HICKS: Early-childhood education benefits the economy

October 23, 2010

Several years ago, the research center I worked in was asked to do a study of the economic effects of early-childhood education.

Early-childhood education is essentially pre-kindergarten. The state, West Virginia, was considering expanding the K-12 school offerings in a few test counties. The U.S. Senate wanted an honest assessment of the potential long-term effect on the economy and on state budgets.

Frankly, I wanted to duck the study. We were terribly busy and, though my kids were in a university laboratory early-education center and I saw firsthand how they responded, I was dubious. I doubted that we’d find that early-childhood education boosted the economy because the data was hard to come by. I also worried that, because most benefits accrued so long after the expense, the present value of benefits would be less than zero—an all-too-common occurrence in government programs.

I also have to admit that I like the smell of diesel exhaust and new asphalt, so plunging into the economics of diapers and pre-literacy programs hardly filled me with gleeful anticipation (though for the record I am a wicked-good diaper changer).

We began the study by reviewing several long-term studies of the effect of early-childhood education. The studies we looked at were all imperfect in some way. That’s understandable, since a great study would track students from pre-K into adulthood, preferably across a diverse sample of students.

Since we didn’t have time to track students, we approached the problem by building a big simulation, or “what-if” model. In this “what-if” approach (formally a fiscal micro-simulation model), we took the findings from other studies and added them across different areas. Earlier researchers had estimated the effect on high school dropout rates, while others estimated how much better kids with early-education experience could read in fourth grade.

Some daring researchers figured out how much less the probability of going to prison was among these students, while some measured the added value of having their parents in the labor force. Our approach was more tedious than brilliant, though knowing that colleagues at the Rand Institute and University of Chicago were working on the issue buoyed our resolve.

Once we added up all the benefits of early-childhood education, we subtracted the cost of providing this schooling. Remember, the costs occur now, but the benefits happen well down the road, so we had to account for inflation and value the future less than the present. The results were shocking.

The return on investment of early-childhood education was clearly positive. We double- and triple-checked the numbers, ran the simulation again, and still the benefits were positive. In terms of investment, we found early-childhood education outweighed virtually everything else government could do to boost long-run economic performance and enhance educational outcomes.

Serious research often holds delightful surprises. This study surely did. West Virginia now has a statewide coordinator of early-education programs, and a serious interest in offering them around the state.•


Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.


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