BenefitCost Analysis of Preschool Education W Steven Barnett

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

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

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

CPC: Academic and Social Benefits at School Exit

Perry Preschool IQ Over Time

Perry Preschool: Educational Effects

Perry: Economic Effects at Age 27

Perry: Arrests person by age 27

Abecedarian IQ Scores Over Time

Abecedarian Reading Ach. Over Time

Abecedarian Math Achievement Over Time

Abecedarian : Academic Benefits

Abecedarian: Benefits to Mothers and Children

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

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

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

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

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

Comparably Calculated Costs and Benefits for the 3 Studies

Economic Benefits ($2002)

Similarities and Differences Across the 3 Studies n n n 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

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

Population Characteristics Perry Maternal HSG (entry) 21% Two Parents (entry) 53% IQ at age 6 (control) 86 Adult Arrests (control) 4. 0 Juv. Arrests (control). 6 Chi. Abec. 64% 32% 24% --93 --1. 5. 8 ---

General Context - 2000 Mean HH Income College Grad (pop) Ypsil. $41, 000 Chicago $54, 000 Chapel H $64, 000 20% 19% 37% $. 98 (IL) $. 05 (NC) Cigarette $1. 25 (MI) Tax (per pack)

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

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

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