The Case for Investing in Disadvantaged Young Children

In this 10-page excerpt from “Big Ideas for Children: Investing in Our Nation’s Future,” Professor Heckman discusses his early findings on the need for early childhood education and the economic benefits of providing it. Written while Heckman and his team were still analyzing the economic returns from the Perry Preschool project, it provides the foundation for subsequent research. Please note that the ROI estimate of the Perry Preschool Program outlined in this paper has been revised to 7-10% per annum, per child. For an updated figure, please see The Rate of Return to the HighScope Perry Preschool Program, published in 2010.

This body of research examines the origins of inequality and analyzes policies to alleviate it. Families play a powerful role in shaping adult outcomes. The accident of birth is a major source of inequality. Recent research by Cunha and Heckman (2007a) shows that in American society, about half the inequality in the present value of lifetime earnings is due to factors determined by age 18. It is possible that the figure is as high, or even higher, in Western Europe because labor market inequality is lower there. Compared to 50 years ago, a greater fraction of American children is being born into disadvantaged families where investments in children are smaller than in advantaged families. Growing unassimilated immigrant populations in Western Europe create similar adverse trends there. Policies that supplement the child rearing resources available to disadvantaged families reduce inequality and raise productivity.