Genes. Mincer equations. Neurons. Opportunity
costs. Biological embedding. Nature vs. nurture. These terms, voiced
during discussions across disciplines at a mid-October conference
at the Minneapolis Fed, eddied to the same central question: Are we
investing enough in early childhood development?
"The Economics of Early Childhood Development: Lessons for Economic
Policy" provided a rare opportunity for economists, public policy
analysts, medical professionals and educators to share their research
on early childhood development. The conference, hosted by the Minneapolis
Fed and Minnesota's McKnight Foundation, in cooperation with the University
of Minnesota, focused largely on the economics of early childhood
development, but economists' findings were supported by sociological
and biological evidence presented by other speakers. And while the
intricate math of economic models may have escaped many, it was evident
that the messages were understood by the audience of nearly 200 participants
from across the country and Canada.
Some might question the topic's relevance to the Federal Reserve,
but as the conference title suggests, early childhood development
is an issue with strong economic implications. James Lyon, first vice
president at the Minneapolis Fed, put it clearly in his opening remarks:
"One of the charges of the district Fed banks is to provide
analysis and insight into regional economic development. State and
local governments have been debating how to best use public funds
to encourage economic growth, and research has shown that early childhood
development programs should be viewed as economic development."
Rip Rapson, president of the co-hosting McKnight Foundation, made
the same point in even more pragmatic terms. "[T]he loss of
one child's potential as a family member is only a shadow of the loss
to that child's potential as an educated, productive world citizen,"
he said. "Our businesses have one less skilled worker. Our communities
have one less person to contribute time, energy and money to sustain
a high quality of life. Our state has one less citizen to engage meaningfully
in public decision-making. There is one more adult at risk of ...
straying into crime or requiring continuing public subsidy."
Bringing together the best
Over the past year, Art Rolnick, Minneapolis Fed senior vice president
and director of Research, has spoken and written extensively on early
childhood development with Minneapolis Fed economic analyst Rob Grunewald.
In collaboration with Nobel Laureate James Heckman, Rolnick conceived
and planned the one-day conference "to bring together some of
the best minds in the area of early childhood research to think through
the issues and to ultimately learn how to design better policies."
Heckman, well-known for his research on the impact of social programs
on the economy and on society at large, has concluded that early investments
in children produce greater economic returns than do investments later
in life, such as on-the-job training.
Heckman's views were shared by the speakers throughout the day, beginning
with Jack Shonkoff, dean of the Heller School at Brandeis University.
Shonkoff, co-author of From Neurons to Neighborhoods: The Science
of Early Childhood Development, a report of a National Academy
of Sciences and Institute of Medicine committee, said there is an
"unacceptably wide gap between what we know and what we do to
promote healthy development in early childhood." Shonkoff called
for a new public dialogue that moves beyond blaming parties involved—parents,
communities, business or government. "The science makes it clear
that each ... has a role to play," he said. "Each of these
provides something that the others can't do." Shonkoff, a pediatrician,
reminded the audience several times that he was not speaking as an
advocate but merely relating what "the science" revealed.
Shonkoff was followed by economists, beginning with W. Steven Barnett,
professor of economics and education at Rutgers University, who bridged
education and economics with an analysis of three studies on early
childhood education. Looking at programs in Chicago, Chapel Hill,
N.C., and Ypsilanti, Mich., Barnett found that overall these programs
increased achievement on test scores, decreased grade retention and
the need for special education, decreased crime and delinquency, and
increased high school graduation rates. Barnett's cost-benefit analyses
for all three programs indicated measurable economic benefits to society.
Janet Currie, professor of economics, University of California, Los
Angeles, also presented findings from a study of preschool children
in the federal Head Start program. She concluded that (a) Head Start
has had positive effects, but it doesn't close the gap between rich
and poor; (b) spending more money on the program may raise test scores,
but doesn't solve children's behavior issues; and (c) additional dollars
should go to reducing pupil-teacher ratios, rather than increasing
teacher qualifications and salaries. This last point contradicted
Barnett's conclusion that upgrading preschool teacher credentials
improves outcomes for children.
Health outcomes and human capital
Luncheon speaker J. Fraser Mustard, founding president and fellow
at the Canadian Institute for Advanced Research in Toronto, reviewed
health outcomes of early childhood development programs, citing international
historical research and more recent work in Canada. In a study of
economic development and health in Holland from 1850 to 1920, he said,
researchers found that as per capita income increased, death rates
dropped dramatically. In another study, he noted, mortality rates
were lowest among professional-level workers and highest among the
unskilled. Mustard in the end reinforced that health issues have a
place in further economic research on early childhood development.
Heckman took the stage to open the afternoon session. Presenting a
paper on "formal models of childhood development that capture
the essence of recent findings from the empirical literature,"
Heckman acknowledged recent research that "recognizes the importance
of both cognitive and noncognitive abilities in explaining schooling
and socioeconomic success." Heckman noted that the advantage
in IQ scores enjoyed by children in early childhood development programs
faded during elementary school. "[But] the greatest benefits
of these programs," he writes, "are their effects on socialization
and not those on IQ. Social skills and motivation have large payoffs
in the labor market, so these programs have the potential for a large
payoff." Heckman also found that "ability is more important
than liquidity" and that the child's environment can be a larger
constraint on educational success than family income. Heckman's paper
concludes, "Clearly much more work remains to be done to integrate
the insights of the child development literature into the mainstream
thinking about human capital formation and human capital policy analysis."
During a concluding panel discussion, David Jennings, interim superintendent
of the Minneapolis Public Schools, cited data that suggest the achievement
gap in Minneapolis public schools could be closed if the following
steps were taken with at-risk children: attend a preschool program,
move into all-day kindergarten and stay in the same school through
the early grades. The last step would require a flexible transportation
program to accommodate children who move during their early school
Panel moderator, Scott McConnell, professor of educational psychology
at the University of Minnesota, cited a number of factors that suggest
an optimistic prognosis: growing political will; unique players, like
the Fed and business leaders; demonstration programs and university
people committed to focusing on early childhood development.
The other member of the panel, Charles Kolb, president of the national
Committee for Economic Development, a group of business and education
leaders dedicated to economic and social policy research, indicated
that business should be involved in programs like Success by 6, a
United Way preschool effort pioneered in the Twin Cities.
Points of agreement
At the end of the day, Shonkoff, who began the program, summed up
what he saw to be conference points of agreement:
- The time has come to invest more resources
in the development of young children.
- We have to think in terms of all children, but
we need to recognize that some are needier than others.
- There's a clear understanding that whatever steps
are taken, earlier is better than later.
- The benefits of wise investments in young children
will be substantial, and the consequences of poor investments will
- Whatever the investment, it must be driven by
knowledge. (But we also have to confront the fact that values trump
knowledge in the political arena every time.)
- The returns on investment in young children will
depend on the extent to which we match programs and services to
needs, and there must be ongoing movement in the knowledge base.
More about the conference and related research:
of Early Childhood Development: Lessons for Economic Policy, October 17, 2003 Conference
Early Childhood Development,
Minneapolis Fed Policy Study