Public Policy Forum Blog

Would you invest in something with a 14 to 1 return?

Factors associated with high-quality early childhood education -- higher earnings, less use of welfare, and lower crime rates -- have been found to contribute to higher government revenues and lower government expenditures. Such are the ingredients of a cost-benefit-analysis predicting nearly 14 times the benefit compared to cost in the long-term for high-quality early childhood education. Economist Robert G. Lynch is the latest researcher to attempt to quantify the costs and benefits of high-quality early childhood education in his new book, Enriching Children, Enriching the Nation, published by the Economic Policy Institute.

Lynch estimates that a high-quality pre-kindergarten program in Wisconsin targeted to at-risk children would begin to pay for itself in 6 years. The annual cost of a fully phased-in program in 2008 would be $126 million. Total benefits in 2050 would be $5.1 billion, and costs in 2050 would be $375 million. The ratio of total benefits to costs in 2050 is 13.6 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $1.2 billion.

Estimates for a high-quality universal program in Wisconsin show higher costs due to being open to all children (i.e., untargeted), but still have significant long-term benefits. Lynch estimates that such a program would start paying for itself in 8 years, with a 2008 annual cost of $527 million. Total benefits in 2050 would be $13.4 billion, and costs in 2050 would be $1.4 billion. The ratio of total benefits to costs in 2050 is 9.5 to 1. This represents savings to Wisconsin individuals from crime reduction in 2050 of $2.5 billion.

Evidence continues to build predicting long-term payoffs for early childhood education investments that exceed the return on most private or public investments. Using the well-known research on the Chicago Child-Parent Center as a foundation, Lynch builds on past studies by producing cost/benefit estimates for the nation as a whole and for each individual state.

Lynch concludes, “Policy makers should consider a national pre-kindergarten initiative a sound investment on the part of government that generates substantial long-term benefits and not simply as a program requiring expenditures.” Results like Lynch’s are pushing many who research on regional levels to gather more local-level data to analyze what a high-quality program would really look like and cost.
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