The Importance Of Early Education: More Evidence

From last month’s round of NBER research (abstract, emphasis added):

The Production of Human Capital: Endowments, Investments and Fertility
Anna Aizer, Flávio Cunha

We study how endowments, investments and fertility interact to produce human capital in childhood. We begin by providing empirical support for two key features of existing models of human capital: that investments and existing human capital are complements in the production of later human capital (dynamic complementarity) and that parents invest more in children with higher endowments due to the complementarity between endowments and investments (static complementarity).

For the former, we exploit an exogenous source of investment, the launch of Head Start in 1966, and estimate greater gains from preschool in the IQ of those with the highest stocks of early human capital, consistent with dynamic complementarity. For the latter, we are able to overcome the potential endogeneity and measurement error associated with traditional measures of endowment based on health at birth. When we do, we find that parents invest more in highly endowed children. Moreover, we find that the degree of reinforcement increases with family size. Thus, an increase in quantity leads not only to a decline in average quality (the quantity-quality tradeoff) but to an increase in the variation in quality, due to both greater variation in endowments (from more children) and greater reinforcing investments. These findings can be explained by extending the quantity-quality trade-off model to include heterogeneous child endowments and parental preferences that feature complementarity between quality and quantity and moderate aversion to inequality in child human capital within the household.

Here’s the English translation:

1. All kids gain from earlier schooling;
2. But the effects are greatest and last longest for smarter kids;
3. Smarter, healthier kids get more support from their parents;
4. But, the more children there are in a family, the lower and more uneven the average support parents can give.

As parents, we don’t have a choice in how naturally talented or intelligent our children are – but there should be little doubt that putting them into a structured learning environment would help them maximise their potential.

And there should be no doubt that kids who don’t have the benefit of very early education will be at a serious disadvantage against those who do.

Technical Notes

Aizer, Anna; & Flávio Cunha, "The Production of Human Capital: Endowments, Investments and Fertility", NBER Working Paper No. 18429, September 2012