The Economic Case for Investments in Young Children

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The Economic Case for Investments in Young
Children
Rob Grunewald
Federal Reserve Bank of Minneapolis
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Human Brain DevelopmentSynapse Formation
Dependent on Early Experiences
Language
Higher Cognitive Function
Sensory Pathways (Vision, Hearing)
FIRST YEAR
-8 -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Birth
(Months)
(Years)
Source C. Nelson (2000)
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Barriers to Social Mobility Emerge at a Very
Young Age
1200
College Educated Parents
600
Cumulative Vocabulary (Words)
Welfare Parents
200
16 mos.
24 mos.
36 mos.
Childs Age (Months)
Source Hart Risley (1995)
4
Risk Factors for Adult Substance Abuse are
Embedded in Adverse Childhood Experiences
Self-Report Alcoholism Self-Report
Illicit Drugs
40
16
35
14


30
12
25
10
20
8
15
6
10
4
5
2
0
0
ACEs
0
1
2
3
4
5
0
1
2
3
4
Source Dube et al, 2002
Source Dube et al, 2005
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Risk Factors for Adult Heart Disease are Embedded
in Adverse Childhood Experiences
3.5
3
2.5
Odds Ratio
2
1.5
1
0.5
0
1
2
3
4
5,6
7,8
ACEs
Source Dong et al, 2004
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High/Scope Study of Perry Preschool

• In early 1960s, 123 children from low-income
  families in Ypsilanti, Mich.
• Children randomly selected to attend Perry or
  control group.
• High-quality program with well trained teachers,
  daily classroom sessions and weekly home visits.
• Tracked participants and control group through
  age 40.

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Perry Educational Effects
Source High/Scope Educational Research Foundation
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Perry Economic Effects at Age 40
Source High/Scope Educational Research Foundation
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Perry Arrested 5 or More Times Before Age 40
Source High/Scope Educational Research Foundation
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Perry Average Number of Months Served in Prison
by Age 40
Source High/Scope Educational Research Foundation
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Perry PreschoolCosts and Benefits Over 62 Years
Source High/Scope Educational Research Foundation
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Perry Preschool Estimated Return on
Investment

• Benefit-Cost Ratio 16 to 1
• Annual Rate of Return 18
• Public Rate of Return 16
• Heckman Reanalysis 10

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Benefit-Cost Ratios for Other Longitudinal
Studies

• Abecedarian Educational Child Care
• 4 to 1
• Chicago-Child Parent
• 7 to 1
• Elmira Prenatal/Early Infancy Project
• 5 to 1

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Short-Run Benefits

• Allow parents to enter workforce
• Reduce absenteeism and turnover
• Attract businesses

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Lessons Learned from Research

• Invest in quality
• Involve parents
• Start early
• Reach at-risk population
• Teach cognitive and noncognitive skills
• Bring to scale

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Moving Forward

• Prenatal/early infant home visits for at-risk
  mothers
• Access to health care
• Parent education
• Quality child care
• Access to preschool

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