Last week I attended the Society for Benefit-Cost Analysis’s annual conference in D.C. This was the first time the Society had met in person in four years, having canceled the 2020 conference just weeks before it was scheduled in March of that year.
This year’s conference was a doozy. Presentations ranged on topics from distilling a large evidence base for a topic to factoring the marginal value of money into cost-benefit analysis to variable discount rates due to risk. But the keynote everyone was excited about was given by Nobel Prize-Winning Economist James Heckman.
James Heckman is 78 years old but speaks with the spryness of someone decades younger. Heckman won the prestigious John Bates Clark Medal in 1983 for his work on time series analysis. In 2000, Heckman was awarded the Nobel Prize in Economics for his work overcoming statistical sample-selection problems.
What makes Heckman so compelling for me, though, is the practicality of his insights. Despite much of Heckman’s work seeming to be rooted in esoteric econometric matters, he has become most famous in policy circles for his championing of early childhood education.
In particular, Heckman has analyzed the long-term effects of two famous early childhood programs: the Perry Preschool Project and the Abecedarian Project.
The Perry Preschool Project was a randomized early childhood program conducted in the 1960s that we now have six decades of data on. The program was offered to low-income African-American children age three and four who were assessed to be at high risk of school failure. Participants in this early childhood program were arrested less before age 40, had higher income, were more likely to graduate from high school, and even had higher IQs later on.
The Abecedarian Project was a similar program conducted in the 1970s in North Carolina. This study was also a randomized controlled trial but took the treatment a step further, offering education to children starting as infants. Participants ended up with better educational outcomes, higher college matriculation, less teen pregnancy, less marijuana abuse, and less depressive symptoms.
Heckman has championed the Perry Preschool model as not just a model for increasing educational, crime, and earnings outcomes for participants, but even for their children. Now that generational data is available on this program that is over half a century old, Heckman argues that early childhood education is a powerful tool for breaking the cycle of intergenerational poverty.
This research is backed up by the research of another giant of the economic policy world and benefit-cost analysis Timothy Bartik. Bartik started doing applied economic analysis focusing on tax incentives and evaluating how their design contributes to improvements in local wages. He was approached by a foundation that was interested in applying his economic development model to early childhood programs.
The worry these funders had was that local leaders would shy away from funding early childhood programs because the children who receive the education would move away and the benefits would not accrue locally. If this were the case, local policymakers would be funding a program that would be building the workforce of other cities.
Bartik’s research found that indeed these benefits would accrue locally. He used results from the Perry Preschool and Abecedarian projects and found that local wage benefits would outweigh the cost of the programs, even factoring in how many children would move away from the local jurisdiction over their lifetime.
Perry Preschool and the Abecedarian Project are only two small-sample studies, but it is not often that we get a randomized controlled trial with accompanying panel data that follows the participants for decades. Only a handful of studies follow a panel of people through their life course like this one and very few are focused on the results of a randomized controlled trial. While there is always more data to collect and evaluation to conduct, the evidence brought forth by economists like Heckman and Bartik suggest early childhood education is indeed a good investment.