economics to answer the following three questions: important and neglected factor. 1. When does inequality start? 3. Adverse impacts of genetic, parental, and environmental 2. Is it worthwhile to reduce inequality by investing in resources can be overturned through investments in quality education? early childhood education that provide children and their 3. How best to invest limited resources to create more productive parents the resources they need to properly develop the cogni- human capital? tive and personality skills that create productivity. 4. Investment in early education for disadvantaged children from It is important to look at the data and invest wisely. This is an birth to age 5 helps reduce the achievement gap, reduce the imperative among economists. Our society has finite resources. need for special education, increase the likelihood of healthier Taxpayers can and should expect value for their investments in lifestyles, lower the crime rate, and reduce overall social costs. government programs and in their fellow citizens. Taking a hard In fact, every dollar invested in high-quality early childhood look at the economic value of efforts to create human capital helps education produces a 7 to 10 percent per annum return on us see where best to invest our resources in education to achieve investment.' Policies that provide early childhood educational its ideal-equalizing opportunity to build greater and enduring resources to the most disadvantaged children produce greater value for all. social and economic equity. We can create a more level and The evidence is quite clear that inequality in the development productive playing field for all by making wise and timely of human capabilities produces negative social and economic investments in effective education. outcomes that can and should be prevented with investments in early childhood education, particularly targeted toward disad- Winning or Losing the Lottery of Birth vantaged children and their families. Each of us is born into circumstances over which we have no control. Our parents, their genes, education, health status, eco- The Data Show a Need for a nomic resources, and environment are passed onto us through New Model of Skill Formation our families and neighborhoods. These endowments shape the America is using antiquated models of human skill formation in trajectories of our lives. devising policies to educate children for success in the 21st cen- By nature and circumstance, endowments are unequal. At tury. My colleagues and I have analyzed many long-term studies birth, each child inherits different capabilities and different of early human development and the impact of early investment resources to capitalize on them. We can't completely change that on schooling and adult outcomes. We reached the following picture. But we can change some of it. In particular, we should conclusions: address the inequity in the resources families have to properly develop their children's potential. 1. Inequality in early childhood experiences and learning pro- It comes as no surprise that there are significant differences in duces inequality in ability, achievement, health, and adult family environments and the resources invested in children across success. socioeconomic groups. Gaps in cognitive and emotional stimula- 2. While important, cognitive abilities alone are not as powerful tion for children from families of different socioeconomic status as a package of cognitive skills and social skills-defined as open up early. Family status makes a substantial difference. attentiveness, perseverance, impulse control, and sociability. The graphs below show the frequency of cognitive stimula- In short, cognition and personality drive education and life tion and emotional support against standardized scales arrayed success, with character (personality) development being an from the worst on the left to the best on the right. A curve shifted Cognitive Stimulation and Emotional Support by Family Type Never-Married Single Mom Ages 0-2, female white children, by family type. Cognitive stimulation is measured by how often parents read to children and the learning environment in the home. Emotional support is Broken Blended Family measured by how often children receive encouragement (e.g., meals with parents).' - Intact Family 0.03 0.03 0.02 0.02 Density Density 0.01 0.01 -0.5 0.5 0.5 0 0.5 Cognitive Stimulation Emotional SupportEarly Childhood (Continued from page 35) mentary, secondary, and postsecondary education that promote the development of cognition and character. The logic is quite clear from an eco- nomic standpoint. We can invest early to close disparities and prevent achievement gaps, or we can pay to remediate dispari- dies when they are harder and more expen- sive to close. Either way we are going to pay. And, we'll have to do both for a while. But, there is an important difference between the two approaches. Investing early allows us to shape the future; invest- ing later chains us to fixing the missed opportunities of the past. Controlling our destiny is more in keep- ing with the American spirit. Endnotes 1. James J. Heckman, Seong Hyeok Moon, Rodrigo Pinto, Peter A. Savelyev, and Adam Yavitz, The Rate of Return to the HighScope Peny Preschool Program, * Journal of Public Economics 94, nos. 1-2 (2010* 114-128. 2. Seong Hyeok Moon, "Multi-Dimensional Human Skill Formation with Multi-Dimensional Parental Investment" (PhD diss., Department of Economics, University of Chicago, 2010) 3. See Mathilde Almlund, Angela L Duckworth, James J. Heckman, and Tim Kautz, "Personality Psychology and Economics, * in Handbook of the Economics of Education, INTENTIONALLY LEFT BLANK ed. Eric A. Hanushek, Stephen Machin, and Ludger Woessmann (Amsterdamc Elsevier, forthcoming). 