Hostname: page-component-cd9895bd7-jn8rn Total loading time: 0 Render date: 2024-12-27T23:00:07.690Z Has data issue: false hasContentIssue false
  • English
  • Français

Toward Standardization of Benefit-Cost Analysis of Early Childhood Interventions

Published online by Cambridge University Press:  19 January 2015

Lynn A. Karoly
Lynn A. Karoly*
Affiliation:
RAND Corporation
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

A growing body of benefit-cost analyses (BCAs) of early childhood programs has been prompted by the increased demand for results-based accountability when allocating public and private sector resources. While the BCAs of early childhood programs serve to make such investments more compelling, there are limitations in the current state of the art, including a lack of standardization in the BCA methods used, from discount rates to shadow prices. The objective of this paper is to delineate a set of standards for conducting BCAs of early childhood programs. The paper reviews the existing evidence of the economic returns from early childhood programs that serve children and families in the first five years of life, discusses the challenges that arise in applying the BCA methodology such programs, highlights the variation in current methods used, and proposes a set of standards for applying the BCA methodology to early childhood programs. The recommendations concern issues such as the discount rate to use and the age to which costs and benefits should be discounted; stakeholder disaggregation; outcomes to value, the associated values, and projections of future outcomes; accounting for uncertainty; sensitivity analysis; and reporting of results. The proposed standards can guide the choices that analysts need to make about the methods to use when performing BCAs for one or more early childhood programs and they can support greater transparency in the results the analysts provide. The standards can also support consumers of the BCA results in their need to understand the methods employed and the comparability across different studies.

Keywords

benefit-cost analysisearly childhood interventions
Type
Article
Information
Journal of Benefit-Cost Analysis , Volume 3 , Issue 1 , 25 January 2012 , pp. 1 - 45
Copyright
Copyright © Society for Benefit-Cost Analysis 2012

