1. Investing in Disadvantaged Young Children Is Good Economics and Good Public Policy Flavio Cunha University of Pennsylvania Business Leadership for America’s Youngest Citizens: The Economic Promise of Investing in Early Childhood Overland Park, Kansas, April 17, 2008 This Research Is Supported By The Partnership For America’s Economic Success

2. 2/15/20162 The Argument in a Nutshell 1 - Many major economic and social problems such as crime, dropping out of high school and drug consumption can be traced to low levels of skill and ability in the population.

4. 2/15/20164 The Argument in a Nutshell Continued 2 - Ability gaps between the advantaged and disadvantaged open up early in the life of the child.

7. 2/15/20167 The Argument in a Nutshell 3 - Life cycle skill formation is dynamic in nature. 4 - Abilities are multiple: Cognitive abilities are important for socioeconomic success. 5 - But socio-emotional skills such as perseverance, attention, motivation, self-control are important for success in life. 6 - Motivation, perseverance, tenacity feed into performance in society and even affect scores on achievement tests.

8. 2/15/20168 7 - If society intervenes early enough, it can affect cognitive, and socio-emotional abilities and the health of disadvantaged children. 8 - Early interventions promote schooling, reduce crime, promote workforce productivity and reduce teenage pregnancy. 9 - These interventions are estimated to have high benefit-cost ratios and rates of return. The Argument in a Nutshell Continued

11. 12 - Early interventions have much higher returns than other later interventions such as reduced pupil-teacher ratios, public job training, convict rehabilitation programs, tuition subsidies or expenditure on police. 13 - A major refocus of policy is required to understand the lifecycle of skill and health formation and the importance of the early years.

12. 2/15/201612 0 Age Rate of return to investment in human capital Preschool programs Schooling Job training 0-34-5 Preschool School Post-school Programs targeted towards the earliest years Figure: Rates of Return to Human Capital Investment at Different Ages: Return to an Extra Dollar at Various Ages

13. 2/15/201613  For years, economists have worked hard to understand the forces of economic growth.  In virtually all theoretical work, human capital plays a central role in promoting long-run economic growth.  However, as the old literature in human capital formation, the literature in economic growth does not differentiate different investments at different stages of lifecycle.  Cunha (2008) addresses this issue. Early Intervention and Economic Growth