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Benefit-Cost Analysis of Preschool Education
W. Steven Barnett, Ph.D.
Director, National Institute for Early Education Research
Rutgers—The State University of New Jersey
Three Economic Analyses
Chicago-Child Parent Centers (CPC)– a half-day program on a large scale in the Chicago public schools
Quasi-Experimental, n=1286
Abecedarian educational child care– a full-day year-round program in Chapel Hill, NC
True Experiment, n=111, follow-up to age 21
High/Scope Perry Preschool– a half-day program on a small scale in the Ypsilanti, MI public schools
True Experiment, n=123, follow-up to age 27
Long-Term Effects that Generate the Benefits
These and other studies with children from low-income families find:
Increased Achievement Test ScoresDecreased Grade RetentionDecreased Special EducationDecreased Crime & DelinquencyIncreased High School Graduation
Gains vary with quality and age of start
CPC: Academic and Social Benefits at School Exit
25%
38%
25%
39%
17%
23%
14%
50%
0% 10% 20% 30% 40% 50% 60%
Juvenile Arrest
Grade Repeater
Special Education
HS Graduation
Program groupNo-program group
Perry Preschool IQ Over Time
80
96 95
91 92
88 88
85
79
86 87 87 87
83 84
75
80
85
90
95
100
Entry 4 5 6 7 8 9 10Age
IQ
Program group No-program group
Perry Preschool: Educational Effects
45%
15%
34%
66%
49%
15%
0% 10% 20% 30% 40% 50% 60% 70%
Graduated from highschool on time
Age 14 achievementat 10th %ile +
Special Education(Cog.)
Program groupNo-program group
Perry: Economic Effects at Age 27
20%
13%
7%
41%
36%
29%
0% 10% 20% 30% 40% 50%
Never on welfare asadult
Own home
Earn $2,000 +monthly
Program group
No-program group
Perry: Arrests per person by age 27
1.5
0.7
2.5
1.2
0.6
0.5 2.3 arrests
4.6 arrests
0.0 1.0 2.0 3.0 4.0 5.0 6.0
No program
Program
Felony Misdemeanor Juvenile
Abecedarian IQ Scores Over Time
75
80
85
90
95
100
6.5 8 12 15 21
Age in Years
Mea
n S
tand
ardi
zed
Sco
re
Control Treated
80
85
90
95
100
105
8 10 12 14 16 18 20 22
AGE (Years)
RE
AD
ING
SC
OR
E
TREATMENT
CONTROL
Abecedarian Reading Ach. Over Time
80
85
90
95
100
105
8 10 12 14 16 18 20 22
AGE (Years)
MA
TH
SC
OR
ES
TREATMENT
CONTROL
Abecedarian Math Achievement Over Time
Abecedarian : Academic Benefits
13%
51%
55%
48%
36%
67%
31%
25%
0% 10% 20% 30% 40% 50% 60% 70% 80%
4 Yr College
HS Graduation
Grade Repeater
Special Education
Program groupNo-program group
Abecedarian: Benefits to Mothers and Children
40%
55%
58%
67%
39%
70%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Skilled Job or HigherEducation at age 21
Smoker at age 21
Teen Moms Self-Supporting
Program groupNo-program group
Estimating Costs and Benefits for All 3 Longitudinal Studies
Abecedarian has the most complete benefit estimates
No crime reduction benefits found in ABC study (but little crime to prevent)
No abuse and neglect data collected in Perry or ABC studies
No health effects data collected in CPC
Abecedarian’s Marginal Benefits
Cost-savings in K-12 schooling Productivity and earnings Maternal Earnings Welfare Crime Intergenerational Earnings effects Improved Health (smoking)
Abecedarian: Present Value of All Benefits
Rate of DiscountBenefit 3% 5% 7%
Compensation $116,861 $69,985 $44,940K-12 Education 8,836 7,375 6,205Smoking/Health 17,781 4,166 1,008Welfare 196 129 85Higher Ed. Cost -8,128 -5,621 -3,920Total Benefits $135,546 $76,034 $48,318
Abecedarian: Net Present Value
Rate of Discount
3% 5% 7%
Total Benefits $135,546 $76,034 $48,318
Cost – FPG 35,864 34,599 33,421
Cost – PS 41,916 40,427 39,041
Net Present Value
FPG Setting $99,682 $41,435 $14,897
PS Setting $93,630 $35,607 $ 9,277
Original Estimates from Three Cost – Benefit Analyses
Cost Benefit
to Society
Perry Preschool: $12,000 $108,000 Abecedarian: $36,000 $136,000 CPC: $7,000 $ 48,000
Figures rounded to nearest $1,000. All three study’s costs and economic benefits discounted at 3%.
ECONOMIC BENEFITS AND COSTS DISC AT 3%, 2002 $
Perry Chicago Abecedarian
Child Care 948 1842 27612
Earnings 38978 30864 37531
K-12 8831 5417 8836
College/Adult -752 -619 -8128
Crime 90447 14739 0
Welfare 341 525 196
FG Earnings 5943 4706 5722
Smoking/Health 0 0 17781
Maternal Earnings 0 0 73608
Abuse/Neglect 0 331 0
Total Benefits 144736 57805 163158
Total Costs 15879 7440 63476
Comparably Calculated Costs and Benefits for the 3 Studies
Economic Benefits ($2002)
0 20000 40000 60000 80000 100000 120000 140000 160000 180000
PERRY
CPC
ABEC
Child Care Earnings K-12 Crime
Welfare Earnings FG Smoking Maternal Earnings
Similarities and Differences Across the 3 Studies
Costs and benefits vary in magnitude across the three studies
Most but not all types of benefits found in all 3 studies
Programs vary in intensity and duration Population and context vary by study Variations in program, population, and context
plausibly explain differences in BCA
Program Characteristics
Perry Chi. Abec.
Child Age 3 or 4 - 5 3 or 4 - 5 0-5
Duration Part-Day Part-Day Full-Day
School Yr School Yr Full Year
Entry Period 1962-65 1983-85 1972-77
Population Characteristics
Perry Chi. Abec.
Maternal HSG (entry) 21% 64% 34%
Two Parents (entry) 53% 32% 24%
IQ at age 6 (control) 86 --- 93
Adult Arrests (control) 4.0 --- 1.5
Juv. Arrests (control) .6 .8 ---
General Context - 2000
Ypsil. Chicago Chapel HMean $41,000 $54,000 $64,000HH Income
College 20% 19% 37%Grad (pop)
Cigarette $1.25 (MI) $.98 (IL) $.05 (NC)Tax (per pack)
Limitations & Future Studies
1. Small samples from a few locations: program, population and context likely affect benefits
2. Benefits included vary across studies
3. Only 1 study of child care impacts on maternal earnings, somewhat higher than econometric estimates of 10-15 percent ($2000-$3000)
4. Much is still excluded
Economic Benefits Excluded
Return on education and skills in nonmarket activities (parenting, marriage, leisure) and consumer activities.
Status and consumption value of education Better health, accident reduction Better timing and spacing of births, less
abortion
Conclusions
Preschool produces cognitive and social emotional gains for children (at least disadvantaged)
Quality preschool education can be a good economic investment
Economic benefits vary with program, population, and context characteristics
Similarities and differences in outcomes and economic benefits across studies are reasonable