References

Aos, Steve, Lieb, Roxanne, Mayfield, Jim, Miller, Marna, and Pennucci, Annie, Benefits and Costs of Prevention and Early Intervention Programs for Youth, Olympia: Washington State Institute for Public Policy, September 17, 2004.Google Scholar
Barnett, W. Steven, “Benefit-Cost Analysis of Preschool Education: Findings from a 25-Year Follow-Up,” American Journal of Orthopsychiatry, Vol. 63, No. 4, 1993, pp. 500–508.Google Scholar
Barnett, W. Steven, “Long-Term Effects of Early Childhood Programs on Cognitive and School Outcomes,” The Future of Children, Vol. 5, 1995, pp. 25–50.Google Scholar
Barnett, W. Steven, Lives in the Balance: Age-27 Benefit-Cost Analysis of the High/Scope Perry Preschool Program (Monographs of the High/Scope Educational Research Foundation, 11), Ypsilanti, MI: High/Scope Press 1996.Google Scholar
Barnett, W. Steven, Belfield, Clive R., and Nores, Milgros, “Lifetime Cost-Benefit Analysis,” in Schweinhart, Lawrence J., Montie, Jeanne, Xiang, Zongping,Barnett, W. Steven, Belfield, Clive R., and Nores, Milagros, Lifetime Effects: The High/Scope Perry Preschool Study Through Age 40. (Monographs of the High/Scope Educational Research Foundation, 14), Ypsilanti, MI: High/Scope Press, 2005, pp. 130–157.Google Scholar
Barnett, W. Steven and Masse, Leonard N., “Comparative Benefit-Cost Analysis of the Abecedarian Program and its Policy Implications,” Economics of Education Review, Vol. 26, 2007, pp. 113–125.Google Scholar
Belfield, Clive R., Nores, MilagrosBarnett, W. Steven, and Schweinhart, Lawrence, “The High/Scope Perry Preschool Program: Cost-Benefit Analysis Using Data from the Age-40 Follow-up,” Journal of Human Resources, Vol. 41, No. 1, Winter 2006, pp. 162–190.Google Scholar
Benasich, April A., Brooks-Gunn, Jeanne, and Clewell, Beatriz Chu, “How Do Mothers Benefit from Early Intervention Programs?” Journal of Applied Developmental Psychology, Vol. 13, 1992, pp. 311–362.Google Scholar
Berrueta-Clement, John R., Schweinhart, Lawrence J., Barnett, W. Steven, Epstein, Ann S., and Weikart, David P., Changed Lives: The Effects of the Perry Preschool Program on Youths Through Age 19, Monographs of the High/Scope Educational Research Foundation, No. 8, Ypsilanti, MI: High/Scope Press, 1984.Google Scholar
Boardman, Anthony E. and Greenberg, David H., “Discounting and the Social Discount Rate,” in Thompson, Fred and Green, Mark T., eds., Handbook of Public Finance, New York, NY: Marcel Dekker, Inc., 1998, pp. 269–318.Google Scholar
Brooks-Gunn, Jeanne, Berlin, Lisa, and Fuligni, Allison, “Early Childhood Intervention Programs: What About the Family?” in Shonkoff, Jack P. and Meisels, Samuel J., eds., Handbook of Early Childhood Intervention, 2nd edition, New York, NY: Cambridge University Press, 2000.Google Scholar
Cook, Joseph H., “Principles and Standards for Benefit-Cost Analysis of Public Health Preparedness and Pandemic Mitigation Programs,” paper commissioned by the Benefit-Cost Analysis Center, University of Washington, July 2009. As of December 1, 2010: http://evans.washington.edu/research/centers/benefit-cost-analysis/principles-and-standards-papersGoogle Scholar
Currie, Janet, “Early Childhood Education Programs,” Journal of Economic Perspectives, Vol. 15, No. 2, 2001, pp. 213–238.Google Scholar
Dasgupta, Partha, Mäler, Karl-Göran, and Farrow, R. Scott, “Intergenerational Equity, Social Discount Rates and Global Warming,” unpublished manuscript (updated from a paper with the same title that appeared in Portney, Paul and Weyant, John, eds., Discounting and Intergenerational Equity, Washington, DC: Resources for the Future, 1999), Department of Economics, University of Cambridge, 2000.Google Scholar
ScottFarrow, R. Farrow, R. and Viscusi, W. Kip, “Principles and Standards for the Benefit-Cost Analysis of Public Safety,” paper commissioned by the Benefit-Cost Analysis Center, University of Washington, 2010. As of December 1, 2010: http://evans.washington.edu/research/centers/benefit-cost-analysis/principles-and-standards-papersGoogle Scholar
Gold, Martha R., Seigel, Joanna E., Russell, Louise B., and Weinstein, Milton C., eds., Cost-Effectiveness in Health and Medicine, New York, NY: Oxford University Press, 1996.Google Scholar
