Consider this. The stock market, on average in the post-World War II era, has produced a 5.8% annual rate of return. High-quality early education yields a 16% rate of return. That’s a powerful reason to invest public dollars in young children, University of Minnesota economist Arthur Rolnick recently told the hundreds of early educators, children’s health providers and activists who attended Boston’s 2011 Early Childhood Summit, held by Thrive in 5 at Northeastern University. “Angel investors,” he said. “If they saw a 16% rate of return, it would get funded.”
Rolnick, the former head of research at the Federal Reserve Bank of Minneapolis, and his colleague Rob Grunewald changed the conversation about high-quality early education in 2003 with their estimate of a 16% rate of return for low-income children. (Invest in Young Children, Not Stadiums) Other researchers offer equally compelling estimates of cost-effectiveness. Nobel laureate James Heckman, an economist at the University of Chicago, pegs the return at closer to 10% — high enough to make Heckman another strong believer in investing in young children. (Nobel Laureate to Debt Panel: Invest in Early Education) The latest round of longitudinal research on a large-scale Chicago program estimates an 18% return. (More Evidence of Long-Lasting Benefits)
“We don’t call them at-risk kids. We call them high-return children,” Rolnick said.
“You better start early,” he added. “You better be working with the family. It better be high quality. The research is clear. You can’t get these results unless it’s high quality.”
Too often, Rolnick said, public investments in economic development consist of pitting one state against another. “From a national perspective, it’s a zero rate of return,” he said. He has long questioned public investments in sports teams and talked of fighting a proposed billion-dollar football stadium. “Right now,” Rolnick said, “I’m battling the Vikings.” Rolnick also described a program to offer scholarships for high-quality programs to children in a low-income neighborhood in St. Paul. He described plans to expand the program through the Minnesota Early Learning Foundation. He noted that early education and pediatric health care go hand in hand.
“Early education begins right away. Health care begins right away,” Rolnick said. “We can save a lot of money if we do it right.”