4. See James J. Heckman, John Eric Humphries, and Nicholas S. Mader, "The GED," in Handbook of the Economics of Education, ed. Eric A. Hanushek, Stephen Machin, and Ludger Woessmann, vol. 3 (Amsterdam: Elsevier, 201 1) James J. Heckman, John Eric Humphries, and Nicholas Mader, Hard Evidence on Soft Skills: The GED and the Problem of Soft Skills in America (Chicago University of Chicago Press, forthcomingh and James J. Heckman and Yona Rubinstein, "The Importance of Nancognitive Skills Lessons from the GED Testing Program," American, Economic Review 91, no. 2 (2001): 145-149 5. See Almlund et al., *Personality Psychology and Economics.* 6. Lawrence J. Schweinhart, Helen V. Barnes, and David P. Weikart, Significant Benefits The High/Scope Perry Preschool Study through Age 27 (Ypsilanti, Mi: High/Scope Press, 1993) 7. Frances A. Campbell, Barbara H. Wasik, Elizabeth Pungelio, Margaret Burchinal, Oscar Barbarin, Kirsten Kairiz, Joseph J. Sparling, and Craig T. Ramey, "Young Adult Outcomes of the Abecedarian and CARE Early Childhood Educational Interventions, " Early Childhood Research Quarterly 23, no. 4 (2008): 452-466. See Lex Borghare, Bart H. H. Golsteyn, James J. Heckman, and John Eric Humphries, "IQ, Achievement, and Personality" (unpublished manuscript, Department of Economics, University of Chicago, 2010) 9. James J. Heckman, Lena Malofeeva, Rodrigo Pinto, and Peter Savelyev, "Understanding the Mechanisms Through Which an Influential Early Childhood Program Boosted Adult Outcomes" (unpublished manuscript, Department of Economics, University of Chicago, 2010). 10. David L. Olds, "Prenatal and Infancy Home Visiting by Nurses: From Randomized Trials to Community Replication," Feverition Science 3, no. 3 (2002) 153-172 ummanzed in Arthur J. R synolds and Judy A. Temple,stock market returns to equity (estimated to be 5.8 percent before the 2008 meltdown). This evidence defies a strictly genetic interpretation of the origins of inequality. Even though their IQs after age 10 were not higher on aver- age, participants' achievement test scores were higher. This evidence underscores the dif- ference between achievement people with different back- test scores and IQ. Achievement tests measure acquired knowl- grounds, skills, abilities, and edge and are influenced by personality factors." The principal family resources. influence in the Perry Program was its positive effect on non- It's a noble cause. But cognitive (character) skills." one person's nobility can Direct investment in children is only one possible channel be seen by another as an for intervening in the lives of disadvantaged children. Many entitlement program that successful programs also work with mothers to improve parent- provides great value to the ing skills. The two inputs-direct investment in the child's cog- receiver and little to the nition and personality, and investment in the mother and the giver. This is why I have not focused my work on the moral aspects family environment she creates-are distinct, but they comple- of providing equity through early childhood education-even ment each other. Improvements in either input improve child though the case for early intervention could be framed this way. outcomes. Improvements in both are the wisest investment. I've focused on its practical value-why it makes sense and how The Nurse-Family Partnership* intervenes solely with at-risk it generates 7 to 10 cents per year on every initial dollar invested. first-time mothers during pregnancy, sends nurses to the home We can make serious inroads toward reducing inequality, regularly for the first two years of a child's life, and teaches moth- elevating the underclass, and generating more productivity from ering and infant-care skills. It promotes adult success of the chil- our investments in people. But to do so requires that we accept dren of disadvantaged mothers. In addition, research documents the facts and rethink our notions of parenting, education, and the that perinatal interventions that reduce fetal exposure to alcohol development of human potential. and nicotine have long-term effects on cognition, socioemotional Achieving educational equity starts by recognizing that noth- skills, and health." ing is equal and everything is dynamic. People have diverse abili- The evidence from a variety of early intervention programs" ties. These abilities account for a large portion of the variation shows that enriching the early environments of disadvantaged across people in socioeconomic success. Substantial ability gaps children has lasting beneficial effects on adolescent and adult across children from various socioeconomic groups emerge outcomes of program participants. before they start school. Since inequality starts at or before birth, it can and should be Moving Toward Better corrected at or before birth with the resource of early childhood Education and Economic Outcomes and parental education. Evidence shows that supplementing the Educational equity is often seen as a social movement to bring family environments of disadvantaged children with educational equal educational opportunities to disadvantaged populations, as resources is an effective and cost-efficient way to provide equal well as to equalize educational achievement across a wide range of opportunity, achievement, and economic success. Gains made in early childhood should be followed through with quality ele- "To learn more about the Nurse-Family Partnership, see www.nursefamilypartnership.org. (Continued on page 47) AMERICAN EDUCATOR | SPRING 2011 35The Economics of Inequality The Value of Early Childhood Education BY JAMES J. HECKMAN Traditionally, equity and efficiency are viewed as competing goals. One can be fair in devising a policy, but it often happens ducational equity is often discussed as a moral issue. that what is fair is not economically efficient. Conversely, what is Another way to think about