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Investing in early childhood

By Andrew Leigh - posted Monday, 27 February 2006

The Nobel Prize winning economist James Heckman visited Australia last week. Unusually for an economist, he had a simple message to deliver: our societies are not investing enough in early childhood intervention programs. By neglecting the opportunity to help disadvantaged children we are increasing the cost of addressing problems later in life. Potentially, a dollar spent on early childhood programs is a dollar saved in building new jails.

This message should have a profound impact on policymakers (and not just because our incarceration rate (pdf file 1.25MB) has risen by 12 per cent over the past decade). For the most part, societies like Australia and the US have been reluctant to intervene to provide parenting skills to those struggling to raise their children. Yet in our squeamishness about crossing the line between public and private, we may be missing out on the best opportunity to break the cycle of intergenerational poverty, or as Heckman puts it, the biggest credit constraint is the inability of a bright child to buy good parents.

Once inequalities are entrenched, they prove surprisingly hard to break. Training programs for the unemployed, once thought to be an effective way of boosting workforce participation, often turn out to perform poorly when subjected to rigorous evaluation. Originally, researchers were optimistic because they saw that those who attended job training were more likely to get jobs.


But there's a problem with this kind of analysis - it might merely reflect the fact that the kinds of people who show up are more motivated than those who stay home. Using the same kinds of randomised trials that medical researchers use to evaluate new drugs, US economists reached the dour conclusion that for many training programs the costs exceeded the benefits.

Randomised trials are also an effective way of analysing the impact of early childhood intervention programs. During the 1960s and 1970s, three early childhood experiments began in different parts of the US. The Abecedarian Project (North Carolina), the Perry Preschool Program (Michigan) and the Early Training Project (Tennessee) each recruited among pregnant mothers from disadvantaged backgrounds, randomly assigning participants into treatment and control groups. The treatment groups received various combinations of intensive preschooling and home visits. The control group received no services, but were interviewed regularly.

Following up the groups as teenagers, the researchers found that those who received early childhood intervention had better cognitive and non-cognitive scores. As adults, the treatment group were more likely to have attended university, less likely to be unemployed, and less likely to be in jail. Although the programs were expensive, they more than paid for themselves in the long run. In the case of the Perry Preschool Program, the intervention cost about $US15,000 a child, but the benefits were $US105,000.

All very promising, but with a different racial mix and a less generous social safety net, poverty in the US is different from poverty in Australia. So what do the Australian randomised trials say about the effectiveness of early intervention?

Alas, this is where the good news story turns sour. Decades after US researchers began three randomised evaluations of early childhood programs, Australia remains too timid to implement a single randomised trial. Under the Early Childhood: Invest to Grow program, the Federal Government spends about $18 million a year. By contrast, its roads program will spend $340 million this year. Because no early intervention program has had a rigorous randomised trial, the next generation of policymakers will remain as ignorant about what works as we are.

Early in the 20th century, Australia was regarded as the "social laboratory" of the world, boldly willing to experiment with new ideas. But in the past decade, we seem to have shed the mantle of policy innovator. Unlike Britain, Canada and the US, Australian politicians have eschewed randomised trials, preferring to guess at what works and announce a nationwide roll-out.


A better option would involve more modesty and a willingness to learn from our mistakes. Just as medical researchers methodically test possible cures for cancer or AIDS, we should put promising social policies like early childhood intervention programs to the test. A dozen carefully evaluated randomised trials of different early intervention programs would reap valuable rewards for future generations. It's about time our politicians learned that the best investments involve starting early.

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Article edited by Angus Ibbott.
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First published in the Sydney Morning Herald, February 15, 2006

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About the Author

Andrew Leigh is the member for Fraser (ACT). Prior to his election in 2010, he was a professor in the Research School of Economics at the Australian National University, and has previously worked as associate to Justice Michael Kirby of the High Court of Australia, a lawyer for Clifford Chance (London), and a researcher for the Progressive Policy Institute (Washington DC). He holds a PhD from Harvard University and has published three books and over 50 journal articles. His books include Disconnected (2010), Battlers and Billionaires (2013) and The Economics of Just About Everything (2014).

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Related Links
Perry Preschool cost-benefit study
The Journal of Human Resources

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