Art Rolnick and Rob Grunewald Federal Reserve Bank of Minneapolis

Early Childhood Development:Economic Development with a

High Public Return

High/Scope Study of Perry Preschool

• 123 children from low-income families in Ypsilanti, Mich.

• Children randomly selected to attend Perry or control group.

• Daily classroom session and weekly home visit.

• Tracked participants and control group through age 27.

  

Perry Preschool IQ Over Time

75

80

85

90

95

100

Entry 4 5 6 7 8 9 10Age

IQ

Program group No-program group

Prepared by W. Steven Barnett, Rutgers University

Perry: Educational Effects

0% 20% 40% 60% 80% 100%

Didn't requirespecial education

Graduated fromhigh school on

time

Age 14achievement at

10th percentile +

No-program group Program group

Prepared by W. Steven Barnett, Rutgers University

Perry: Economic Effects at Age 27

0% 10% 20% 30% 40% 50%

Never onwelfare as adult

Own home

Earn $2,000 +monthly

No-program group Program group

Prepared by W. Steven Barnett, Rutgers University

Perry: Arrests per Person by Age 27

0 1 2 3 4 5 6

No program

Program

No program Program

Prepared by W. Steven Barnett, Rutgers University

Perry PreschoolCosts and Benefits Over 27 Years

-$20,000 $0 $20,000 $40,000 $60,000

Welfare Payments

Crime Victims

Justice System

Higher Participants' Earnings

K-12 Ed

Program Cost

For Public For Participant

Perry Preschool -- Return on Investment

• Total Benefit-Cost Ratio = $8.74 to $1

• Estimated Total Annual Rate of Return = 16%

• Public Rate of Return = 12%

   

Other Longitudinal Studies

Chicago, Child-Parent Centers Half-day large-scale program in Chicago

public schools

Abecedarian, educational child care

Full-day year-round program in Chapel Hill, N.C.

  

Vital Ingredients of an ECD Program

• Fund at Perry Preschool level to achieve high return on investment.

• Target at-risk children, but make available for all children.

• Allow for competition and specialization among providers.

• Test for program improvement and pay for demonstrated results.

   

Cost estimate to educate all 3- and 4-year-old children from low-income families in Minnesota

at a high-quality ECD program

3- and 4-year-old children living in poverty 20,000Cost per child $9,500Total $190,000,000

Current funds available $85,000,000

Total annual need $105,000,000

  

Endowment for Early Childhood Development vs. Incentives to Relocate Businesses

  •A $1.5 billion endowment could raise $105 million per year to meet current funding gap for ECD.

•Proposals to build and renovate professional sports stadiums total over $1 billion.

•Incentives used to relocate businesses in Minnesota have totaled over $500 million.