equity is as a way to promote efficient may not be fair. Thus a cut in the tax rate on capital gains productivity and economic efficiency. As an economist, promotes economic efficiency by stimulating investment; it is not I focus on the economic value of equalizing educational fair because it mainly benefits the rich. opportunities and achievement in order to identify the most effect What is remarkable is that there are some policies that both are tive way to increase the productivity of the American economy. fair-i.e., promote equity-and promote economic efficiency. We need a capable and productive workforce that will compete Investing in the early years of disadvantaged children's lives is one successfully in the global economy. Underdeveloped human such policy. potential burdens our economy and leaves us with a workforce A large body of data from economics, biology, and psychology that is less than it could be. shows that educational equity is more than a social justice impera- tive; it is an economic imperative that has far-reaching implica- tions for our nation. My work has focused on the economic value James J. Heckman is the Henry Schultz Distinguished Service Professor of Economics at the University of Chicago, a Nobel Memorial Prize winner of human capital development, specifically the value of providing in economics, and an expert in the economics of human development. His resources to disadvantaged children and their families in an groundbreaking work with a consortium of economists, developmental attempt to equalize the children's possibilities for social and eco- psychologists, sociologists, statisticians, and neuroscientists has proven nomic success. that the quality of early childhood development heavily influences health, For many years, Flavio Cunha from the University of Pennsyl economic, and social outcomes for individuals and society at large. Heck- man has proven that there are substantial economic gains to be had by vania, myself, and colleagues at the University of Chicago, Uni- investing in early childhood development. This article is based on versity College Dublin, and other institutions have been "Schools, Skills, and Synapses," which Heckman wrote for the July 2008 synthesizing what is known from the fields of biology, human issue of Economic Inquiry, available at http://ftp.iza.org/dp3515.pdf development, education, psychology, cognitive science, andhours and commutes are long, wages are stagnant, and relatively few jobs offer generous parental leave benefits. In addi- tion, we no longer live in intact, intergen- erational families where parents are supported in the daily tasks of child- rearing by their parents and siblings. When asked, a large majority of Ameri- cans agree that the interests of children are best served if one parent remains at home with the child. This is a bittersweet affirmation of a family value that is nearly impossible to fulfill for many middle-class families, let alone working-class and working-poor families. Parents need help, and their children will suffer if they don't get it. Society will pay the price in higher social costs and declining economic rightward indicates more beneficial fortunes. stimulation or support. Intact families Poor parenting is an important con- invest greater amounts in their children tributor to life poverty. But parenting than do single-parent families, deficits can be addressed. An equalizing although the exact reasons why are not factor is early access to education, which known. These investments pay off in changes the equation for the parent and higher achievement. the child. Like quality parenting, quality There are large gaps in cognitive early learning is defined as developing a stimulation and emotional support at package of cognitive and character skills. early ages. They persist throughout childhood and strongly influence adult Cognition and outcomes. The evidence on disparities Character Propel Success in child-rearing environments and their Numerous studies have documented that consequences for adult outcomes is cognitive ability, usually measured by troubling in light of the shrinking pro- scholastic achievement tests, predicts portion of children being raised in intact schooling, wages, participation in crime, families. The proportion of American children under the age of health, and success in many facets of life. Personality traits-often 18 with a never-married mother grew from less than 2 percent in referred to as character-have also proven to be powerful predict 1968 to over 12 percent in 2006. The fraction of American children tors of the same outcomes.' These abilities are attributes of char- under age 18 with only a single parent (i.e., never married or acter: perseverance, motivation, self-esteem, self-control, divorced) has grown from 12 percent to over 27 percent during conscientiousness, and forward-thinking behavior. this period. Cognition and character work together. They determine future The problem is not just income. Even though income is the social and economic status. For example, the higher the cognitive standard way to measure poverty, recent research suggests that and character capabilities, the more likely it is that the individual parental income is an inadequate measure of the resources avail- will choose and succeed in a white-collar job. able to a child. Good parenting is more important than cash. This is borne out in my recent joint work on the economic High-quality parenting can be available to a child even when the consequences of getting a GED (a high school equivalency cre- family is in adverse financial circumstances. While higher income dential obtained by scoring high enough on an achievement test). facilitates good parenting, it doesn't guarantee it. An economically Those who don't graduate from high school but obtain a GED are advantaged child