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Economic Impact of Preschool Education Programs

Analysis of long-term benefits and costs of preschool programs on academic achievement, crime reduction, health and earnings, based on various studies. Learn about the economic effectiveness of different preschool programs and their impact on society.

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Economic Impact of Preschool Education Programs

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  1. Benefit-Cost Analysis of Preschool Education W. Steven Barnett, Ph.D. Director, National Institute for Early Education Research Rutgers—The State University of New Jersey sbarnett@nieer.org

  2. Three Economic Analyses Chicago-Child Parent Centers (CPC)– a half-day program on a large scale in the Chicago public schools Quasi-Experimental, n=1286 Abecedarian educational child care– a full-day year-round program in Chapel Hill, NC True Experiment, n=111, follow-up to age 21 High/Scope Perry Preschool– a half-day program on a small scale in the Ypsilanti, MI public schools True Experiment, n=123, follow-up to age 27

  3. Long-Term Effects that Generate the Benefits • These and other studies with children from low-income families find: Increased Achievement Test Scores Decreased Grade Retention Decreased Special Education Decreased Crime & Delinquency Increased High School Graduation • Gains vary with quality and age of start

  4. CPC: Academic and Social Benefits at School Exit

  5. Perry Preschool IQ Over Time

  6. Perry Preschool: Educational Effects

  7. Perry: Economic Effects at Age 27

  8. Perry: Arrests per person by age 27

  9. Abecedarian IQ Scores Over Time

  10. Abecedarian Reading Ach. Over Time

  11. Abecedarian Math Achievement Over Time

  12. Abecedarian : Academic Benefits

  13. Abecedarian: Benefits to Mothers and Children

  14. Estimating Costs and Benefits for All 3 Longitudinal Studies • Abecedarian has the most complete benefit estimates • No crime reduction benefits found in ABC study (but little crime to prevent) • No abuse and neglect data collected in Perry or ABC studies • No health effects data collected in CPC

  15. Abecedarian’s Marginal Benefits • Cost-savings in K-12 schooling • Productivity and earnings • Maternal Earnings • Welfare • Crime • Intergenerational Earnings effects • Improved Health (smoking)

  16. Abecedarian: Present Value of All Benefits Rate of Discount Benefit3%5%7% Compensation $116,861 $69,985 $44,940 K-12 Education 8,836 7,375 6,205 Smoking/Health 17,781 4,166 1,008 Welfare 196 129 85 Higher Ed. Cost -8,128 -5,621 -3,920 Total Benefits $135,546$76,034 $48,318

  17. Abecedarian: Net Present Value Rate of Discount 3%5%7% Total Benefits $135,546 $76,034 $48,318 Cost – FPG 35,864 34,599 33,421 Cost – PS 41,916 40,427 39,041 Net Present Value FPG Setting $99,682$41,435$14,897 PS Setting $93,630$35,607$ 9,277

  18. Original Estimates from Three Cost – Benefit Analyses Cost Benefit to Society • Perry Preschool: $12,000 $108,000 • Abecedarian: $36,000 $136,000 • CPC: $7,000 $ 48,000 Figures rounded to nearest $1,000. All three study’s costs and economic benefits discounted at 3%.

  19. Comparably Calculated Costs and Benefits for the 3 Studies

  20. Economic Benefits ($2002)

  21. Similarities and Differences Across the 3 Studies • Costs and benefits vary in magnitude across the three studies • Most but not all types of benefits found in all 3 studies • Programs vary in intensity and duration • Population and context vary by study • Variations in program, population, and context plausibly explain differences in BCA

  22. Program Characteristics PerryChi.Abec. Child Age 3 or 4 - 5 3 or 4 - 5 0-5 Duration Part-Day Part-Day Full-Day School Yr School Yr Full Year Entry Period 1962-65 1983-85 1972-77

  23. Population Characteristics PerryChi.Abec. Maternal HSG (entry) 21% 64% 34% Two Parents (entry) 53% 32% 24% IQ at age 6 (control) 86 --- 93 Adult Arrests (control) 4.0 --- 1.5 Juv. Arrests (control) .6 .8 ---

  24. General Context - 2000 Ypsil.ChicagoChapel H Mean $41,000 $54,000 $64,000 HH Income College 20% 19% 37% Grad (pop) Cigarette $1.25 (MI) $.98 (IL) $.05 (NC) Tax (per pack)

  25. Limitations & Future Studies 1. Small samples from a few locations: program, population and context likely affect benefits 2. Benefits included vary across studies 3. Only 1 study of child care impacts on maternal earnings, somewhat higher than econometric estimates of 10-15 percent ($2000-$3000) 4. Much is still excluded

  26. Economic Benefits Excluded • Return on education and skills in nonmarket activities (parenting, marriage, leisure) and consumer activities. • Status and consumption value of education • Better health, accident reduction • Better timing and spacing of births, less abortion

  27. Conclusions • Preschool produces cognitive and social emotional gains for children (at least disadvantaged) • Quality preschool education can be a good economic investment • Economic benefits vary with program, population, and context characteristics • Similarities and differences in outcomes and economic benefits across studies are reasonable

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