The economics of pre-school

The Wall Street Journal's Real Time Economics weblog has an interesting post by Deborah Solomon on the economics of pre-school

James Heckman, University of Chicago economist and 2000 Nobel prize winner, has become a key advocate for pre-school, with his work routinely cited by everyone from Sen. Hillary Clinton to state legislators. But his interest in early education happened in a roundabout way.

In the early 1990s, while doing work evaluating government job programs, he noticed that the reason minorities weren’t going to college at a greater rate was not because they couldn’t afford it but because of “ability gaps.” Minorities were more likely to be lacking in both cognitive and non-cognitive abilities, making it more difficult for them to excel – or even stay — in school.

He grew interested in finding out when those gaps first occur and was surprised to discover that they take place in a child’s formative years.

“I happened to notice that ability gaps opened up very strongly at ages 3, 4 and 5,” Mr. Heckman says, adding those gaps “were so predictive of a range of behavior.”

That discovery helped fuel his belief that intervention efforts need to happen while kids are still very young, before they even get into Kindergarten. “If we wait too late the costs of remediation are high and they’re higher than anything we’ve paid so far,” he said. Mr. Heckman is part of a growing cadre of economists — Federal Reserve Chairman Ben Bernanke among them — who see pre-school as a cure for inequality. (Read more in a page-one WSJ article here.)

In 2004, he and a colleague produced a paper with some landmark findings, including that pre-school could reduce crime, keep people off welfare and boost taxes down the road. His paper has been cited by legions of pre-school supporters, who tout the economic benefits as a strong reason to fund pre-school.

But while Mr. Heckman is a proponent of early education, he believes it should be targeted solely at disadvantaged kids and not all kids, as some advocates propose.

“You go where the marginal returns are the highest and they’re highest with disadvantaged children,” he says. He fears that all the economic data – including his own — has produced a “rush to judgment” that has convinced some camps to pre-school for everyone will produce the greatest return.

“It worries me a lot,” he says. “Science doesn’t support universality … we have to approach it more cautiously.”

Comments

[The Cynical Libertarian]

That was a great article until "who tout the economic benefits as a strong reason to fund pre-school." If the benefits are so great, and minorities can afford to go to college, surely they can afford pre-school? Thus, the focus should be on letting them know that pre-school is a great idea rather than subsidizing an already efficient sector. We don't lack supply, we lack demand.

[The Cynical Libertarian]

That was a great article until "who tout the economic benefits as a strong reason to fund pre-school." If the benefits are so great, and minorities can afford to go to college, surely they can afford pre-school? Thus, the focus should be on letting them know that pre-school is a great idea rather than subsidizing an already efficient sector. We don't lack supply, we lack demand.

[The Cynical Libertarian]

That was a great article until "who tout the economic benefits as a strong reason to fund pre-school." If the benefits are so great, and minorities can afford to go to college, surely they can afford pre-school? Thus, the focus should be on letting them know that pre-school is a great idea rather than subsidizing an already efficient sector. We don't lack supply, we lack demand.

[The Cynical Libertarian]

That was a great article until "who tout the economic benefits as a strong reason to fund pre-school." If the benefits are so great, and minorities can afford to go to college, surely they can afford pre-school? Thus, the focus should be on letting them know that pre-school is a great idea rather than subsidizing an already efficient sector. We don't lack supply, we lack demand.

[Arthur Eckart]

Some place a low value on education (in both minority and majority groups). The opportunity cost is too high, given U.S. (relatively) low-skilled and high-paying jobs (including overtime). Some jobs don't require a lot of education. Often, experience is enough to raise or maximize productivity. When parents don't value education, typically, their children won't either. The most cost efficient way to increase education may be for parents to be educated about the value of education. Another low cost way, to increase education, is to pay less educated workers less and more educated workers more for the same job, given prior opportunity costs.

[Arthur Eckart]

Also, I may add, most U.S. employers have performance reviews, which are typically based on productivity. Education could be included through tax credits. Increased education levels of the workforce may spill over to children.

[Freddie Sirmans]

Just browsing the internet, your blog is very, very interesting.

[W. Steve Barnett]

My work over the past 25 years is much of the basis for current understanding of the economics of investing in early education. The externalities are very large, monetary benefits far in the future, and outcomes for any individual child are highly uncertain, thus parents have far less interest in investing in an expensive preschool education program than does the general public. Moreover, research has shown that parents are poor judges of the educational effectiveness of programs (though this is an area where more information might be useful in affecting demand).

[Arthur Eckart]

W, perhaps, children who need preschool the most have parents who value education the least. Also, an expensive preschool education has a high opportunity cost to poor (or less educated) parents. The outcome for any child is uncertain. However, it seems, a preschool education will increase the child's chances.

[Arthur Eckart]

The study above states: "You go where the marginal returns are the highest and they’re highest with disadvantaged children..." However, true costs are rarely overestimated. A cost efficient way to increase the quantity and quality of education can help more children and society.

[Arthur Eckart]

W, what study (or studies) concludes "parents have far less interest in investing in an expensive preschool education program than does the general public," based on the three factors you cited?, i.e. "externalities are very large, monetary benefits far in the future, and outcomes for any individual child are highly uncertain."

When parents place their children in expensive private schools, they forgo the free or prepaid benefits of public schools (also, typically, public schools are better in affluent areas). So, those parents pay twice (although, some students attend both private and public schools simultaneously and receive two diplomas). It would seem income and parent's values are more influencial determinants. The idea seems to be to give children an advantage or a head start in education. So, they won't lag other students and receive better grades. When students perform well, they may be more interested in education.

[HealOurWaters]

Interesting topic!

Meanwhile, there is an economic report in a couple weeks showing that cleaning up the Great Lakes will turn out to be CHEAPER in the long-term. Take a look at the site:
http://www.healthylakes.org/

[Silkroad]

Excellent. If I had $1 to allocate I'd put more on pre-school, then primary and secondary school. Subsidizing disadvantaged children should help more than universal subsidies. To be fair to others, the children should pay back what they've received. It is government's investment on a person but most of the return is reaped by the person himself

The pre-school subsidies should then be a form of non-interest government loan. Beneficiaries should repay when they reach a certain age, say 25

[Danny L. McDaniel]

That is one of the most reasoned, practical and uplifting economic stories I have read in a long while. It is too bad that economic analysis of that kind couldn't be applied to more facets of the American lifestyle and government spending.

Danny L. McDaniel
Lafayette, Indiana