, however, must serve the great god Economy, even the children {sigh}

    1. Steeeve

      Yes! Should we fund education? Hmm, let’s see…what’s the ROI on educated kids? Brings my thoughts back to changing the dialogue to considering something more like the wellbeing metrics posted about recently.

    2. Julie

      Thank you for this. It’s good for the children isn’t a satisfactory reason for anything, due to the fact that they rarely have helpful amounts of money to loan. And they’re notoriously tightfisted with their toys, too.

  11. mle detroit

    “One of the advantages of the sort of longer-lived pre-elementary education touted in this study is likely to be softening class markers, such as accents,” i.e., learning to sound white…or something. I noticed decades ago that my late-teen brother (in a monolingual upper middle class WASP family) spoke 3 American English dialects: ‘street’ to use with his friends, ‘proper’ to use with parents and teachers, and something in between for girlfriends and sisters. Served him well.

    Anyway, the platform:
    1. Medicare for all
    2. Headstart for all
    3. Let’s sell Russia or China one of our unneeded military boondoggles

  12. Eric377

    My sense is few people who already pay a hefty property tax are keen on many ideas that seem to run very parallel with the interests of teachers and other public unions. So what is the investment here? Why some more teachers and administrators, certainly, and public sector day care workers at $58,000/year and full pensions in 20 years. If Tennessee wants to go for it, great. Or Pueblo, CO. But I’m going to guess that chins will be slowly stroked and then – huzzah! – it would be most appropriate as a federal program. Such a surprise.

  13. Moneta

    The resistance is incredible despite good results. I experienced the system in Quebec and the one in Ontario. Night and day.

    In Quebec it was 5$ per day universal. In grade school there is before and after care. You pick them up at school.

    In Ontario, a nightmare. Hodgepodge. Waiting lists for those at school. And home daycares when you wait… but you better find one in the same zone for buses! And expensive.

    When I try to explain that the Quebec system is better. Indignation… socialist and they will go broke!

    Then I say how can they go broke when the ratio is 20/1 and it’s for a max 3-4 hours per day and they are using empty classes? The money covers the costs.

    The 1/1 and 5/1 ratio groups are expensive but not the 20/1. But the population is brainwashed into the status quo of stressful living.

  14. Julie

    Another study shows that giving poor families cash results in higher test scores for children than attending preschool does.

    Most preschools are not high quality. In fact, most are crap. I’ve worked in preschools that I wouldn’t enroll my dog in. I’m not surprised that funneling money through these institutions may not be as helpful as giving poor parents money directly to help provide for their children. Rent paid, car fixed, food in the fridge= less stress, more quality time with the kiddos.

  15. nonsensefactory

    First, this statement only works with a major qualifier:

    “Investing in the continuum of learning from birth to age 5 not only impacts each child, but it also strengthens our country’s workforce today and prepares future generations to be competitive in the global economy tomorrow.”

    “Competitive” in the neoliberal global system means they must accept the same wages as Chinese and Indian laborers doing similar (blue-collar) work; this is the central factor driving the rising wealth gap in the United States. You also have the influx of skilled H1B labor driving wages down for traditional white-collar jobs. The only beneficiaries are upper management and investors, who pocket the reduced labor costs. The brilliant Ha-Joon Chang analyzes this in his 23 Things They Don’t Tell You About Capitalism.

    Second, what kind of education are we talking about?

    The rise of the standardized multiple-choice test is symptomatic of an educational system geared towards indoctrination and rote learning, not towards promoting inquisitive explorative learning, independent thinking, and analytical and creative abilities. It’s become a system designed to turn out cogs for a machine, which is why so many intelligent children are bored to death with it – and what happens then? They are classified as “disruptive”, diagnosed with “ADHD”, and drugged up with Ritalin, Adderall, etc.

    This kind of mentality has also entered into upper academic institutions, with their obsession with for-profit patentable research, secrecy contracts for graduate students, and public-private partnerships with corporate interests. Forget about sharing of research data, forget about the advances in basic science that benefited applied research, forget about independent research groups. Corporations, instead of financing their own applied R&D departments, instead now rely on public universities to do their proprietary research. One major result is that data is routinely fudged and manipulated to promote the interests of the corporate partner. As study after study shows, highly biased results are extremely widespread when research funding comes from a corporate partner.

    In many ways, this is kind of like what happened to Soviet science under people like Lysenko – it lost its independence and became subservient to the state’s agenda, and only those who followed the ideological agenda of the state in their educational approach and research findings advanced to leading positions in the system – the same has happened (to a lesser degree) to the American educational and research system, with corporate conglomerates playing the role of the Soviet state.

  16. The Heretic

    Children grow up in a home. Ideally, both mother and father have time to nurture them and play with them. They will spend most of their time at home, especially when less than 2. Who comforts them at night, who holds them and interacts with them the most, especially when they are sick? Hence if we really want to invest in children, we must also invest in their parents… stable decent jobs that are not too time demanding or excessively stressful, parental support systems, since parents will always need advice/coaching/reassurrance for their little people, and parents also get stressed…

    The neoliberal tunnel vision that children can be invested in, as if they are an asset seperate from the parents who raise them, is patently ridiculous.

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