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August 27, 2007
Value of early education
On this first day of school (at least here in DC), let me offer up these comments in today's Washington Post from Jeffrey Lacker, President of the Federal Reserve Bank of Richmond on "Children's Education Is a Smart Investment":
Early childhood development may seem like an odd topic for a Federal Reserve Bank president. But as a regional Reserve Bank in a federated central banking system like the Fed, we spend a good deal of time trying to understand the economies that make up our district, which includes Maryland, D.C., Virginia, West Virginia and the Carolinas.
Data on the growth of income per person across the United States and across cities and metropolitan areas reveal that at least one important measure of skills is consistently correlated with future growth. That measure is education, and a typical finding is that the share of the population of a U.S. city or state that had a college degree in 1990 was positively associated with growth in family income between 1990 and 2000. In other words, the more educated the population, the greater the subsequent growth in economic well-being. Furthermore, population growth is correlated with education levels, suggesting that places with highly skilled populations create opportunities that attract newcomers.
. . .
What does this have to do with early childhood? I mentioned that acquiring skills improves one's ability to acquire further skills. Could this logic extend back to the earliest investments in human capital -- those that occur between birth and age 5? I believe the evidence indicates that the answer is yes.
Economists like to think about investment in terms of rate of return, and there is reason to think that the rate of return on early childhood investment could be particularly high. Like any investment in human capital, some of the return accrues directly to the individual in increased lifetime earning ability. But a substantial share of the return -- perhaps as much as three-quarters of the total -- is a broader, social benefit coming from such sources as reduced costs of remediation and other special services in primary and secondary school, as well as from the reduced incidence of the array of social problems often associated with low educational achievement.
There are many explanations for the apparent high economic returns to early childhood education, but a key difference between early childhood investments and investments at primary and secondary education levels is the potential for compounding. That is, enhancing early childhood development appears to improve a child's ability to learn at later stages. This means the return on early education comes not just from the direct effects, say on the development of cognitive ability, but also from the fact that these early investments increase the productivity of later educational investments. Nobel Prize-winning economist James J. Heckman has emphasized this point in his writing on early childhood education.
This compounding effect means disparities in early childhood development have potential to exacerbate inequality within our society. People with limited means are more likely to have difficulty providing their children with high-quality early childhood environment, leaving those children less able to benefit from later investments in human capital. This possibility creates a legitimate public interest in helping people of modest means find and afford quality early childhood education. It holds the promise of expanding the development of human capital more broadly across our society and in so doing, widening our potential for skill-based economic growth.
Well said, although I have to take issue with one point. In his remarks, Mr. Lacker downplays the importance of on-the-job and experiential learning:
It is worth noting that the skills that have become most valuable over time seem to be general skills that come with higher levels of education -- as opposed to the very specific skills gained through experience in a particular job or occupation. This is an important distinction. It means that more than ever, the path to economic success lies in education rather than in on-the-job experience.He does this, it appears, to emphasis the importance of formal education in the process of learning to learn. I agree that general skills are important. But much of formal education is about specific skills (especially at the higher levels when knowledge becomes much more specialized). And experiential learning, especially in childhood, is very much a part of the learning to learn process. In fact, some might even complain that formal education gets in the way of learning to learn.
That last criticism notwithstanding, early childhood education is one of the best ways to raise the knowledge level of our nation. DC has initiated a pre-K pilot programs to expand early childhood education beyond the traditional Head Start program (an initiative started by my good friend Councilmember Tommy Wells when he was on the School Board). Such pre-K programs are an example of cities and states across the nation understanding that an investment in the intangible asset of knowledge and kids is one that have a huge pay off in the future.
(FYI -- the Post is an excerpt from his remarks at the July 2007 Governor's Summit on Early Childhood Development in Virginia, see the full text of the speech.)
Posted by Ken Jarboe at August 27, 2007 10:25 AM
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