exposed to low-quality parenting is more disad- less successful economically than high school graduates. This has vantaged than an economically disadvantaged child exposed to more to do with shortfalls in personality skills-or character- high-quality parenting. than cognition. The GED test is effective in screening for test tak- It is not feasible in a free society to insist that all children be ers' cognitive abilities. It completely misses their noncognitive raised by married parents or that individuals pass a parenting test traits.' Individuals who persist in graduating from high school are before having children. It is feasible to recognize the trends in our more likely to have personality traits that help them succeed in society and make adjustments in social investments to fill gaps life. They show up, control their impulses, work toward a goal, and and improve social and economic outcomes. work with others. Those with GED certificates are as smart as The problem is not just one of single parenting. We currently ordinary high school graduates, but they tend to be characters have a society that makes high-quality parenting difficult. The rather than people with character who have greater value and high cost of living often requires dual careers and incomes. Work potential for employment. Simply put, cognition and characterreceive so much attention in policy debates have small effects on creating or eliminating disparities. This is surprising when one thinks of the great inequality in schooling quality across the United States and especially among disadvantaged communities. My colleagues and I have looked at this. We controlled for the effects of early family environments using conventional statistical models. The gaps substantially narrowed. This is consistent with evi- dence in the Coleman Report (which was published in 1966) that showed family characteristics, not those of schools, explain much of the variability in student test scores across schools. Such evidence opens the question of which aspects of families are responsible drive the educational success that for producing these gaps. Are they due to ultimately results in economic genes? Family environments? Family success for individuals and society investment decisions? Can the gaps be at large. avoided or surmounted? Evidence from The same bundle of psycho- intervention studies, such as the High- logical traits strongly predicts a Scope Perry Preschool Program and the variety of diverse behaviors, such Abecedarian Project," suggests an impor- as smoking, employment, teenage tant role for investing resources in pregnancy, wages, wages given improving family environments in order schooling, and many other to produce better education and adult aspects of economic and social outcomes. " Creating a positive early envi- life-all of which affect local, state, and national economies." ronment through parental support and/or formal early childhood Given this fact, it is alarming that our education system primar education shapes abilities, capabilities, and achievement. ily values cognitive achievement. Important character traits that Knowing this, it is imperative to change the way we look at promote personal achievement are largely ignored or maligned education. We should invest in the foundation of school readiness as "soft" and nonmeasurable skills. Evidence suggests that efforts from birth to age 5 by providing early childhood education for that focus mainly on closing disparities in cognitive achievement disadvantaged children. We should build on that foundation with are not as successful as they could be because they neglect the high-quality elementary and secondary education to sustain the need to close gaps in character development. development of successful lives. Providing that kind of equity will Low-quality parenting fails to provide children with cogni- build a more productive society for all. tive and character development. Low-quality education fails in the same way. High-quality early education can be an equal- Enriching Early Family Environments izing factor. Can Compensate for Disadvantage The Perry Preschool Program is the flagship early childhood inter- Targeting Disadvantaged Children vention program. Perry enriched the lives of low-income African Promotes Economic Efficiency American children with initial IQs of 85 or below. The intervention We cannot possibly equalize all the factors that contribute to was targeted to 3-year-olds and was relatively modest: 2.5 hours achievement and personal success. But we can invest wisely to per day of classroom instruction, 5 days per week, and 1.5 hours correct disparities that create large and persistent problems that of weekly home visits. Children participated for only two years, threaten the well-being of our nation. and no further intervention was given. But the lives of participants Gaps in the capabilities that play important roles in determin- were tracked for decades to see the effect on school and adult ing diverse adult outcomes open up early across socioeconomic outcomes. groups. The gaps originate before formal schooling begins and Perry did not produce lasting gains in the IQs of its male par- persist through childhood and into adulthood. Remediating the ticipants and produced at best modest gains in IQ for females. Yet problems created by the gaps is not as cost effective as preventing the program has a rate of return of around 7 to 10 percent per them at the outset. annum for males and females-well above the post-World War II For example, schooling after the second grade plays only a minor role in creating or reducing gaps. Conventional measures "To learn more about the Perry Preschool Program, see www.highscope.org. For more of educational inputs-class size and teacher salaries-that information on the Abedecarian Project, see www.fog.uncedu/-abc