The Return on Early Childhood Education Investment (The Benefits of Investing in Other People’s Children)

The Return on Early Childhood Education Investment (The Benefits of Investing in Other People’s Children)

With the President’s plans for universal Pre-K defined, the next step is state implementation. While the states can qualify for funding under the President’s plan by meeting certain criteria, a state-level investment will still be a necessary part of the equation.

Beyond its appeal to moral convictions, every investment needs a solid justification – preferably one that is based on a good return on investment. Over the last several weeks, a number of articles have touched on the investment in early childhood education and the return it can bring – to individuals, families and communities.

The Heckman Equation

Nobel Prize winning economist James Heckman from the University of Chicago is one of the proponents who has been making a strong case for this investment. One of the foundations of his argument is what he calls The Heckman Equation:

Invest – Invest in educational and development resources for disadvantaged families to provide equal access to successful early human development.

Develop – Nurture early development of cognitive and social skills in children from birth to age five.

Sustain – Sustain early development with effective education through to adulthood.

Gain– Gain a more capable, productive and valuable workforce that pays dividends to America for generations to come

Heckman’s economic studies suggest a nearly 10% annual rate of return to the state on money invested in early childhood education. Not bad, by any standard.

Investing in Other People’s Children

But let’s look at this from another perspective. We tend to hear a lot about return on investment to the state. What about to each of us? And what about to those of us who do not have children? Economist Timothy Bartik, from the Upjohn Institute in Michigan addresses these concerns in a recent TED Talk. His talk is definitely worth a look because it gets right to the point and answers the questions on many people’s minds: “Why should I pay more taxes to invest in other peoples’ children? What’s in it for me?” His answer…

When other peoples’ children get more skills, it increases the prosperity of everyone including those whose skills don’t change. Metropolitan areas such as Boston, Minneapolis and the Silicon Valley, are growing because they have high levels of skills, not because they are low cost. So when we invest in other peoples’ children and build up those skills, we increase the overall job growth of the metro area.

Bartnik cites studies that show that a modest investment in preschool programs on our part as residents of a state can lead to sizable increases in the future earnings of students who will later become workers in that state (as much as a 10% increase for low-income students), which can significantly improve the state’s economic profile as a whole, and benefit us directly, as residents.

Support from More than 300 Business Leaders

The Department of Education announced on their blog that a group of more than 300 business leaders from 44 states signed a letter in support of early learning investment. The letter states:

We rarely have the luxury of making business investment decisions with as much evidence as we have to support the economic value of investing in early care and education… We ask our federal representatives and our business colleagues around the country to give all children the chance to fulfill their potential and create the best workforce and economy in the world.

Whether we’re looking at the benefit to the state, to each of us as individuals or to the business community, the research shows a solid return on investment. Now it’s time to act. Drop a comment below and tell us about your favorite justifications (economic, moral or otherwise) for investing in early childhood education.


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