The Heckman Equation and the relative difficulty of human capital investments

Ezra Klein links to a New York Times article by James Warren about Nobel prize-winning James Heckman’s arguments for greater early childhood investments. (Full disclosure: Professor Heckman has written a favorable blurb for my book Investing in Kids, part of which is at the top of this blog.)

Mr. Warren’s article highlights the argument by Professor Heckman that early childhood investments have higher returns than K-12 investments:  Heckman “contends that high-quality programs focused on birth to age 5 produce a higher per-dollar return than K-12 schooling…”

The way I would formulate this insight is that it is more difficult to have high-return investments in K-12 schooling, not that it is impossible to do so. The most straightforward and easy investments in early childhood investment have higher returns than the most straightforward and easy investments in K-12.

For example, in chapter 7 of investing in Kids, I estimate the impact of financing universal pre-k education by reducing K-12 spending. I assume that this K-12 spending has the same returns as economists such as Alan Krueger have estimated for lower class size in early elementary school. I find that the reduced K-12 spending would only offset about two-fifths of the positive benefits of universal pre-k for a state’s per capita earnings.

But this does not mean that more difficult reforms in K-12 could not have high returns relative to their monetary costs. Education reformers such as Kevin Carey at Education Sector and Sara Mead at Bellwether Education Partners are right to say that there are many reforms that could significantly improve K-12 education without huge monetary costs.

For example, there are potentially big gains to improving K-12 teacher quality, as shown by a number of studies, including a study by Robert Gordon, Thomas Kane and Douglas Staiger. However, implementing a system that will reliably improve K-12 teacher quality is by no means easy and straightforward. For example, there are very significant issues in how to measure teacher quality, as has been pointed out in studies by Jesse Rothstein.

As I argued in an earlier post, the advantage of early childhood investments is that there are high returns to programs implemented in a straightforward way by average quality agencies. We need not achieve some extraordinary subtlety of program design to get high economic benefits from early childhood programs.  We only need to change our thinking about what age it is appropriate to begin public policy involvement in education. Quality matters for early childhood programs, but it can be readily achieved on a large scale by typical agencies.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
This entry was posted in Early childhood program design issues, Early childhood programs. Bookmark the permalink.