Universal Pre-K as an Investment

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This post is about Universal Pre-K. For those of you who are interested already, skip this paragraph. For those of you who are not interested, I’m sure you have your reasons. Maybe you can easily afford private preschool for your children. Or, perhaps your kids have already aged out. You may not be planning on having children at all. Well, I have a question for you. Do you like saving money? If so, read on. Because Universal Pre-K is a policy that pays for itself.

In the United States, school is compulsory in most places from ages 5 or 6 until ages 16 to 18 (depending on the state). As a result, preschool enrollment is far from universal. Indeed, less than half of children ages 3 and 4 attend a preschool program. And, like just about everything else in the United States, attendance is unequal. Just over 40 percent of 3- and 4 year-old children with parents near the poverty threshold attend. That number is closer to 55 percent for children with higher-income parents.

You might be thinking, “big deal.” After all, what do kids learn in Pre-K anyway? Last time I checked, Duck-Duck-Goose didn’t come into play at many jobs. Well, it turns out kids learn a lot, and with long-lasting effects. And the kids that benefit the most? Those from lower-income backgrounds who are least likely to go to Pre-K in the first place. Don’t believe me? Let’s turn to the research.

Assessing the Value of Universal Pre-K

Research into the value of early childhood education has to contend with difficulties. The biggest one is something called “selection.” Because preschool isn’t mandatory, the students who attend are not random. They may have high-income parents who can afford private options. Or, their parents may be very engaged, as evidenced by doing the work to get them enrolled. In these cases, the effect of preschool would appear too good — the kids attending have other things going for them. Or, their parents may be very low-income, making the children eligible for public preschool. These parents may lack the time or resources of wealthier parents. In this case, preschool could appear not so good — because the kids face other barriers. Either way, selection is a problem for researchers.

To get around this problem, researchers can rely on something called “random assignment.” Some kids who apply for the study are given access to a preschool program while others are not. I want to talk about two such studies — The Perry Preschool Program and the Head Start Impact Study — and discuss why they suggest preschool is worth the cost.

The Perry Preschool Program

The Perry Preschool Program is an O.G. of research on the benefits of early childhood education. Perry was a randomized trial involving 123 disadvantaged, low-SES Black children during the mid-1960s. Some of the children were assigned to a high-quality preschool program. The curriculum encouraged problem solving, asking children open-ended questions about how they accomplished tasks and having them explain their actions to teachers and peers. Perry also engaged with families, giving parents strategies and activities for helping their children learn. The remaining children had no interaction with the Perry program. All of the students then entered the same public school system and were followed by researchers. For…a…very…long…time.

Today, the Perry Preschool participants are in their 50s. And, as documented by James Heckman and a team of researchers in 2010, the long-run impacts of the program are remarkable. For example, female Perry students were nearly three times as likely to graduate high school. At age 40, male participants were 40 percent more likely to be employed than men left out of the program. And, both men and women saw increases in yearly earnings at age 40 of 20 to 30 percent.

But, more remarkable than these economic impacts was the impact on anti-social behavior as measured by crime. Of non-participants, 65 percent of women and 95 percent of men were arrested at least once by age 40. For participants in Perry, the numbers were substantially lower, at 56 and 82 percent, respectively. The absolute number of arrests was lower too. For example, male non-participants were arrested 33 percent more times than Perry participants –12.4 versus 8.2 times.

Did Perry accomplish these changes by dramatically altering academic performance? Not quite. Something else was at play.

Why Perry Worked

When I hear the phrase “early childhood education” I think of improvements in the “three R’s”: reading, writing, and arithmetic. The truth is that these skills improved for Perry participants, but mainly for women. Which raises a bit of a puzzle. If Perry had no impact on these sorts of cognitive skills for men, how the heck did it improve their long-run economic outcomes? I’m glad I asked.

Let’s turn once again to James Heckman, who with a different team produced another interesting paper on the topic in 2012. It turns out, in addition to traditional cognitive measures like IQ, the Perry project collected data on personality traits. And these traits were used to construct a measure of students’ “externalizing behaviors.” It turns out, changes in externalizing behaviors are key to what Perry accomplished. But, what the heck are these behaviors?

According to the Encyclopedia of Personality and Individual Differences, externalizing behavior “comprises any of a wide variety of generally antisocial acts (i.e., acts that violate social norms and/or are harmful to others).” In the Perry data, these sorts of behaviors included disruption of the classroom, stealing, lying, cheating, and aggression towards peers.

It turns out, the program significantly reduced these behaviors for both men and women in the long-run.  And, according to Heckman, this reduction explains much of the increases in earnings and reductions in crime experienced by Perry attendees, especially men. To quote Heckman and his co-authors: “[t]he reduction in externalizing behavior, which explains the bulk of the effects of the Perry program on criminal, labor market, and health behavior outcomes, is especially strong.”

