Early childhood education: the economics of early versus later interventions

Nick Kristof had an excellent column on early childhood education in the October 27th edition of the New York Times. In this column, he argues that early childhood education is “the best tool we have to break cycles of poverty”.

In two previous blog posts, from 2011 and 2013, I have tried to quantify how much early childhood education in general, and preschool in particular, could do to reduce income inequality. (The 2011 blog post was commenting on a previous Kristof column, and the 2013 blog post on a Krugman blog post that made similar points about the potential anti-inequality role of universal pre-K.)

What research suggests is that universal pre-K, by itself, might increase future earnings as adults of disadvantaged children by 7% to 15%, depending upon whether we are talking about one school-year of half-day pre-K at age 4, or two school years of full-day pre-K at ages 3 and 4. Moving to high-quality full-day child-care and pre-K for all disadvantaged children from birth to age 5 might add 25% to future adult earnings of disadvantaged children. High-quality parenting programs such as the Nurse Family Partnership might add 3% to the future earnings of disadvantaged children who are part of this program, as well as having a similar magnitude of economic benefits for the disadvantaged first-time mothers who are served by NFP.

The bottom-line is that if we did all of this for disadvantaged children — high-quality parenting programs, high-quality child-care, and high-quality pre-K, at a high intensity and quality level — we would essentially make up for the impact of increased inequality from 1979 to the present on the lowest income quintile. Early childhood education by itself, if pursued at full-scale, can make up for the adverse income trends of the last 34 years, at least in terms of the impact on the earnings of the poor.

However, Kristof alludes to a point in his column, and makes a statement in his blog post accompanying the column, that could be misinterpreted. In his column, Kristof states that “The earliest interventions, and maybe the most important, are home visitation programs like Nurse-Family Partnership.” In his accompanying blog post, he expands on this point to state the following:

“…When we hear “early childhood education” we mostly think of pre-K. In fact, the earlier the intervention, the better. Helping pregnant moms avoid substance abuse is highly cost-effective, and then helping them through home visitation programs like Nurse Family Partnership in the first couple of years of life is crucial as well. By the time you get to age 4, it’s a little late, and children are so far behind that they never catch up.”

This can be interpreted as implying that we should prioritize the earliest possible interventions. I think that conclusion is inconsistent with the research.

Here’s the situation:

(1)    The highest benefit-cost ratios for early childhood education programs, particularly if we are focused on benefits for kids, tend to be for pre-K programs. For example, in my book Investing in Kids, I estimated that the ratio of future earnings benefits to costs for universal pre-K might be about 3.8 to 1. (The future earnings benefits are the present value of future earnings benefits.) The ratio of future earnings benefits to costs for a full-time child care and pre-K program from birth to age 5 is about 3.0 to 1, but only a little more than one-third of this is due to effects on the children, the rest is due to what free high-quality full-time child care does for the earnings prospects of parents.  The ratio of future earnings benefits to costs for the Nurse Family Partnership program is about 2.5 to 1, but half of this is due to benefits for kids, half due to benefits for the moms.

This pattern of relatively high benefit-cost ratios for early childhood programs at ages 3 or 4, versus programs at earlier ages (or later ages), has been previously noted by Arthur Reynolds, Judy Temple, and Suh-Ruu Ou. (See Figure 8.5, in chapter 8 of Childhood Programs and Practices in the First Decade of Life.)

(2)    Why does this pattern occur? After all, kids are more malleable at earlier ages, because neurons are forming at a higher rate.  The reason is that at earlier ages, our interventions must use lower ratios of children to adults, so the interventions are more costly.  Pre-K can get away with staffing ratios of 15 to 20 students per two teachers and still provide high-quality services to kids, assuming the teacher and curriculum is high-quality.  Child care programs prior to age 3 must use smaller child-to-staff ratios to be high quality.  Parenting programs such as NFP provide one-on-one parent visits using skilled nurses. The more individualized services that are required at earlier ages are more costly per child.

Benefits do go up from adding more staff-intensive earlier interventions. However, the benefits do not go up in percentage terms as fast as costs expand. Therefore, the benefit-cost ratios tend to be somewhat lower for the earlier-age interventions.

Pre-K seems to operate in something of a “sweet spot”. Children at ages 3 and 4 are malleable enough that high-quality interventions can make a significant difference. Yet children at these ages are ready to benefit from interventions that can take place in larger groups, which makes interventions less costly per child, or at least less costly per hour of service to the child.

(3)    At the same time, adding on these earlier interventions, even though it tends to lower benefit-cost ratios, still passes a benefit cost test. Even if we already had universal pre-K at ages 3 and 4, adding high-quality child care and parenting programs for disadvantaged families would pass a benefit- cost test.  (The available evidence suggests that such child care and parenting programs, at least in terms of benefits for children, probably are of much more benefit to children from lower-income families that for children from middle-income families. In contrast, universal pre-K tends to have similar dollar benefits for future adult earnings for children from low-income and middle-income families. )

(4)    Furthermore, at noted above, if we really want to deal fully with the earnings gaps of low income families, universal pre-K is not enough. A half-day of pre-K at age 4 raises future earnings by 7%, which is a very large benefit compare to modest costs of perhaps $5,000 per child, but does not come close to making up for growing income inequality. If we really want to deal with poverty, more intervention is necessary per child, which of course is more costly per child.  High-quality child care and parenting programs are interventions that provide valuable add-on benefits.

We need the most intensive early interventions, which begin the earliest, to fully address the challenges of childhood poverty. But policymakers must consider costs as well as benefits.  If budgetary or political constraints prevent fully addressing child poverty, pre-K programs represent a good program area for a start, as such investments can have the highest benefit-cost ratios. However, we shouldn’t stop there, but rather add earlier interventions as budgets and politics allow.

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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