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Return on Early Human Investment

In Uncategorized on October 24, 2009 at 10:12 pm

Abstract

Policy discussions to ameliorate socioeconomic (SES) inequalities are increasingly focused on investments in early childhood. Yet such interventions are costly to implement, and clear evidence on the optimal time to intervene to yield a high economic and social return in the future is meagre. The majority of successful early childhood interventions start in the preschool years. However socioeconomic gradients in cognitive skills, socio-emotional functioning and health can be observed by age three, suggesting that preventative programmes starting earlier in childhood may be even more effective. We discuss the optimal timing of early childhood intervention with reference to recent research in developmental neuroscience. We motivate the need for early intervention by providing an overview of the impact of adverse risk factors during the antenatal and early childhood periods on outcomes later in life. We provide a brief review of the economic rationale for investing early in life and propose the ‘‘antenatal investment hypothesis’’. We conclude by discussing a suite of new European interventions that will inform this optimal timing debate

“The antenatal investment hypothesis

Current evidence on antenatal interventions, while limited, would therefore suggest that the returns to investing in this period are high, yet an explicit test of this hypothesis is lacking. By amending Fig. 2a to incorporate the antenatal period from conception to birth Fig. 2b presents a graphical illustration of the antenatal investment hypothesis. The hypothesis can be displayed as two downward sloping investment curves representing the rate of return to investment starting in the antenatal period (upper curve), and the postnatal period (lower curve). If the hypothesis is correct, the return in both cases is greatest for earlier rather than later investment. This hypothesis also indicates that the return on the antenatal investment will be higher than the postnatal investment, both initially and in the long-term, and may increase the rate of return on investment at every subsequent period. As the Nurse–Family Partnership had a greater impact on young women having their first child, the hypothesis may be further extended to investigate whether supporting women at the beginning of their reproductive life leads the benefits of the intervention to be carried over to subsequent births. An explicit study which tests the antenatal investment hypothesis and models the impact of intervening at different stages of the child’s and mother’s life is needed. Current knowledge in this area is based on a small number of predominantly US studies, and it cannot be assumed that the effectiveness of a US-style intervention can be replicated across European settings given the difference in social welfare systems and cultural contexts. For example, social welfare spending in Ireland is half that of Sweden (OECD, 2007). An optimal study design would incorporate a series of randomised interventions with programmes starting at difference ages. A longitudinal study would reveal the impact of the timing.”

Heckman timing and economic efficiency.pdf
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