On Balance: Early Childhood Education’s Cost-Effective Potential to Improve Life-cycle Outcomes

September 11, 2019

By: Jorge Luis Garcia & Grace Guthrie Griffith

The National Center for Children in Poverty reports that 21% of American children are living in poverty, including 46% of African American and 40% of Latino children. Compared to non-poor children, on average impoverished children are 15.6% less likely to graduate high school and 37% more likely to be unemployed as adults.

Research has documented that high-quality early childhood education boosts the skills of disadvantaged children in the short-term. However, a recent series of articles finds that comprehensive early childhood education programs have positive long-term impacts on earnings, criminal activity, and health. Such programs remediate socioeconomic inequality by improving the economic prospects of their participants. While the boost in cognitive skills eventually fades away, the boost in non-cognitive skills persists over the life cycle.

The Carolina Abecedarian Project (ABC) and the Carolina Approach to Responsive Education (CARE)—the continuation of ABC—are early childhood education programs that promote skills (such as language) and cognitive development, providing treatment until age 5 for 50 weeks per year. García et al. (2018a) conducted a benefit cost analysis of these programs by monetizing the benefits of treatment for the participants over their lives, and comparing benefits to programmatic costs.

ABC/CARE improves the language and development skills of children and, subsequently, their years of education completed. Figure 1, which is reproduced from Garcia et al. (2018a), displays the average life-cycle net present values per program participant of the main components of the ABC/CARE programs. Benefits were measured from birth to forecasted death, discounted to birth at a rate of 3%. Programmatic costs are adjusted to reflect the welfare cost of taxation to fund the programs. Both benefit and cost estimates are statistically significant at standard levels, and account for forecasting and estimation error, and are adjusted for. As indicated in the figure, higher future earnings and the avoided cost of crime (to society) are significant components of the benefit of the program.

To investigate the effects of the ABC/CARE programs on crime, García et al. (2019) used criminal administrative records. As displayed in Figure 2a, reproduced from this study, there is a positive treatment effect for females for all outcomes (the number of property, violent, and drug crimes); for males, there is a positive treatment effect for only drug crimes. Although not displayed in the figure, the study found that, as a consequence of the program, men substantially decreased their participation in crimes that are very costly to society. Consequently, the monetized benefit of the reduction in male crimes (US$466,318) is much larger than the benefit of the reduction in female crimes (US$32,790). Garcia et al. (2018b) posit potential biological, psychological, and economic causes for these differences.

Early childhood education programs can also reduce the likelihood that participants will develop chronic diseases. Figure 2b below, reproduced from García and Heckman (2019), looks at the effects of ABC/CARE treatment effects in terms of reduced incidence of heart disease, stroke, cancer, and mortality across the life-cycle of participants of both genders. The female treatment group has a slightly lower mortality rate than the control group. Male mortality rates diverge over time between treatment and control, but control males are nearly four times more likely to die than treatment males by age 75. Quality-adjusted life years (QALYs) measure the value of health outcomes, combining the quality and the quantity of life into an index number. As indicated in Figure 1, for males, the increase in QALYs more than offsets all program costs (including the welfare costs of financing the program through taxation) and the increase in QALYs offsets nearly half of the program’s costs for females.



The demonstrated improvements in health and criminal behavior found by these studies are consistent with previous research that finds that early childhood education programs are effective because they boost non-cognitive skills (Heckman et al., 2013). In turn, improved non-cognitive skills produce reductions in criminal and other anti-social behavior and improvements in academic motivation, which are associated with long-term improvements in outcomes and in monetizable benefits of treatment. Figure 1 above suggests that if the only benefits were either crime or health, the programs would nonetheless pay for themselves.

The series of articles concludes with a cautionary note that we echo here. ABC/CARE was implemented in a relatively disadvantaged and predominately African-American population in a university town in North Carolina. Despite ABC/CARE’s cost effectiveness and potential to reduce criminal activity and chronic diseases, the findings may not generalize to other populations; it would be unwise to use the studies to argue for universal application of ABC/CARE across all socio-economic groups. By studying the features of ABC/CARE, we can begin to determine what cost-effective early childhood education programs may benefit disadvantaged populations, who have the largest potential to benefit from these programs.

Jorge is an applied microeconomist at the John E. Walker Department of Economics at Clemson University. I am also a visiting research fellow at Duke University’s Social Science Research Institute, a Quintiles Fellow at the Schaeffer Center for Health Policy and Economics of the University of Southern California, and a member of the Early Childhood Interventions Network of the Human Capital and Economic Opportunity (HCEO) working group.

Grace G. Griffith is a senior Economics and Criminal Justice student at Clemson University in Clemson, S.C. She is a Clemson Writing Fellow and a member of the Clemson Women's Cross Country and Track & Field teams.

References

  • García, J. L. and J. J. Heckman (2019). Early Childhood Education and Life-cycle Health. Under review at Health Economics.
  • García, J. L., J. J. Heckman, and A. L. Ziff (2019). Early Childhood Education and Crime. Infant Mental Health Journal 40(1).
  • García, J. L., J. J. Heckman, D. E. Leaf, and M. J. Prados (2018a). Quantifying the Life-cycle Benefits of a Prototypical Early Childhood Program. NBER Working Paper No. 23479, Issued in June 2017, Revised in February 2019. Available at: https://www.nber.org/papers/w23479
  • García, J. L., J. J. Heckman, and A. L. Ziff (2018b). Gender Differences in the Benefits of an Influential Early Childhood Program. European Economics Review 109, 9–22.
  • Heckman, J. J., R. Pinto, and P. Savelyev (2013). Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes. American Economic Review 103(6).