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Benefit-Cost Analysis of Preschool Education

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.

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Benefit-Cost Analysis of Preschool Education

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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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