Head Start Introduction
Introduction
Head Start is the largest early childhood education program in the United States. It offers education, health, and nutrition services to disadvantaged children and their families. The program started in 1965 and by 2013 enrolled about 900,000 three and four-year-old children at a cost of $7.6 billion.
Johnson and Jackson (2019) exploit variation in the timing of the opening of Head Start centers in each county between 1965 and 1970 to evaluate the impact of Head Start funding on high school graduation rates, years of completed education, wages, poverty status, and incarceration of eligible children who are followed into adulthood. Hendren and Sprung Keyser (2020) translate these estimates into an MVPF of the introduction of Head Start.
Pays for Itself
Net Cost
The estimates of Johnson and Jackson (2019) suggest that every $4230 increase in spending (which represents the average cost of Head Start per child) leads to a 9.87% increase in wages measured between ages 20 and 50. Hendren and Sprung-Keyser (2020) translate this estimated effect into a lifetime income effect by assuming a constant impact on earnings throughout the life cycle and applying a tax rate of 20% based on Congressional Budget Office estimates. Estimates are then discounted at a real interest rate of 3% back to the date of the initial spending. These calculations imply that the revenue generated by expansions of Head Start programming sums to $4,677.08. Subtracting this fiscal externality from the program costs of $4,230 yields a net total cost of -$447.08, with a fairly wide 95% confidence interval of [-$2194.97, $1160.71].
Willingness to Pay
Hendren and Sprung-Keyser (2020) show that the 9.87% increase in earnings implies an increase in post-tax lifetime earnings of $18,708.33, with a 95% confidence interval of [$12,277.16, $25,699.89]. They assume that the children who received Head Start value the program according to its impact on their after tax earnings, so that the willingness to pay is equal to $18,708.33.
MVPF Summary
The future tax revenue impacts of Head Start are greater than the upfront initial cost, which implies that the policy has an infinite MVPF. The 95% confidence interval is given by [10.58, \infty].
References
Hendren, Nathaniel and Ben Sprung-Keyser (2020). “A Unified Welfare Analysis of Government Policies.” The Quarterly Journal of Economics, 135(3): 1209–1318. DOI: https://doi.org/10.1093/qje/qjaa006
Johnson, Rucker C. and C. Kirabo Jackson (2019). “Reducing Inequality through Dynamic Complementarity: Evidence from Head Start and Public School Spending.” American Economic Journal: Economic Policy, 11(4), 310-49. https://doi.org/10.1257/pol.20180510
Policy Features
- Category
- Education
- Sub-Category
- Child Education
- Beneficiary Type(s)
- Children and Youth, Children under five, Students
- Average Age
- 4
- Average Income
- 26760
- Country of Implementation
- United States
- Year of Implementation
- 1965
- Empirical Method
- Difference in Differences
- Research Type
- Secondary
- Peer Reviewed
- Yes
- MVPF Publication Link
- academic.oup.com/qje/article/135/3/1209/5781614