Responsible Researcher: Bruno Benevit
Original Title: The Dynastic Benefits of Early Childhood Education
Authors: Jorge Luis García, Frederik H. Bennhoff, Duncan Ermini Leaf and James J. Heckman
Intervention Location: United States
Sample Size: 123 children
Sector: Education
Variable of Main Interest: Program cost-benefit
Type of Intervention: Educational assistance
Methodology: OLS, AIPW, LASSO, Probit
Summary
The problem of social mobility for African American children represents a persistent social problem in the United States. The establishment of policies aimed at changing this context is essential, especially in the educational field. In this sense, several studies have investigated the effects of the Perry Preschool Project , a program focused on the educational development of African-American children in situations of social vulnerability. This study analyzed the effects of the program on indicators of education, income, crime and health throughout the lives of treated children, in addition to presenting several cost-benefit analyzes for the program. The study also presents new evidence related to the effects of early childhood education programs on family members. The results indicate that the program led to improvements in all indicators, in addition to being efficient in terms of cost-benefit. The same effects were identified for the children and siblings of the original treated participants.
The problem of social mobility for African American children represents a persistent social problem in the United States. The establishment of policies aimed at changing this context is essential, especially in the educational field. In this sense, several studies have investigated the effects of the Perry Preschool Project (PPP) program on the social mobility of African-American children in situations of social vulnerability.
According to Elango et al. (2016), at least 30% of early childhood education programs in the United States were based on PPP, highlighting the relevance of the program. This type of program has the potential to improve several factors associated with participants' social mobility, such as education, income, participation in crime and health. Therefore, understanding the prolonged effects throughout the lives of participants in this type of program provides relevant information for cost-benefit assessment and for the formulation of new policies aimed at development and social mobility.
The PPP was conducted in Ypsilanti, Michigan and was designed to stimulate the development of cognitive and non-cognitive skills in socially disadvantaged African-American women during the early 1960s. The program intervention consisted of preschool sessions of 2.5 hours during working days carried out over two years, from the age of three. Additionally, participants also received weekly visits from teachers in their homes during the two-year treatment period. No treatment of any kind was conducted for the children in the control group, and there were no treatment substitutes available in the area where they lived.
The group of PPP participants were representative of the disadvantaged African-American population in the United States, and included 123 socially disadvantaged African-American children. According to Heckman et al. (2010), 15% of African American women and 17% of African American men born in the United States during the 1960s would have been eligible to participate in the PPP. The authors calculate that these percentages represent 10% for both men and women in 2021.
The PPP randomly selected 123 socially disadvantaged African-American children into treatment and control groups across five cohorts during the early 1960s. Participant eligibility criteria were based on IQ scores and socioeconomic status. from research at the school, references and visits. Participants in the treatment and control groups were followed through several rounds of data collection until age 54. At the age 54 follow-up, when data on the original participants' siblings and adult children were collected, 83% of the 123 participants were interviewed; 12% of participants were not interviewed because they had died.
The learning process involved planning, execution and reflection activities guided by teachers. The students and teachers were from the catchment area served by Perry Elementary School in Ypsilanti, Michigan. Teachers carried out reports on the process. In terms of values in 2017, the program had a total cost of 21,151 US dollars per participant (Barnett, 1996), including operational costs (teachers and administration salaries) and capital costs (classrooms and facilities). This value was used as the basis for the cost-benefit analyzes of this article.
The sample used was constructed from data collected by PPP participants in interviews carried out, on average, at 15, 19, 27, 40 and 54 years of age. In addition to the participants, the interviews also collected data regarding their siblings and children (up to 5 older ones) in the interview carried out at 54 years of age. Only siblings born before the implementation of the treatment and up to 5 years apart from the original program participant were considered. The data presents children's information on socioeconomic aspects, IQ at 3 years of age (start of the program), education, income, participation in crimes and health.
The study evaluates how participants who underwent the intervention were affected in their life cycle in terms of education, income, participation in crimes and health. In order to provide greater robustness to the evidence found, the econometric methods of Ordinary Least Squares (OLS), augmented inverse probability estimator (AIPW), Least Absolute Shrinkage and Selection Operator (LASSO) and Probit were applied.
