In a previous post, I showed that under plausible assumptions, universal pre-k would have broad benefits for the middle class as well as for the poor. But how does universal pre-k compare with a preschool program that is more tightly targeted on the poor? After all, it seems reasonable to assume that preschool’s effects on the poor are higher per child. Therefore, targeting would seem to have some merit.
In chapter 8 of my book Investing in Kids, I include some comparisons of universal and targeted pre-k. I consider the benefits of a targeted preschool program that is restricted to families with less than around $34,000 of income. This is about one-third of all families.
Compared to universal pre-k, such a targeted preschool program has significantly lower costs. I estimate that this targeted program only costs one-fourth as much. Furthermore, this targeted program still makes preschool accessible to all poor children, who have higher benefits from preschool.
This targeted pre-k program has higher overall benefits per dollar invested. The overall benefit to cost ratio for universal pre-k is 2.78. In other words, for each dollar invested in universal pre-k, there is an extra $2.78 for the state economy in economic development benefits. These “economic development benefits” are higher per capita earnings for state residents. In contrast, for targeted pre-k, the ratio of state economic development benefits to costs is 7.16. This is over twice the ratio for universal pre-k.
However, the net benefits for state economies from universal pre-k, compared to targeted pre-k, are about 10% greater. Expanding pre-k to middle income families has lower returns per dollar than the returns per dollar from targeting the poor. These lower returns per dollar reduce the average returns per dollar of universal pre-k compared to targeted pre-k. But the net returns from expanding pre-k to the middle class are still positive. These positive net returns to the middle class from universal pre-k are sufficient to offset the excess of taxes over benefits for upper income households.
One could consider a pre-k program that is less tightly targeted. For example, based on these distributional assumptions, there would be even greater net benefits from a program that was “targeted”, but very broadly, at the bottom 60% of all households, with less than $62,000 in income. However, I don’t think this is what most people mean by a “targeted” preschool program. Usually “targeting” means focusing on the poor and near-poor, not including the middle class. A future blog post will consider whether charging sliding scale fees for preschool to children from upper-class families could help shape a preschool program that is more broadly targeted to include the middle class.
From a pure economic perspective, going beyond targeted pre-k to universal pre-k pays off modestly in producing net benefits. However, recall that these estimates are based on the assumption of a quite drastic tail-off in benefits from preschool as we go from the poor to the middle class. If this tail-off is less drastic, then the economic benefits from going beyond targeted pre-k to universal pre-k would be greater.
However, any analysis of targeted vs. universal pre-k must also consider the politics. I will address this in a future blog post.