Working Paper: NBER ID: w23479
Authors: Jorge Luis Garcia; James J. Heckman; Duncan Ermini Leaf; Mara José Prados
Abstract: This paper quantifies and aggregates the multiple lifetime benefits of an influential high-quality early childhood program with outcomes measured through midlife. Guided by economic theory, we supplement experimental data with non-experimental data to forecast the life-cycle benefits and costs of the program. Our point estimate of the internal rate of return is 13.7% with an associated benefit/cost ratio of 7.3. We account for model estimation and forecasting error and present estimates from extensive sensitivity analyses. This paper is a template for synthesizing experimental and non-experimental data using economic theory to estimate the long-run life-cycle benefits of social programs.
Keywords: Early Childhood Programs; Lifecycle Benefits; Cost-Benefit Analysis; Social Mobility
JEL Codes: C93; I28; J13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Programs lead to a 137% tax-adjusted internal rate of return (H29) | Benefits generated by the program outweigh the costs significantly (H43) |
| Investment in the program (G31) | Substantial returns in terms of social benefits (H43) |
| Treatment effects on cognitive and socioemotional skills (I21) | Significant and positive impact on education, employment, and health (I24) |
| Average treatment effect on labor income at age 30 (J39) | Nearly $20,000 (2014 USD) (A39) |
| Participation in the Carolina Abecedarian Project (ABC) (I21) | Boost in various outcomes for disadvantaged children (I24) |
| Participation in the Carolina Approach to Responsive Education (CARE) (I24) | Boost in various outcomes for disadvantaged children (I24) |