Advocates of early childhood education–programs like Head Start–often claim that the social benefits so far outweigh the costs that money budgeted for such programs should be considered an investment in the future rather than ordinary government spending.
But are those benefits real? It’s almost impossible to measure such things in the abstract. Studies that show the benefits or lack thereof tend to be riddled with questionable assumptions or methodological programs. And so far very little effort has gone in to harnessing our usual market based methods to predict future returns.
Mike Mandel over at Business Week notes that Congressman Jared Polis wants to do exactly that: encourage private investment in early education by creating some kind of investment security.
Polis, with a long history as an entrepreneur and an education supporter, was discussing ways to get the private sector to invest in desirable social goods, such as early childhood education. His point (broadly interpreted by me) was that there is a systematic market failure: Even if the social return on investment in early childhood education is high, as the data seems to show, there’s no way for private investors to take advantage of these opportunities.
In particular, the data seems to show that improving early childhood education seems to reduce a wide variety of government expenses, including crime and prisons. Polis suggested creating securities where private investors could put money into early childhood education, and at some point in the future get a share of the cost savings. In the language of economics, he’d create private property rights in future tangible fiscal benefits from social investment (my words, not his).
It’s not clear how exactly this would work. Would it create a claim on the future income of the students of early childhood education programs? A tax credit for the budget savings from reduced expenditures for things like welfare and jail? There seems to be a serious danger that the same problems in measuring tangible benefits from hearly childhood education would apply to measuring the payoffs from private investment.
But let’s suppose we could accurately gauge the return with Head Start Securities. Would this result in more private funding for early childhood education? Charles Murray thinks it wouldn’t. In fact, it would likely reveal that such programs are tremendous wastes of money. He likes the idea of the securities for precisely this reason, calling it a “great idea” for “blowing the claims for early childhood intervention out of the water.”
“I think we all ought to get behind this idea, and thereby prompt some unsentimental hedge-fund guys to take a hard look at the claimed returns for early childhood intervention and the data that are being used to support those claims,” Murray writes. “I predict their technical conclusion will be ‘You can’t be serious.’ Maybe someone will pay attention to them.”