Do early childhood programs pay for themselves?

Today I continue to provide brief responses to questions I have received at presentations.

Today’s question: “Do early childhood programs pay for themselves?”

In the long-run, high quality early childhood programs are self-financing; in the short-run, a significant portion of program costs are offset by savings in remedial programs.

In the long-run, after 20 years, high-quality early childhood programs provide more than enough added revenue, and savings in government costs, to more than cover their program costs. Earnings go up, which increases tax revenue. Welfare program usage goes down. Crime goes down, which saves on prison and police costs.

Even in the short-run, high quality early childhood programs reduce the need of some kids for special education services. These special education services can cost up to $10,000 extra per year, for up to 13 years during the K-12 years. Conservative projections indicate that within 10 years after a high-quality early childhood program begins, over half its program costs will be covered by reductions in special education costs.

However, in the short-run, early childhood programs require an initial expenditure of funds,  which is not immediately offset by cost-savings. This is why early childhood programs are an investment. The immediate extra costs of early childhood programs will yield future benefits, which include but are not limited to long-term financial benefits for the government and taxpayers. As with all investments with long-term benefits, the willingness to make such short-term sacrifices for long-term benefits requires the ability to be patient and take the long view.

The policy challenge posed by early childhood programs is part of a broader challenge facing the U.S. over many issues: do we have the ability as a society to take the long view in making important policy decisions?

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.
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