To evaluate the cost-benefit of the program, the authors created an aggregation variable of the benefits added to the participants' life cycle based on the variables of interest listed above. The authors adopted different approaches present in related literature for each topic to compute the aggregate benefit of each variable of interest (García et al. , 2021). From these computations, the ratio between the value of this aggregation variable and the cost of the program was considered in two ways: (i) considering the cost directly, equivalent to 21,151 dollars in 2017, and (ii) considering the cost multiplying the amount of 21,151 dollars by 1.5, in order to consider the 50% efficiency loss resulting from tax collection to finance the program.
The main analysis of the study presented estimates of the intervention's cost-benefit effects for each variable of interest relating to education, income, crime, health and total effects for PPP participants. Values in 2017 US dollars were considered and discounts were applied for the year in which the program began using a rate of 3%.
The authors also conducted a series of robustness tests and were used to verify the validity of the identified results, considering different estimation methods, optimistic and pessimistic scenarios in relation to the costs considered, and alternative ways of measuring the benefit arising from the program intervention.
Finally, the study presented a cost-benefit analysis for the participants in the treated group, their siblings, their children, their “dynasty” (original participant and their children) and their “extended dynasty” (original participant, their children and their siblings). Due to the age of the participants' children, health analyzes were not performed.
The results of the main analysis demonstrated that treated individuals received fewer years of special education and retention in basic education (elementary and secondary), in addition to showing an increase in years of formal education. Due to the increase in productivity caused by this improvement in human capital, the higher incomes of the treatment group generate an increase in the tax base of income collected. According to the authors, there was an average benefit from income of 43.4 thousand dollars (after taxes). Greater effects were identified for women on earnings compared to men.
Regarding the effects on participation in crimes, the results indicated that treated participants showed less participation in crimes, resulting in a reduction in criminal justice costs and monetary costs for victims in the order of 79.3 thousand dollars.
Regarding the impact on the health variables of interest, the estimates showed an increase in health expenses in the treated group. These increases occur for both private and government medical spending. This behavior can be explained by the increase in income earned for this group, so that better health conditions significantly exceed health expenses (García et al. , 2021). Additionally, added to the increases in health spending, the better health behavior of those treated leads to a lower mortality rate at age 54.
When considering the benefits arising from education, income from work, costs of the criminal justice system and health system costs, and costs of crime victimization, the results identified that the intervention provided a significant cost-benefit ratio between 6.0 and 9.0 (considering and not considering the loss of efficiency, respectively). The results maintained their validity after conducting robustness tests.
The analysis of the “dynasties” showed that the positive effect of the treatment spilled over to the children and siblings of the treated participants. The children and siblings of those treated spent more on education, a behavior resulting from their greater education, as observed in relation to health. As in the main analysis, these effects are offset by increases in family income. Analogous results to those identified in the main analysis were also identified in relation to the criminal behavior of family members of the original participants. In total, benefits for children and siblings add $32,700 and $60,600 to the program benefit, respectively. The lifetime present value of the program's “extended dynasty” increases to $286,000, implying a significant cost-benefit ratio between 13.5 and 9.0 (accounting for and excluding efficiency loss, respectively).
This article verified how the PPP social development policy impacted African-American children in situations of social vulnerability. Indicators of education, income, participation in crime and health throughout the lives of program participants were observed to estimate the impact and cost-benefit of the program, as well as intragenerational and extragenerational effects.
The results present robust evidence that the program was effective in improving all estimators, in addition to being efficient in terms of cost-benefit and returns. Furthermore, the article presented new findings regarding the impact of an early childhood education program on the families of the original participants. This evidence highlights the importance of policies aimed at development and their lasting effects at the individual and family level.
References
BARNETT, WS Lives in the balance: age 27 benefit-cost analysis of the High/Scope Perry Preschool Program . Ypsilanti, Mich: High/Scope Press, 1996.
ELANGO, S. et al. Early ChildhoodEducation. In : Economics of Means-Tested Transfer Programs in the United States, Volume 2 . [sl] University of Chicago Press, 2015. p. 235–297.
GARCÍA, JL et al. The Dynastic Benefits of Early Childhood Education . Cambridge, MA: National Bureau of Economic Research, Jul. 2021. Available at:
HECKMAN, J.; MOON, SH; PINTO, R. Analyzing social experiments as implemented: A reexamination of the evidence from the HighScope Perry Preschool Program. Quantitative Economics , vol. 1, no. 1, p. 1–46, 2010.
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