Microsoft Word Heckman final 2007-03-22c jsb doc

 

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workplace, and society at large. 

Rigorous statistical analysis is not needed to show that parents and their resources matter, 

although there is a large body of empirical evidence that supports this claim, as we document 

below. The issue that has stymied social policy is how to compensate for adverse family 

environments in the early years. One approach has been to reduce the material deprivation 

suffered by the poor with transfers from the state, as in Lyndon Johnson’s War on Poverty. 

Another approach has been to bolster the family with programs outside the home. Sometimes 

children have been removed from the biological families, as in the case of the American Indians 

in the early twentieth century. Policies that have removed children from homes have had 

catastrophic consequences.

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An emerging body of evidence suggests that there is a better way to improve the early 

years of disadvantaged children. Enriched preschool centers available to disadvantaged children 

on a voluntary basis coupled with home visitation programs have a strong track record of 

promoting achievement for disadvantaged children. The economic return to these programs is 

high, especially when we consider alternative policies that target children from disadvantaged 

environments or the policies targeted to the young adults who emerge from them. We review the 

evidence on these programs and suggest that some version of them be used to supplement the 

resources of disadvantaged families with children. 

Our logic is simple and compelling. Education and human skill are major factors 

determining productivity, both in the workplace and in society. The family is a major producer of 

the skills and motivation required for producing successful students and workers. The most 

effective policy for improving the performance of schools is supplementing the childrearing 

resources of the disadvantaged families sending children to the schools. The family is a major 

determinant of child participation in crime and social deviance. A family supplementation policy 

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is a successful anti-crime policy. 

Our emphasis on early childhood interventions does not deny the importance of schools 

or firms in producing human skill. Indeed, if proven early intervention programs are adopted, 

schools will be more effective, firms will have better workers to employ and train, and the prison 

population will decline. At lower cost to society, bolstered families will produce better educated 

students, more trained workers and better citizens. 

This paper proceeds in the following way. We first discuss the problem of the supply of 

skills to the American economy. Growth in both the quantity and the quality of the labor force 

traditionally has been a major source of U.S. output growth. Given current trends, U.S. growth 

prospects are poor. Labor force growth is slowing, especially that of young and skilled workers 

who are a source of vitality for the entire economy. The composition of the future workforce will 

shift towards workers from relatively more dysfunctional families with commensurately worse 

skills. 

We next discuss the problem of crime in America. Even though the crime rate has fallen 

in recent years, the levels and costs of crime are still very high. The damage to victims and the 

resources spent on preventing crime and on incarcerating criminals are large. Early intervention 

programs targeted towards disadvantaged families reduce participation in crime. On purely 

economic grounds, the case for early childhood intervention is strong. 

After describing these two major social problems that impair the productivity of 

American society, we summarize trends in adverse child environments. We summarize a vast 

literature in social science that establishes that dysfunctional and disadvantaged families are 

major producers of cognitive and behavioral deficits that lead to adverse teenage and adult social 

and economic outcomes. The effects of disadvantage appear early and persist. Remediating these 

disadvantages at later ages is costly. Human abilities affect lifetime performance and are shaped 

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early in the life of the child. Early interventions promote cumulative improvements. Enriched 

interventions targeted towards children in disadvantaged environments are cost-effective 

remedies for reducing crime and the factors that breed crime, and raising productivity in schools 

and in the workplace. 

We then move on to summarize the findings of the literature on the economics of child 

development that demonstrates the importance of both cognitive and noncognitive abilities in 

shaping child educational and economic outcomes. Both types of abilities are major determinants 

of the economic return to education. 

Both cognitive and noncognitive abilities are shaped early in life and early differences in 

abilities persist. Gaps in college attendance across socioeconomic groups are largely shaped by 

abilities formed in the early years. Gaps in child ability across families of different income levels 

are associated with parental environments and parenting practices. Early interventions can 

partially remediate these deficits. Later interventions are much less effective. At current levels of 

investment, American society over-invests in public job training and formal education and under-

invests in early education for disadvantaged children. 

We summarize the evidence from a variety of early intervention programs targeted toward 

disadvantaged children and focus on three early interventions that followed participants into 

adulthood. Some of these interventions are evaluated by the method of random assignment. Early 

interventions reduce crimes, promote high school graduation and college attendance, reduce 

grade repetition and special education costs, and help prevent teenage births. They raise 

achievement as measured by test scores. Very early interventions also appear to raise IQ, 

especially for girls. Cost-benefit analyses of these programs reported in the literature show that 

they are cost effective. Estimated rates of return are 16%: 4% for participants and 12% for 

society at large. The paper concludes with a summary of the argument and some specific policy 

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