Cost-Effectiveness and Trade-Offs in Early Education

Two new studies released this week aim to help policymakers make sound choices about early education investments.

In Meaningful Investments In Pre-k, researchers from the Institute for Women’s Policy Research estimate what it actually costs to provide quality pre-k programs. To estimate the costs of quality pre-k programs, the IWPR researchers identified the characteristics of high-quality pre-k programs—qualified teachers, small class sizes, appropriate educational materials, and so on—and arrived at research-based estimates of what it actually costs, on a per-child basis, to provide those things. They also estimated the cost of appropriate facilities and of state-level support and oversight infrastructure needed to ensure pre-k quality.

The researchers estimated the cost of pre-k at a variety of quality levels, varying quality in terms of both teacher qualifications/compensation and class size. They also estimated the difference in costs of half-, full-, and extended-day programs. Estimates ranged from a low of $3,214 dollars per child, per year for half-day pre-k programs taught by teachers with a CDA (a child development credential that is less than an associate’s degree) in classrooms of 20 students, to a high of $13,649 per child, per year for extended-day pre-k programs, taught by bachelor’s degree teachers paid under public school salaries, in classrooms of 15 students.

The sad reality is that most states are spending nowhere near this much money per pupil on pre-k, even compared to more modest quality standards. Pre-K programs in 10 states are spending less than even the $3,214 per child IWPR estimates is necessary to provide just the lowest-quality pre-k! The National Institute for Early Education Research estimates that only 19 states are spending enough money to meet quality standards, and all but 4 of those provide only half-day programs.

Fortunately for policymakers seeking to raise quality, the IWPR study also provides estimates of the marginal cost to improve state pre-k quality standards. For instance, for a full-day program with associates degreed teachers and classes of 17 students, it would cost about 12 percent more to raise teacher education requirements to a bachelor’s degree, while it would cost about 8 percent more to reduce class size to 15. These estimates can be useful for policymakers weighing the costs of different policy alternatives.

What the IWPR study doesn’t provide, however, is information on cost effectiveness of different quality improvements: That is, if I’m a legislator seeking to improve pre-k quality or access in my state, what investments give me the biggest bang for my buck? Should I invest marginal dollars in class size reduction, or on raising teacher credentials, or should I leave quality be and increase the number of children served?

A recent RAND paper on the Economics of Early Childhood Policy notes the lack of adequate evidence to answer these questions. We know what the characteristics of high-quality programs are and, to some extent, what they cost. We also know that very high-quality programs have been demonstrated to have clear impacts in terms of improving children’s school and long-term outcomes, and generating positive returns for society as a whole. But we don’t know what kind of returns marginal investments in improving quality produce, nor do we know which marginal quality improvements produce the greatest marginal benefits. We also don’t know whether or not there is a minimum threshold for quality below which early educational investments do not produce positive returns. These are critical questions for policymakers seeking to make smart early education investments with limited public resources. Developing better evidence on cost-effectiveness of different marginal early education investments should be a research priority for the early childhood field.

The RAND report is worth a read because it steps back from the common rhetoric about return on investment from early education programs to take a hard look at the economic theory of what we mean when we say that early education programs produce returns on public investment. Researchers Rebecca Kilburn and Lynn Karoly also dive into the tough questions of trade-offs that policymakers must make between different types of early childhood investments, as well as between quality and quantity for any given early childhood investment, and offer a variety of frameworks for researchers, advocates, and policymakers to think about these investments. Ultimately, they conclude that policymakers need to think about early childhood investments as a portfolio, allocating funds to a variety of strategies that contribute to desired outcomes for children, rather than focusing on a single approach or considering early childhood programs in separate, isolated silos.

One of these studies answers some important questions that policymakers have in creating early education programs, but in the process, it also raises some. The second study raises similar challenging questions, as well as some others around trade-offs for early education, and, while it does not provide answers, offers some useful frameworks to start working on them.