Journal Issue: The Next Generation of Antipoverty Policies Volume 17 Number 2 Fall 2007
Expected Benefits of Our Proposal
Because our proposed early childhood education intervention is not an exact replica of existing programs, much less of an existing large-scale program, determining its longterm benefits necessarily requires some assumptions and guesswork. Our assumptions about take-up rates, as noted, imply that about 30 percent of children receiving subsidies under our program (that is, from families with incomes below three times the poverty line) would otherwise be in Head Start, about another 20 percent or so would be in state pre-K programs, just over 10 percent would be in other forms of center-based care, and the rest would be in some form of parental or other informal care arrangement.
The net impact of our proposed program will be based on the difference in effects between our early childhood education intervention and the effects of the other early childhood and child care programs that participants would have experienced in the absence of our program. Based on our reading of the evaluation literature, our program’s effects on early childhood test scores would range from about one-third to one-half of a standard deviation.39
Our proposed intervention may have other long-term benefits for society as well. One study of the Perry Preschool program estimated that taxpayer benefits were four times as large as benefits to participants. For example, the study found that Perry Preschool reduced criminal activity: 83 percent of the control group had been arrested by age forty, as against 71 percent of the treatment group.40
With the most recent estimates suggesting a benefit-cost ratio for Perry Preschool on the order of 13:1, if our assumption about program effects is even close to being correct, then the early childhood program that we propose would easily pass a benefit-cost test.41 If our program’s net lifetime benefits are one-quarter to one-half as large as those for Perry, and our net program costs to the government (after expected offsets) are about the same as Perry’s, then the expected ratio of benefits to costs would be between 4:1 and 7:1.42 The benefits of our proposal would likely rival or exceed any of the social investments now available.
How to go from effects on short-term test scores to effects on what is ultimately of interest for this volume of The Future of Children— adult poverty status? We assume that our program’s long-term effects on adult poverty will be proportional to its effects on short-term test scores relative to those of Perry Preschool. In unpublished calculations that he generously shared with us, Clive Belfield found that Perry reduced adult poverty rates by about one-fifth at age twenty-seven and one-quarter at age forty. If our program’s long-term effects are about one-third to two-thirds as great as those observed for Perry Preschool, then our intervention would reduce the chances of adult poverty for program participants by between 7 and 17 percent. If we assume that our program would reduce the risk of future poverty for children only from families with incomes below three times the poverty line, then under our assumption that about 80 percent of children from these family backgrounds would participate in our program, our proposed intervention would reduce future poverty by roughly 5–15 percent. (Put differently, the net effects of our program might be around one-quarter to one-half as great as those from Perry Preschool.)
Finally, we note that our proposal will reduce both future and current poverty. The provision of subsidized care may result in increased parental employment and work effort, and thus, in turn, higher earnings for participating families. Moreover, poor families with three- and four-year-olds who participate in the early childhood education component of the program receive $8,000 worth of services, while those in afternoon child care receive an additional $4,000 of services a year. A good portion of this spending amounts to “near cash” income for the poor families and should figure into a poverty status calculation based on an expansive definition of family income.