 estimates account the distortionary costs of raising taxes to finance the programs. There are greater monetised benefits for boys than for girls. This is primarily because of a reduction of violent crime and greater improvements in health for males. However, benefits are substantial for both. Our paper reports a range of plausible estimates that account for estimation error, forecast error, and bands of plausible estimates of the monetary benefits from reduced crime and enhanced lifetime health.
About 75 percent of the control-group children were placed in low-quality centre-based preschools. Only 25 percent stayed at home with family members. The effectiveness of an intervention is properly measured relative to the alternatives available. We estimate the benefit-cost ratio compared to (1) staying at home, (2) going to alternative, lower-quality centres, and (3) the ‘next best’ option for each child (i.e. the best of the first two options). Estimates vary across genders and the baselines used (see Table 1).
Boys are especially vulnerable to being placed in low quality preschools compared to remaining at home – whatever the quality. The benefit-cost ratio of staying at home is 3.30, but is not statistically significantly different from one. The benefits of high-quality formal care compared to low-quality formal care are considerably higher for boys compared to girls (11.46 vs 2.28). The fact that the benefits are much lower for taking boys out of the home and placing them in high-quality childcare is consistent with a large literature in psychology and economics on the greater vulnerability of young boys to being removed from the home environment (Golding and Fitzgerald 2016, Schore 2016, García et al. 2017).
Are Programmes too Costly?
A common complaint about early childcare programmes is that they are costly (Fox Business News 2014). ABC/CARE costs about $19,000 per year in 2017 dollars. Children in the treatment group remain in the program for five years.
Focusing solely on costs misses the crucial point that the benefits more than recoup the costs. Each dollar invested produces more than seven dollars of discounted returns over the lifetimes of participants. The programme promotes the social mobility and economic and social welfare of both parents and children.
Targeting disadvantaged families is an effective strategy
Early childhood programmes are effective because they supplement the environments of children from disadvantaged families. They stimulate the flow of resources into families by promoting the employment, education, and work experience of mothers by subsidising their childcare costs. As currently configured, early childhood programmes are much less effective for advantaged families who already provide high-quality early childhood support. Targeting the young children of disadvantaged families and their mothers is, however, an effective social policy (Elango et al. 2016).
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Elango, S, J Luis García, J J Heckman, and A Hojman (2016), “Early childhood education”, in R A Moffitt (ed), Economics of means-tested transfer programs in the United States, 235–297, Chicago: University of Chicago Press.
Fox Business News (2014), “Head start has little effect by grade school?“.
García, J L, J J Heckman and A L Ziff (2017), “Gender differences in the benefits of an influential early childhood program”, NBER Working paper 23412.
García, J L, J J Heckman, D Ermini Leaf, M José Prados (2016), “The life-cycle benefits of an influential early childhood program”, NBER Working paper 22993.
Golding, P and H E Fitzgerald (2016), “Pyschology of boys at risk: Indicators from 0-5”, Infant Mental Health Journal.
