Pre-K quality: even slight improvements have large economic benefits, which justify even large costs to improve quality

One argument made in my new book, From Preschool to Prosperity, is that even slight improvements in preschool quality can be shown by the economic logic of educational investments to have large benefits. This justifies spending quite a bit of money to improve quality even slightly.

Over a career, the average American has large earnings. Even for low-income families, the average child can expect to have future earnings, over their entire lifetime, whose “present value”, as of age 4, sums to over one-half million dollars. (“Present value” adjusts future dollars down in value to reflect that dollars today are more valuable because they could be invested and earn interest.)

Suppose there is some quality improvement in a pre-K classroom. Even if this quality improvement only improves average future earnings by a very small percent, when we sum this quality improvement over an entire career, and over all the children in the classroom, we get a very large economic benefit. If the investments in training or teacher selection or curriculum that lead to this quality improvement lead to quality improvements for more than one year, the sum of benefits over multiple subsequent years will be even greater.

For example, suppose some quality improvement in pre-K classrooms increases average future earnings of children in that classroom by only one-half-of-one percent. (In the real world, this “average effect” might in many cases consist of helping some children, but not all children, by much more.) The benefits per child of this improvement will be about $2,500 in increased present value of earnings (1/2 of 1% times one-half million dollars in expected future earnings). If there are 15 children in the classroom, the total benefit for the entire class is $37,500 ($2,500 times 15). If the investment in quality improvement has benefits that last for three years, then total benefits of the quality improvement will exceed $100,000 (adding the $37,500 over three years, with some discounting for the last two years). Spending up to $100,000 to achieve such a quality improvement would be worth it from an economic benefit to cost ratio. This could pay for quite a bit of curriculum improvement, teacher training, higher teacher salaries, or teacher hiring incentives, if these measures actually improved classroom quality.

Based on studies of the relationship between kindergarten entrance test scores and future earnings, achieving a future earnings improvement of one-half of one percent would only require average kindergarten entrance test scores to improve by about 0.7 percentiles (for example, moving a student from the median to the 50.7th percentile, with their test scores greater than 50.7% of all entering kindergartners, or from the 30th percentile to the 30.7th percentile). It seems plausible that investments in pre-K quality improvements might be able to achieve such test score improvements, or even greater improvements.

We don’t know as much as we would like about how pre-K quality is affected by different investments. But we do know that even slight increases in quality have large effects. This justifies great effort to discover what quality investments work. And it also poses a challenge for researchers: even slight improvements that are hard to detect empirically may have benefits greater than costs.

From an economic perspective, quality in pre-K matters a lot.

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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