INVESTING IN OUR CHILDREN WHAT WE KNOW AND DON’T KNOW ABOUT THE COSTS AND BENEFITS OF EARLY CHILDHOOD INTERVENTIONS Lynn A. Karoly Peter W. Greenwood Susan S. Everingham Jill Houbé M. Rebecca Kilburn C. Peter Rydell Matthew Sanders James Chiesa Funded by a grant from The California Wellness Foundation R The research described in this report was supported by a grant from The California Wellness Foundation. ISBN: 0-8330-2530-9 RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND’s publications do not necessarily reflect the opinions or policies of its research sponsors. © Copyright 1998 RAND All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 1998 by RAND 1700 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1333 H St., N.W., Washington, D.C. 20005-4707 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Internet: [email protected] PREFACE Around the beginning of 1997, RAND was approached by the “I Am Your Child” Early Childhood Public Engagement Campaign to con- duct an independent, objective review of the scientific evidence available on early childhood interventions. “Early childhood inter- ventions” were defined as attempts by government agencies or other organizations to improve child health and development, educational attainment, and economic well-being. The aim was to quantify the benefits of these programs to children, their parents, and society at large. Funding for the project was secured from The California Well- ness Foundation. RAND’s Criminal Justice Program and Labor and Population Pro- gram established an interdisciplinary research team including two economists, a criminologist, two mathematical modelers, and a de- velopmental pediatrician. As the project evolved, it became conve- nient to separate the benefits being examined into two large cate- gories: benefits to the children and parents participating in the programs, and benefits by way of eventual savings to the government (and therefore society in general) from reduced levels of social- service expenditures on participants following the end of the programs. For ease of reference, the first class is typically called “benefits” in this report and the second class, “savings.” Savings are compared with program costs. This study was one of Peter Rydell’s last projects at RAND. Peter, who was largely responsible for Chapter Three, died in October 1997. Peter’s clear, rigorous approach to the analysis of societal costs, iii iv Investing in Our Children benefits, and savings was a hallmark of RAND research in multiple areas of public policy concern over a period of almost 30 years. His insight, optimism, and generosity have been an inspiration to us all. CONTENTS Preface ......................................... iii Figures ......................................... vii Tables.......................................... ix Summary ....................................... xi Acknowledgments................................. xxiii Chapter One INTRODUCTION .............................. 1 The Importance of Early Childhood ................. 2 What Is Early Intervention? ....................... 4 Goals and Approach of This Study .................. 7 Organization of This Report ....................... 9 Chapter Two TARGETED EARLY INTERVENTION PROGRAMS AND THEIR BENEFITS .............................. 11 The Origins of Early Intervention ................... 11 From Theory to Practice: Determining Which Interventions Work ......................... 15 Historical Review of Targeted Early Intervention Programs................................. 18 First Models for Targeted Early Intervention ......... 33 The Next Generation of Targeted Early Intervention Programs................................. 44 More Recent Models of Targeted Early Intervention ... 55 Summary of Findings ........................... 61 v vi Investing in Our Children Outcomes for Children ........................ 63 Outcomes for Mothers ......................... 68 Chapter Three COMPARING COSTS, SAVINGS, AND BENEFITS ....... 73 Programs Selected for Analysis .................... 76 The Elmira PEIP ............................. 79 The Perry Preschool Program .................... 81 Comparing Program Costs to the Government Savings the Programs Generate ................ 84 Elmira PEIP, Higher-Risk Families ................ 85 Elmira PEIP, Lower-Risk Families ................. 88 Perry Preschool Program ....................... 91 Summary .................................. 94 Additional Monetary Benefits to the Rest of Society ..... 96 Sensitivity of Results to Discount Rate ............... 