So, it seemed Perry had long-run impacts, with “soft skills” being a big part of the explanation. Do all studies come to such a neat conclusion? Not quite.

The Head Start Impact Study (HSIS)

Head Start is the United State’s federal pre-school program for low-income families. In 1998, congress mandated that the program — which serves about 1 million children — be evaluated. The result was the HSIS, a longitudinal study of about 5,000 three- and four-year old children that started in 2002 and has followed children through the 3rd grade. Like Perry, the study took advantage of random assignment. Half of the students who participated in the study were given access to Head Start, the other half did not have access to Head Start.

But, the study also had some differences from Perry. For example, Perry focused on a single program with a single curriculum and parental visits. The HSIS looked at over eighty different Head Start preschools, each with different curriculums, the majority of which lacked home visits. And, a third of students in the HSIS study who were not assigned to Head Start attended preschool elsewhere. In the Perry experiment, most students who did not attend Perry simply did not attend preschool at all. As we will see below, this difference is important.

At a first glance, the results of the NHIS study are enough to give pause about the benefits of Universal Pre-K. While the children were in Head Start, the effects were universally positive. Head Start students showed significant benefits in terms of literacy and language, as well as in their health. But, these benefits largely “faded out” by the time the students were in the 3rd grade. This fade out led some conservative writers to gleefully call Head Start a waste of money. To which I’d say: calm down.

HSIS and Students on the Margin

As I mentioned above, evaluating any voluntary program is hard. The people who enter are “selected,” and may be different than those left out. For example, imagine trying to investigate a job training program. The people who enroll may do very well. But, they were also motivated to enroll in the first place. If you expanded the program, you may get less motivated people who do less well. Any research into the value of the program needs to consider this possibility.

Head Start is no different. In the case of HSIS, random assignment is designed to get around the issue. But, the random selection is within applicants. This can still introduce selection, since only certain people apply. A 2015 paper by Patrick Kline and Christopher R. Walters looked at this issue in the HSIS data. They found an odd pattern. Basically, the students most likely to enroll in Head Start gained less from the program than others. The authors argue this could occur because these kids were more likely to use other preschool if they hadn’t got into Head Start. This would make the program appear less valuable for these types students, since they had other options.

In any case, the consequence of this pattern, to use the authors’ words is that there “are large benefits for children [who are] less likely to attend the program.” Kline and Walters work suggests that expansions of the program to this population are likely to be extremely valuable. A naïve look at the NSIS data misses this point.

So, how valuable is a dollar spent on Pre-K?

The Rate of Return of Pre-K

In the 2010 Heckman paper I mentioned above, the authors attempt to estimate the rate of return of the pre-school program that they looked at, the Perry program. The rate of return of an investment is the payment each dollar generates in a year. If the rate of return is 10 percent, a dollar invested earns 10 cents of income.

Wait a second…am I implying a dollar of government spending can more than pay for itself? Yes I am. Remember, Perry increased employment and earnings, while decreasing crime. Do you know what costs the government money? Benefits for people who are unemployed, or incarcerating people. So, reducing those things saves the government money. Save enough money, and the preschool pays for itself.

And that’s exactly what the Heckman paper finds. They suggest a rate of return of the Perry program of 7 to 10 percent. Is that a good rate of return? Well, the historical rate of return on equities is about 5.6 percent. So, if you could, you’d be better of investing in a child’s preschool than the stock market. To put it differently, the authors find that, extrapolated over the lifetime of the individuals affected, a dollar spent on preschool could be worth 4 dollars in savings.

It’s Time for Universal Pre-K

When I think about the policy debates going on now, I can’t help but be disappointed. Right now, it seems the most intense discussions are on infrastructure. And, look, I don’t think that’s a bad thing. Infrastructure spending is a great way to improve the labor market for middle-income adults. But, a large body of research suggests that spending on adults has nowhere near the return as spending on kids.

And, this return completely ignores other benefits of Universal Pre-K. For one thing, it’s a great way to take pressure off of mothers, freeing them up to work more if they want to. (For moms that would rather do home care, Universal Pre-K could easily be optional, unlike mandatory K-12.) Indeed, research suggests that spending on early childhood education is one of the best ways to reduce the gender wage gap. And, worried about the record low fertility rates reported during COVID? Spending on early childhood education increases fertility too. Turns out making it easier to have young kids makes people more likely to have young kids. Who would have thought?

I can’t help but feel that part of the problem is our societal impatience. When society builds a road, there’s a cost. But, there’s also a road and a job. The benefit is obvious and immediate. When society spends on Universal Pre-k, the benefit is slow to develop. The Perry project makes that crystal clear. The academic benefits are smaller than the behavioral ones. And, those behavioral benefits only make themselves clear in the long run. Unfortunately, our impatience is costly. We are missing out on a great investment.

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