Phil Power: The ROI of starting kids off right

Category: Top News Published on Monday, 30 April 2012 14:15 Written by Phil Power

How do you justify taking a public policy position?

 Essentially, there are only two approaches: You can present an argument based on morality -- or you can base it on outcomes -- essentially reasoning from the expected “return on investment.”
 Half a century ago, when there was much more of a broad consensus on what government was for, reasoning based on projected results was the more common argument.
 Today, however, there are far more appeals to morality. Appealing on that basis is relatively easy to do. It’s also comforting to wrap one’s preferences in the gauzy warmth of moral principles.
 And to be sure, in some cases – the civil rights movement in early 1960s America, for example – the moral case has been so overwhelming that it decisively persuaded the majority of people that a series of specific and definite policies were needed.
 However, that is seldom the case, More commonly, one man’s morality is another’s heresy. Right-to-lifers argue passionately that abortion is intrinsically evil, as it involves the taking of a life. Pro-choice advocates assert, just as passionately, that to deny a woman choice over her reproductive rights is just as repellent.
 Over the years, moral philosophers have argued the relative merits of both sides endlessly … and without much social effect.
 Arguments based on moral assertions have a strange way of winding up with unintended consequences. Take the run-up to the recent Great Recession. Policy-makers in Washington argued that the moral desire to increase home ownership as widely as possible ultimately caused banks to issue rafts of sub-prime mortgages that precipitated the ultimate loss of homes for millions.
 Which goes to show that it is often smart to make a dispassionate, hard-headed cost-benefit assessment before one chooses between policy alternatives.
 Perhaps the best example of this latter approach: Home visitation programs aimed at infants and toddlers and schooling enrichments for pre-kindergartners.
 That’s the intellectual underpinning for an important report released last week, “Detroit’s One-Child School Readiness Dividend,” sponsored by the Max & Marjorie Fisher Foundation. Research was carried out by Wilder Research, a firm in St. Paul, MN.
 The study presents the eye-widening conclusion that taxpayers will save $100,000 over the lifetime of every vulnerable Detroit child who, thanks to early childhood programs, has been helped to be fully ready to enter kindergarten at age five. Throughout Michigan, the average savings amount to $39,500 per child.
 What the study was analyzing was the individual benefits obtained -- and negative social costs avoided --  as result of early childhood programs focused on at-risk children aged 3-5.
 When such a child goes to preschool and then is able to succeed in kindergarten through third grade, that enormously increases their changes of success in life.
 She or he is far more likely to graduate form high school and college, have a successful marriage, be a good parent and increase income. In fact, the study predicts that says a child who goes to preschool will earn far more than one who doesn’t.
 Additionally, the child who goes to preschool is far less likely to wind up in prison or poverty and less likely to end up on welfare or some other expensive social program. He is less likely to cost taxpayers money for special education programs; less likely to cost us more by having to repeat grades in school. Most importantly, he is far less likely to end up criminally victimizing others.
 This combination of societal benefits and savings are what make the case for investing in early childhood programs so compelling. Earlier studies indicated that the rate of return for early childhood programs like Head Start range from 7-to-1 to 14-to-1. That’s seven dollars gained for every one invested. Now the Fisher Foundation study suggests the rate of return is even higher.
 Sadly, we haven’t been acting on these very obvious lessons. Michigan spends something like $13 billion on K-12 schools every year, but only $200-$300 million on early childhood programs.
 Diverting some of the money we now spend elsewhere to pre-kindergarten programs would amount to not much more than a rounding error, and the return on investment would be substantial. 
 I’ve known Phil Fisher, president of the Fisher Foundation, for years. He’s smart. He’s tough. He’s a committed citizen. And he describes himself as an “unreconstructed capitalist.”
  What that means, to him and to many other rational players in society, is that there is a powerful case to be made for investing in programs that bear such powerful returns.
 Fisher is also on the board of an outfit called Children’s Leadership Council of Michigan, a group of business leaders who reason the most cost-effective way of obtaining a skilled, competitive work force in Michigan is through early childhood programs.
 They’re in the process now of gearing up a powerful list of business endorsers who are interested in the ROI (Return on Investment) for early childhood programs.
 Intelligent people may sometimes disagree on priorities. But his foundation’s important study demonstrates it’s far better to justify public policy by hardness of the head than by assertions, no matter how passionate, of some sort of ill-defined morality.

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Editor’s Note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and chairman of The Center for Michigan, a nonprofit, bipartisan centrist think-and-do tank, designed to cure Michigan’s dysfunctional political culture. He is also on the board of the Center’s Business Leaders for Early Education. The opinions expressed here are Power’s own and do not represent the official views of The Center. He welcomes your comments at This email address is being protected from spambots. You need JavaScript enabled to view it.