Pre-K as Cost-Effective Economic Development?

Timothy BartikIn the past I have complained (and I plan to complain in the future!) about the way in which state and local governments typically encourage local economic growth using tax give-aways (incentives!) for businesses.

I appreciated this TEDx talk’s research-driven approach to arguing for a different model, based on investing in Pre-Kindergarten education.  Since my city just went through this issue last year at the ballot box, I took notes.

Economic Benefits of Pre-K

Timothy Bartik’s argument is as follows:

1. A major determinant of local wages is the level of education, measured (by proxy) using the % of college graduates in a given metropolitan area.[1] 

2. More interestingly, however, is that the direct benefits to the individual of a college education – $725K more earnings per person over a lifetime – are bested by the indirect benefits of a college education on the earnings potential of other people in the area – $998K over a lifetime.  [See minute 7:35 of the video.] 

3. In other words, the herd – or to be more anthropologic, the metropolitan area – benefits more than the individual, from an educated workforce.

4. People are not as mobile in the United States as we think.  60% of Americans stay within the state they were born. [See minute 10:30 in the video.] That means that investments by state and local governments actually do get enjoyed by the state and local residents.  Hence, he argues, we’re not overpaying on educating kids, only to suffer brain drain.

What about costs?

Bartik acknowledges that costs will always be an issue. 

Among the hardest parts about investing in Pre-K as an economic development plan is the giant lag time between Pre-K implementation and higher education outcomes, leading to higher wages over a couple of decades.

The time horizon far outweighs any political leader’s calculus for holding office, as well as most taxpayers’ willingness to invest in a wealthier future.

But boy does it seem affordable to me.

Bartik puts a $30 Billion number on instituting universal Pre-K in the United States.  That seems to me like a shockingly low number to invest nationally on economic development.

Maybe he’s way low on that estimate.  It’s hard to say.

Or maybe we overpaid by about $1 Trillion to depose Saddam Hussein, occupy and rebuild Iraq over 10 years.  It’s hard to say. 

Seems like we could spend 3% of the cost of an optional Iraq War to actually, you know, occupy and rebuild America.

 


[1] It seems relevant to mention here that the public school district where my 7 year-old attends 2nd grade has a graduation rate of between 3% and 7% ‘college readiness,’ as defined by minimum scores on a standardized test.   I will now light myself on fire.

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One Reply to “Pre-K as Cost-Effective Economic Development?”

  1. Light yourself on fire is right. It is a sad situation – multitudes of uneducated kids graduating from high school with no skills at all (or dropping out.) Not too many jobs for the unskilled these days.

    What should we do about it?

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I founded Bankers Anonymous because, as a recovering banker, I believe that the gap between the financial world as I know it and the public discourse about finance is more than just a problem for a family trying to balance their checkbook, or politicians trying to score points over next year’s budget – it is a weakness of our civil society. For reals. It’s also really fun for me.

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