Hartman, Robert W., “One Thousand Points of Light Seeking a Number: A Case Study of CBO’s Search for a Discount Rate Policy,” Journal of Environmental Economics and Management, Vol. 18, 1990, pp. S3–S7.Google Scholar
Heckman, James J., LaLonde, Robert J. and Smith, Jeffrey A., “The Economics and Econometrics of Active Labor Market Programs,” in Ashenfelter, Orley and Card, David, eds., Handbook of Labor Economics, Vol. III, Amsterdam: North-Holland, 1999, pp. 1865–2097.Google Scholar
Heckman, James J., Moon, Seong Hyeok, Pinto, Rodrigo, Savelyev, Peter A., and Yavitz, Adam, “The Rate of Return to the High Scope Perry Preschool Program,” Journal of Public Economics, Vol. 94, No. 1–2, February 2010, pp. 114–128.Google Scholar
Karoly, Lynn A., Valuing Benefits in Benefit-Cost Studies of Social Programs, TR-643, Santa Monica, CA: RAND Corporation, 2008.Google Scholar
Karoly, Lynn A., Overview of Benefit-Cost Analysis for Early Childhood Interventions, presentation at the Workshop on Strengthening Benefit-Cost Analysis Methodology for the Evaluation of Early Childhood Interventions, March 4–5, National Academies, Washington, DC, 2009.Google Scholar
Karoly, Lynn A., Greenwood, Peter W., Everingham, Susan S., Jill Houbé, M.Rebecca Kilburn, C.Rydell, Peter, Sanders, Matthew, and Chiesa, James, Investing in Our Children: What We Know and Don’t Know about the Costs and Benefits of Early Childhood Interventions, Santa Monica, CA: The RAND Corporation, MR-898, 1998.Google Scholar
Karoly, Lynn, Kilburn, Rebecca, and Cannon, Jill, Early Childhood Interventions: Proven Results, Future Promise, Santa Monica, CA: RAND Corporation, MG-341, 2005.Google Scholar
Kilburn, M. Rebecca and Karoly, Lynn A., The Economics of Early Childhood Policy: What the Dismal Science Has to Say About Investing in Children, OP-227, Santa Monica, CA: RAND Corporation, 2008.Google Scholar
Levin, Henry M. and McEwan, Patrick J.Cost-Effectiveness Analysis: Methods and Applications, 2nd edition, Thousand Oaks, CA: Sage Publications, Inc., 2000.Google Scholar
Loomis, John B., “Incorporating Distributional Issues into Benefit-Cost Analysis: Why, How, and Two Empirical Examples Using Non-market Valuation,” Journal of Benefit-Cost Analysis, Vol. 2, No. 1, Article 5, 2011. As of April 1, 2011 :http://www.bepress.com/jbca/vol2/iss1/5Google Scholar
Lott, John R. Jr., “Principles and Standards for the Benefit-Cost Analysis of Crime,” paper commissioned by the Benefit-Cost Analysis Center, University of Washington, November 2009. As of December 1, 2010: http://evans.washington.edu/research/centers/benefit-cost-analysis/principles-and-standards-papersGoogle Scholar
Ludwig, Jens, and Phillips, Deborah, “The Benefits and Costs of Head Start,” Social Policy Report, Vol. XXI, No. 3, 2007, pp. 3–18.Google Scholar
Masse, Leonard N., and Barnett, W. Steven, “A Benefit-Cost Analysis of the Abecedarian Early Childhood Intervention,” in Levin, Henry M. and McEwan, Patrick J., eds., Cost-Effectiveness and Educational Policy, Larchmont, NY: Eye on Education, Inc., 2002, pp. 157–173.Google Scholar
McCormick, Marie C., Brooks-Gunn, Jeanne, Buka, Stephen L., Goldman, Julie, Yu, Jennifer, Salganik, Mikhail, Scott, David T., Bennett, Forrest C., Kay, Libby L., Bernbaum, Judy C., Bauer, Charles R., Martin, Camilia, Woods, Elizabeth R., Martin, Anne, and Casey, Patrick H., “Early Intervention in Low Birth Weight Premature Infants: Results at 18 Years of Age for the Infant Health and Development Program,” Pediatrics, Vol. 117, 2006, pp. 771–780.Google Scholar
Meisels, Samuel J., and Shonkoff, Jack P., eds., Handbook of Early Childhood Intervention, New York, NY: Cambridge University Press, 1990.Google Scholar
Miller, Ted R., Cohen, Mark A., and Wiersema, Brian, Victim Costs and Consequences: A New Look, Washington, DC: National Institute of Justice, January 1996.Google Scholar
Miller, Ted R., Fisher, Deborah A., and Cohen, Mark A., “Costs of Juvenile Violence: Policy Implications,” Pediatrics, Vol. 107, No. 1, January 2001.Google Scholar
Moore, Mark A., Boardman, Anthony E., Vining, Aidan R., Weimer, David L., and Greenberg, David H., “‘Just Give Me a Number!’ Practical Values for the Social Discount Rate,” Journal Of Policy Analysis And Management, Vol. 23, No. 4, 2004, pp. 789–812.Google Scholar
