Is early childhood education a good investment?

Responsible researcher: Angelo Cruz do Nascimento Varella

Article title: THE RATE OF RETURN TO THE HIGHSCOPE PERRY PRESCHOOL PROGRAM

Article authors: James J. Heckman; Seong Hyeok Moon; Rodrigo Pinto; Peter A. Savelyev; Adam Yavitz;

Location of intervention: Perry Elementary School, in the city of Ypsilanti, Michigan, in the United States

Sample size: 123 students

Big theme: Education

Variable of main interest: Internal Rate of Return (IRR) on investments in early childhood education from the HighScope Perry Program

Type of intervention: Calculation of the Internal Rate of Return (IRR) and other socioeconomic benefits from the HighScope Perry program for early childhood education

Assessment method: Others

Policy Problem

Investments in early childhood education are considered effective ways of reducing social inequality, as well as its consequences and harms, in addition to efficiently promoting economic development. We can highlight the fact that data transparency and monitoring of social and educational programs are useful tools in this process and allow the investigation of the real effects that public spending on early childhood education effectively generates for a country's society and economy.

In the United States, the economic argument in favor of investing in early childhood education uses as a basis the social experiment called HighScope Perry Preschool Program , an educational support program for children with cognitive difficulties and in precarious socioeconomic situations.

 Despite the existence of several studies indicating social and individual benefits from carrying out the program, there are researchers who question the positive results resulting from carrying out the experiment, arguing that there were problems with carrying out the program and with subsequent data collection.

Therefore, to deepen the debate and determine whether the impacts of the program were truly positive, the authors of this research carried out several statistical tests to ensure that the data and calculations of returns on investments made are truly safe and robust.

Implementation and Evaluation Context

HighScope Early Childhood Education Program was created in the early 1960s to serve students at Perry Elementary School in the city of Ypsilanti, Michigan, in the United States. The aim of the program was to identify children with precarious cognitive and socioeconomic conditions, in order to provide complementary aid to early childhood education.

The program's curricular activities were aimed at the cognitive, emotional and social development of the selected children, through specialized techniques to strengthen learning in an active way. To this end, nominated teachers and their respective families encouraged participating children to plan and reflect on daily activities according to a previously established process. Children were encouraged to make choices, solve problems and engage in activities and tasks, with a focus on reflective reasoning and logical questions.

Policy/Program Details

Selection for the program occurred through a research process that involved teachers, researchers and families associated with Perry Elementary School. From the data collected, a family socioeconomic index was developed, in addition to Intelligence Quotient (IQ) tests carried out by the children. In this way, children who lived in adverse conditions and who had performed between 70 and 85 points on the IQ test were considered disadvantaged, so that five groups of children eligible for participation were identified.

After identifying suitable participants, control groups and treatment groups were created randomly, in order to ensure the quality of the experiment. The control groups were evaluated without participating in the program, while the treatment group was made up of children who received educational investments, through classes and complementary activities.

After carrying out the educational intervention and auxiliary classes and procedures, the children in both groups were monitored and evaluated throughout their lives. Socioeconomic questionnaires were applied to all participants, at the beginning and end of the program, as well as at ages 15, 19, 27 and 40, covering aspects of their life trajectories, including schooling, economic activities, marital life, education of children and criminal records. In a complementary way, the project also gathered administrative data and public records from school, police, judicial and social assistance programs.

The Assessment Method

HighScope project generated a huge range of data, which was analyzed by several researchers over time. Consequently, there was a heated debate in the academic literature about the results obtained and the limitations of this research and the program. Therefore, the researchers of this work complemented this rich database with current data and modern statistical tests to robustly confirm the results obtained.

The researchers' main objective was to measure the Internal Rate of Return (IRR) of the program's investments. For this, the amounts invested in the program and the individual and societal returns were considered. IRR is a financial analysis metric that determines the annual discount rate that equalizes the costs and benefits of a given investment in present values. In simpler terms, IRR is a parameter that shows how much better an investment is compared to another safe, low-yield investment. Thus, the higher the IRR rate, the better the investment in question.

In addition to the IRR, the program's cost-benefit ratio was also calculated in terms of return to society, so that the results demonstrate the proportion of benefits generated in relation to investment costs.

Main Results

The results obtained show that investments made in early childhood education generate individual and collective benefits. Not only were return rates positive, cost-benefit ratios and reductions in social ills such as crime rates were better in treatment groups compared to control groups.

On average, the program's IRR was measured within the range of 7% to 10% in the different groups. This means that, on average, for every dollar invested in the program, there was an increase in the estimated return of around 60 to 300 dollars throughout the participant's life, up to the age of 65. This, obviously, in addition to the results observed for the control group, which characterizes an argument in favor of this type of investment in early childhood education.

Furthermore, the cost-benefit ratio for society was measured in the range between 7 and 12 dollars, based on a discount rate of 3%. In other words, for every dollar invested in the program, there was an extra gain for society in the order of 7 to 12 dollars, through social benefits and tax collection. It is also worth noting that socioeconomic, education and crime parameters also achieved considerable improvements in the groups served by the program's activities.

Public Policy Lessons

The study indicates that carrying out early childhood education assistance initiatives, similar to the HighScope Perry program, is beneficial to the individuals covered and to society as a whole. Practically all indicators were positive, resulting in financial and social gains, improvements in living conditions and a reduction in crime among participants. Therefore, it can be stated that it is advisable not only to replicate the program in question, in other locations and circumstances to obtain increasingly robust results, but also to increase monitoring and data collection systems, in order to remedy problems observed in the program and continue improving and increasing the initiative and subsequent research.

Reference

HECKMAN, James J. et al. The rate of return to the HighScope Perry Preschool Program. Journal of public economics, v. 94, no. 1-2, p. 114-128, 2010.