One feature of pre-k programs that can “easily” be changed by public policy is class size. When I say class size can be changed “easily”, I mean that it can be changed with a simple to implement change in law or program rules. Reducing class size is NOT easy in terms of money. Reducing class size is expensive. Are the large costs of reducing pre-k class size justified by the resulting economic benefits for state or local economic development?
As reviewed in chapter 5 of Investing in Kids, lower class size in a pre-K program probably significantly improves program effects on child development. The best direct evidence comes from the National Day Care Study. Some good indirect evidence comes from the Tennessee Class Size Study. Although the Tennessee Study looked at class size in kindergarten through 3rd grade, and not pre-K, it seems reasonable that this study’s effects for kindergarten might be extrapolated to pre-K. The Tennessee Class Size Study’s effects are of interest because they were estimated based on random assignment of students to different class sizes. Random assignment makes these estimates less likely to be biased by unobservable variables.
These studies estimate effects on early test scores. In the book, I use these estimated effects on early test scores, and research relating adult earnings to early test scores, to estimate the effects of lower class size in pre-K on local economic development. The pre-k program I am analyzing is a half-day, school-year program for four-year-olds.
I find that lowering pre-K class size from 20 students per class to 15 students per class increases costs of pre-K by 28%. However, lower class size provides local economic development benefits that are three times these increased costs. As defined in the book, these local economic development benefits are the present value of the future increase in per capita earnings in the local economy. This increase in local per capita earnings is what local economic developers and many local policymakers should be trying to increase when they pursue the goal of economic development.
Therefore, lowering pre-k class size from 20 students to 15 students per class clearly passes a benefit-cost test, even when we only include local economic development benefits. Benefits of this lower class size would be even greater if we include economic development benefits that accrue outside the local economy, or if we included non-economic development benefits such as lower crime.