98 Findings from Cost-Savings and Cost-Benefit Analyses ... 100 Chapter Four ISSUES RELEVANT TO INVESTMENT DECISIONS ...... 105 What We Know About Early Childhood Intervention .... 106 What We Don’t Know About Early Childhood Intervention .............................. 108 Are There Optimal Program Designs? .............. 109 How Can Programs Best Be Targeted to Those Who Will Benefit Most? ...................... 110 Can Model Programs Be Replicated on a Large Scale? ............................... 113 What Benefits Do Programs Generate Beyond Their Objectives? ............................... 115 What Are the Implications of the Changing Social Safety Net? ............................... 116 Next Steps for Research and Policy ................. 119 Appendix A. CALCULATION OF THE COSTS AND BENEFITS OF THE ELMIRA PRENATAL/EARLY INFANCY PROJECT ....... 123 B. CALCULATION OF THE COSTS AND BENEFITS OF THE PERRY PRESCHOOL ............................ 137 References ...................................... 143 FIGURES S.1. Effects of Selected Early Intervention Programs on Participating Children ........................ xiv S.2. Program Cost Versus Savings to Government (Taxpayers) ................................ xviii 2.1. Effects of Selected Early Intervention Programs on Participating Children ........................ 64 2.2. Effects of Selected Early Intervention Programs on Participating Mothers ........................ 69 3.1. Sources of Savings to Government: Elmira PEIP, Higher-Risk Families ......................... 88 3.2. Cumulative Costs and Benefits: Elmira PEIP, Higher- Risk Families............................... 89 3.3. Sources of Savings to Government: Perry Preschool ................................. 93 3.4. Cumulative Costs and Benefits: Perry Preschool .... 94 3.5. Program Cost Versus Savings to Government ....... 95 3.6. Benefits to Society from Elmira PEIP and Perry Preschool ................................. 100 3.7. Sensitivity of Estimated Cost and Benefits to Discount Rate: Elmira PEIP, Higher-Risk Families ... 101 3.8. Sensitivity of Estimated Cost and Benefits to Discount Rate: Perry Preschool ................. 102 vii TABLES 2.1. Features of Selected Targeted Early Intervention Programs ................................. 21 2.2. Children’s Measured Outcomes and Results for Selected Targeted Early Intervention Programs ..... 26 2.3. Parent’s (Mother’s) Measured Outcomes and Results for Selected Targeted Early Intervention Programs ................................. 31 3.1. Outcomes Measured in Elmira PEIP ............. 81 3.2. Outcomes Measured in Perry Preschool ........... 83 3.3. Costs and Savings: Elmira PEIP, Higher-Risk Families .................................. 86 3.4. Costs and Savings: Elmira PEIP, Lower-Risk Families .................................. 90 3.5. Different Baselines May Explain Different Improvements ............................. 91 3.6. Costs and Savings: Perry Preschool .............. 92 3.7. Benefits to Society from Analyzed Early Intervention Programs ....................... 99 4.1. Number and Percentage of Children Born with Various Risk Factors ......................... 112 A.1. Program Effects: Elmira PEIP, Higher-Risk Families .. 126 A.2. Detailed Cost and Benefits: Elmira PEIP, Higher-Risk Families .................................. 127 A.3. Program Effects: Elmira PEIP, Lower-Risk Families .. 131 A.4. Detailed Cost and Benefits: Elmira PEIP, Lower-Risk Families .................................. 132 B.1. Program Effects: Perry Preschool................ 139 B.2. Detailed Cost and Benefits: Perry Preschool ....... 140 ix SUMMARY Over the last year or so, there has been a renewed interest in the in- fluence of early childhood—especially the first 3 years of life—on child health and development, educational attainment, and eco- nomic well-being. Public attention has been stimulated by television shows and stories in national news magazines, and governors and legislators have been initiating programs to direct budgetary sur- pluses to services for young children. Much of this activity has been given impetus by research findings that the great majority of physical brain development occurs by the age of three. These findings have been interpreted to suggest that early childhood furnishes a window of opportunity for enriching input and a window of vulnerability to such social stressors as poverty and dysfunctional home environ- ments. The response has been an attempt to promote healthy child development, particularly among disadvantaged children, with home visits by nurses, parent training, preschool, and other pro- grams.