1 Developing State Specific Evidence on the Costs and Benefits of Early Childhood Education (ECE) Kenneth Troske, Director Center for Business and Economic Research University of Kentucky March 10, 2010 Presentation to Pew Charitable Trusts

2 Why? Policy makers are increasingly relying on empirical evidence when deciding on funding for existing or new programs –Provides more information on how a program functions and defines the identifiable benefits and costs and how these are going to be measured Forces opponents to produce alternative evidence –Helps to focus the discussion on tangible issues

3 Why? Places a dollar value on the benefits as well as the costs of a program; allows one to construct the “return-on-investment” –Important component of decision making in business –Often lacking in government programs that do not earn a “profit” –Focus on the “bottom line” is something that appeals to business leaders What are the goals of ECE programs?

4 How? Evaluate existing state ECE programs Strengths –Better at producing precise evidence for a specific program in a state Weakness –Only works if there is an existing ECE program –Expensive to implement if there is not an on-going evaluation—rigorous evaluations can cost well over $100K –Takes time to produce estimates—often requires years of follow-up

5 How? Adapt existing studies to the specific situation in your state Strengths –Less costly—$10K-$20K –Makes use of existing studies that have already been critically evaluated –Most existing studies show benefits of ECE are greater than costs –Some existing studies have a number of years of follow-up information

6 How? Adapt existing studies to specific situation in your state Weaknesses –Requires additional assumptions –Relatively few rigorous studies to draw on, some of which evaluate programs that are quite old –Existing studies do not address different forms of implementation that might affect outcomes Public vs. private In home visits Teacher credentials

7 Adapting Results from Existing Studies This discussion will primarily draw from two sources CBER study: Estimates of the Costs and Benefits of Expanding the Early Childhood Education Program in Kentucky (2009) – port_final.pdfhttp://cber.uky.edu/Downloads/CBER_early_educ_re port_final.pdf RAND study: Early Childhood Interventions: Proven Results, Future Promise (2005) – -childhood-interventions-fulldoc.pdfhttp:// -childhood-interventions-fulldoc.pdf

8 Adapting Results from Existing Studies Employ independent researcher(s) familiar with program evaluation and local economy –Outside researcher with no “dog in the fight” adds legitimacy to the findings –Can bring local knowledge to the discussion of local effects

9 Adapting Results from Existing Studies Use estimates from rigorous evaluations What does rigorous evaluation mean? Goal is to estimate the causal impact of an ECE program on participants in the program—effect of treatment on the treated –What does it mean to not receive treatment?

10 Adapting Results from Existing Studies Estimate causal impact by comparing an outcome for a participant with what the outcome would have been had the person not participated –Earnings after participating compared with earnings had they not participated –Fundamental problem of causation Requires information on participants and information on a comparison group that look like participants

11 Adapting Results from Existing Studies Rigorous studies have both a treatment and comparison group “Gold standard” is randomized trial –This is expensive –Estimates some effects very precisely, but not well suited to estimate effects of different implementation Other ways to form comparison sample –Always hinge on untestable assumptions –Can examine more complex questions Two methods are complementary

12 Adapting Results from Existing Studies Provide estimates of both the private and public benefits of the program Private benefits are benefits that accrue directly to the participant or family –Largest private benefits are higher lifetime earnings for the children and reduced cost of childcare for the parents Public benefits accrue to other people in the region even if they don’t participate –Largest public benefits are reduced cost of special education programs, grade repitition and crime

13 Adapting Results from Existing Studies Easy to argue that programs providing private benefits should be largely financed by those receiving the benefits Traditional view is that government finances programs with large public benefits Note, largest private and public benefits occur in the future—which is why we need long-term follow-up when evaluating ECE programs

14 Adapting Results from Existing Studies Be conservative when making assumptions Without strong assumptions, reducing transfer payments or increasing taxes paid does not produce net benefits to society other than reducing the cost of administering programs –Transfer programs are just that, programs that transfer resources from one group of people to another group of people—they do not create wealth

15 Limitations of Existing Studies of ECE Programs Focus primarily on benefits that translate into dollars. Less focus on nontangible benefits –Nontangible benefits may include behavioral/emotional development, cognitive achivement –Presumably nontangible benefits translate into tangible benefits such as increases in educational achievement or decrease in need for special education programs –What is the goal of ECE programs?

16 Limitations of Existing Studies of ECE Programs Not much evidence on important elements of implementation of ECE programs –Expand existing private sector (Minn. Fed plan); use existing public schools; create new public infrastructure –Programs that have been studied focused on severely disadvantaged children; some evidence showing that benefits are lower for less disadvantage children –Importance of home visits and/or parent involvement –Student/teacher ratios –Teacher qualifications

17 Implementing or Expanding ECE Program On-going, rigorous, independent evaluation should be part of any proposal to implement a new ECE program or expand an existing ECE program –Willingness to evaluate the program demonstrates a belief in the program –Provides an annual measure of the “profitability” of the program which will appeal to the business community –A well designed evaluation provides administrators information on what works and what doesn’t work so the program can be improved

18 THANK YOU