Economic impact of early childhood education

jbrehm2, January 4, 2013 | View original publication

Economic impact of early childhood education

A UNL research team has started a study to identify the economic value of Nebraska’s investments in early childhood.

Lisa Knoche, research associate professor at UNL’s Nebraska Center for Research on Children, Youth, Families and Schools, has partnered with the Department of Economics’ David Rosenbaum and Eric Thompson to evaluate the fiscal benefits of funding Nebraska’s early childhood education and programs.

The researchers have already identified several groups of “economic indicators” that reflect the future value of these investments, from children’s academic achievement and educational advancement to their subsequent socioeconomic status, criminal activity and overall well-being. The research team has also recognized parents’ earnings, employment and health as significant economic indicators.

Knoche is reviewing studies that provide estimates for these indicators, specifically identifying studies that match Nebraska’s population demographics, economic climate and other relevant characteristics. Once compiled, these estimates will allow Rosenbaum and Thompson to project the economic advantages – including reduced costs of education, crime and child welfare – resulting from the state’s investment in early childhood.

The study’s modeling approach will enable the researchers to dynamically predict the outcomes of each economic indicator – and its associated financial benefits – according to any change in early childhood funding. As an example, the team noted that if Nebraska were considering a funding increase that gave 10 percent more children access to early education, the model could calculate the economic benefits associated with increased rates of high school graduation and college completion.

Knoche also noted that the model will allow the researchers to calculate economic benefits over the span of an entire generation, from the cost savings of early childhood to the continued savings and increased earnings of adulthood. Consequently, it will also provide projections on payback periods and rates of return on investment.

The team plans to translate its cost-benefit analyses into easily digestible formats that it hopes will inform the state’s future policymaking.

Knoche and Thompson outlined their research for Nebraska’s State Legislative Planning Committee in early December – and will continue doing so as the study progresses.

“We believe we can show that these investments will yield a really positive, meaningful economic benefit, which is powerful in the eyes of policymakers,” Knoche said of the study, which is funded by the Nebraska Children and Families Foundation. “There are limited resources available, so hard decisions need to be made in terms of where to devote those resources.”

In this vein, the research team also intends to focus on economic indicators tied specifically to lower- versus higher-quality early childhood education. This analysis should help define the impacts of investing in each, according to Knoche.

“If we don’t raise the level of quality, that investment in early childhood is not going to yield the kinds of benefits we would hope to see,” said Knoche. “It is important to think about the kind of investment that we’re making – not just that we’re putting money into early childhood.”

Knoche said she ultimately sees the study as an opportunity to raise the prominence of early childhood education among those with the influence to significantly improve it.

“The policymakers have enormous responsibility; they have many people talking to them about many different issues. If we can provide them with some compelling, informed data, we have a better chance of producing meaningful change in policy.”