The Last Economist to Understand that Bad Policy Has Ill Effects
Nobel Memorial Prize Winning Economist James Heckman has a piece in the Opinionator section of the NYT (is that a printed section, by the way, or online-only?) that reveals the lie behind the farce that is Arne Duncan’s “leadership”:
Children raised in disadvantaged environments are not only much less likely to succeed in school or in society, but they are also much less likely to be healthy adults. A variety of studies show that factors determined before the end of high school contribute to roughly half of lifetime earnings inequality. This is where our blind spot lies: success nominally attributed to the beneficial effects of education, especially graduating from college, is in truth largely a result of factors determined long before children even enter school.
This comes as a surprise to absolutely no one. The menu at Denny’s adveritises that children who eat breakfast perform 20% better than those who don’t. I’m guessing that one reason the difference is that low is that some portion of those children eat breakfast at Denny’s, and become too soporific by midmorning to concentrate, while the kids whose stomachs are growling until lunch miss even that opportunity.
As Heckman notes, any sane economist would support Earlier and Earlier Interventions:
Critics say that early childhood education is expensive and that it is not effective. They are right about the cost, but terribly wrong about the large return on the investment. Quality early childhood programs for disadvantaged children more than pay for themselves in better education, health and economic outcomes.
Proof comes in the form of a long-term cost-benefit analysis of effective early childhood programs….
[The Perry Preschool project] did not produce lasting gains in the I.Q.’s of its participants, but it did boost character skills that produced better education, economic and life outcomes. The economic rate of return from Perry is in the range of 6 percent to 10 percent per year per dollar invested, based on greater productivity and savings in expenditures on remediation, criminal justice and social dependency. This compares favorably to the estimated 6.9 percent annual rate of return of the United States stock market from the end of World War II to the 2008 meltdown. And yes, these estimates account for the costs of raising taxes and any resulting loss of economic activity.
There’s your bloody Equity Premium.
Heckman’s other example is one place where “ObamaCare”–credit where due, Obama is the first president to live under a few years of state-sponsored health care*–makes replication even easier:
A similar long-term early childhood study, the Carolina Abecedarian Project, better known as ABC, gave cognitive stimulation, training in self-control and social skills, and parental education starting in the first few months of life. The children were also provided with health checkups and health care. Four groups of individuals born between 1972 and 1977 were randomly assigned to treatment and control groups, and their progress has been monitored so far through studies conducted at ages 12, 15, 21 and 30. This program had lasting effects on I.Q., parenting practices and child attachment, leading to higher educational attainment and more skilled employment among those in the treatment group.
Most dramatic were ABC’s effects on lifelong health. Now, over 30 years later, those treated in ABC have lower blood pressure, lower abdominal obesity, less hypertension and less likelihood of metabolic syndrome and cardiovascular conditions as adults. This evidence clearly shows the power of quality early childhood programs for producing flourishing people with healthier lives, which increases productivity and lowers health care costs. [emphases mine]
If we’re going to live longer, we also need a workforce that is able to work longer. Otherwise, we end up with what I will call The Mannion Conundrum, after one of Lance’s posts.**
And it’s easier to live longer if you start life on a better footing. My kids spent a year qualified for Free Lunch, but at least they started on first base.
Of course, Heckman isn’t the first economist to notice that early intervention–including health, nutrition, and education–pays dividends. It’s just that the most prominent “Nobel Memorial Prize Winning Economist” to point that out is fictional. Which, sadly, doesn’t mean he wasn’t correct then (and isn’t even moreso now). So even as John Kasich pillages his own, let’s look back on the better days when people paid attention to an Economics Professor who knew from which he spoke, Josiah Bartlett:
Click Here for Video
James Heckman couldn’t have said it better. And would probably be very happy with the Korean subtitles, since they followed a version of his recommendations in the post-1953 era.
*Hawaii has had the Prepaid Health Care Act since 1974, when BarryO was 13.