Funding Childhood Programs Improves Life and the Economy

Ensuring that kids have a chance to succeed is the best thing we can do for society. If children of all backgrounds and stations in life get the support the need from the start then all of us benefit, not just the child. We have known this for years, but it’s important to remember now as we face “uncertain times” when traditionally right-wing leaning individuals call for budget cuts and “austerity”. A recent study has proven that for every dollar spent on early childhood programs the government actually earns $7.3 back.

This paper quantifies and aggregates the multiple lifetime benefits of an influential high-quality early-childhood program with outcomes measured through midlife. Guided by economic theory, we supplement experimental data with nonexperimental data to forecast the life-cycle benefits and costs of the program. Our point estimate of the internal rate of return is 13.7%, with an associated benefit/cost ratio of 7.3. We account for model estimation and forecasting error and present estimates from extensive sensitivity analyses. This paper is a template for synthesizing experimental and nonexperimental data using economic theory to estimate the long-run life-cycle benefits of social programs.

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