National Research Council (NRC) and Institute of Medicine (IOM), Committee on Strengthening Benefit-Cost Analysis Methodology for the Evaluation of Early Childhood Interventions, Strengthening Benefit-Cost Analysis for Early Childhood Interventions: Workshop Summary, Washington, DC: National Academies Press, 2009.Google Scholar
Nores, Milagros, Belfield, Clive R., Barnett, W. Steven, and Schweinhart, Lawrence, “Updating the Economic Impacts of the High/Scope Perry Preschool Program,” Educational Evaluation and Policy Analysis, Vol. 27, No. 3, Fall 2005, pp. 245–261.Google Scholar
Office of Management and Budget (OMB), “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs (Revised),” Circular No. A-94, Washington, DC: OMB, 1992. As of December 1, 2010: http://www.whitehouse.gov/omb/circulars/a094/a094.htmlGoogle Scholar
Reynolds, Arthur J., Temple, Judy A., Robertson, Dylan L., and Mann, Emily A., “Age 21 Cost-Benefit Analysis of the Title I Chicago Child-Parent Centers,” Educational Evaluation and Policy Analysis, Vol. 24, No. 4, Winter 2002, pp. 267–303.Google Scholar
Reynolds, Arthur J., Temple, Judy A., White, Barry A., Ou, Suh-Ruu, and Robertson, Dylan L., “Age-26 Cost-Benefit Analysis of the Child-Parent Center Early Education Program,” Child Development, Vol. 82, No. 1, 2011, pp. 379–404.Google Scholar
Schweinhart, Lawrence J., Barnes, Helen V., and Weikart, David P., Significant Benefits: The High/Scope Perry Preschool Study Through Age 27 (Monographs of the High/Scope Educational Research Foundation, 10), Ypsilanti, MI: High/Scope Press, 1993.Google Scholar
Schweinhart, Lawrence J., Jeanne, Montie, Zongping, Xiang, Barnett, W. Steven, Belfield, Clive R., and Nores, Milagros, Lifetime Effects: The High/Scope Perry Preschool Study Through Age 40 (Monographs of the High/Scope Educational Research Foundation, 14), Ypsilanti MI, : High/Scope Press, 2005.Google Scholar
Shonkoff, Jack P., and Phillips, Deborah A., eds., From Neurons to Neighborhoods: The Science of Early Child Development, Washington, DC: National Academy Press, 2000.Google Scholar
US Department of Health and Human Services, Head Start Impact Study: First Year Findings, Washington, DC: Administration for Children and Families, US Department of Health and Human Services, June 2005. As of December 1, 2010: http://www.acf.hhs.gov/programs/opre/hs/impact_study/reports/first_yr_fin ds/first_yr_finds.pdfGoogle Scholar
US Environmental Protection Agency (EPA), Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for Lead, Research Triangle Park, NC: Office of Air Quality Planning and Standards, US EPA, 2008. As of December 1, 2010: http://www.epa.gov/ttnecas1/regdata/RIAs/finalpbria.pdfGoogle Scholar
US Government Accountability Office (GAO), Discount Rate Policy, Washington, DC: Government Printing Office, May 1991.Google Scholar
Vining, Aidan R. and Weimer, David L., “General Issues Concerning the Application of Benefit-Cost Analysis to Social Policy,” paper commissioned by the Benefit-Cost Analysis Center, University of Washington, June 2009. As of December 1, 2010: http://evans.washington.edu/research/centers/benefit-cost-analysis/principles-and-standards-papersGoogle Scholar
Vining, Aidan R. and Weimer, David L., “An Assessment of Important Issues Concerning the Application of Benefit-Cost Analysis to Social Policy, ”Journal of Benefit-Cost Analysis, Vol. 1, No. 1, Article 6, 2010. As of December 1, 2010: http://www.bepress.com/jbca/vol1/iss1/6Google Scholar
Yoshikawa, Hirokazu, “Long-Term Effects of Early Childhood Programs on Social Outcomes and Delinquency,” The Future of Children, Vol. 5, 1995, pp. 51–75.Google Scholar
Zerbe, Richard O. Jr., “A Reliable Internal Rate of Return,” working paper, July 2010.Google Scholar
Zerbe, Richard O. Jr., Davis, Tyler Blake, Nancy, Garland, and Tyler, Scott “Toward Principles and Standards in the Use of Benefit-Cost Analysis,” Benefit-Cost Analysis Center, University of Washington, November 2010. As of December 1, 2010: http://evans.washington.edu/files/DRAFT_Principles_and_Standards_Rep ort_12_22_2010.pdfGoogle Scholar
Zerbe, Richard O. Jr. and Dively, Dwight D., Benefit Cost Analysis in Theory and Practice, New York, NY: Harper and Row, 1974.Google Scholar