Aaron Sojourner and Matt Wiswall on the Value of Investments in Quality Child Care

Chancellor: Hello and thanks for joining us for the Poverty Research and Policy Podcast, from the Institute for Research on Poverty at the University of Wisconsin–Madison. I’m Dave Chancellor. This is our August 2019 podcast episode and we’re going to hearing from Aaron Sojourner and Matt Wiswall about the value of early childhood education and how we can think about tradeoffs when it comes to child care subsidies and related policies. Sojourner is a labor economist at the University of Minnesota and previously served as a senior economist on the President’s Council of Economic Advisors in 2016 and 2017. Wiswall is a professor of economics here at the University of Wisconsin–Madison who studies education. Sojourner and Wiswall say that there’s a growing consensus in favor of more investment in young children, but when we think about child care and child care subsidies, there are lots of forms that these interventions can take—and the tradeoffs matter. So I asked them about the challenges of weighing these issues when we evaluate child care policy. Professor Sojourner starts us off.

Sojourner: The basic question is, if families are trying to meet their dual responsibility to provide good care to their young children and to keep a roof over their head. And the way you keep a roof over your family’s head is to work. And so your time can either be used in parenting or it can be used in earning. And that creates a conflict. The kid needs parenting all the time and you also need somebody earning to bring resources to the family. So the question is do families have enough resources when their kids are young to meet both of those responsibilities. And how do families try to balance both of those responsibilities? They’re pulled between these different uses of their time. We have policies as a community to invest in families with young children, to help make sure that there are enough resources—kids are getting the right experiences and people can be productive in the labor market at the same time, potentially. And the design of those policies is really important because it impacts, it creates different incentives, it creates different possibilities for families and parents and communities. If we design the policies in one way, it might encourage more people to work and spend less time in parenting. If we design a different way, it might do the opposite. And it might also affect the quality of the early childhood experiences the kids have and impact their developmental trajectory—sort of how much ability they build and capacities they build. There’s a lot of evidence from a variety of sources that early experiences really matter and have lifelong consequences so it’s hard to go back, it’s expensive to go back and try to make up for that missed opportunity if you miss it. Basically it’s about what policies can we as a community use to support families with young children and the healthy development of young kids, but whatever policies we choose—families are then going to react to in a way that works best for them and we have to anticipate and understand those potential responses when we’re designing a policy.

Wiswall: The issue of childcare is interesting because you need childcare to allow parents to work. And so it’s important for building their income and maintaining their careers, but also we want to think about having high quality childcare that benefits the kids. So there’s a role for government here for families that can’t afford high quality child care. We’re really particularly interested in that.

Chancellor: Can we talk a little bit more about why early childhood matters?

Sojourner: There’s a convergence of evidence from neuroscience, human development, medicine, economics, psychology, all pointing to the importance of this period of development. If you just think about the biology of development. Different parts of people—develop at different stages. Eyes, your vision abilities, develop early in life in about a one year window, partly prenatally, partly postnatally and your environment during that time influences how your vision develops. And the same is true of cognitive development and brain development. In the first few years of life our brains are growing, creating a lot of neurons and then, depending on the environment we’re in and the experiences we’re having, some of those neurons are pruned. The pathways of our brain are shaped and that process is specific to that time of life and later on, our brains are still changing but less, and they’re a little more fixed. I think that kind of evidence from just a biological understanding of the human development process is pointing towards an understanding that these early experiences really matter and set the foundation for later development and later experience. Frederick Douglass said that it’s easier to build strong children than it is to repair broken men and if you set the foundation right then it sets a good developmental trajectory and if you miss that opportunity, it’s harder and more expensive to deal with the consequences later.

Chancellor: I asked them to tell us more about how this early cognitive development matters when it comes to education and later opportunities.

Sojourner: What we know is that you see gaps in the achievement levels—academic achievement or IQ scores—of kids from high income families versus low income families and if you study the development of that gap, if you look at the time people go to college, it exists. If you go backwards through k12 to kindergarten, you can see roughly a similar size gap at age 5 as you see at age 18. So it doesn’t really widen during k12, it emerges in the first few years of life and there’s a lot of evidence that ties the widening of that gap, the creation or opening of that gap to differences in experiences and environment that the kids develop. So, when kids have access to high quality care experiences, even kids from low income families who would normally without access to these enriched environments develop one way, they develop in a different way if they do have access to those. If they’re randomly assigned to get access to a high quality developmental experience, they look more like high income kids than like low income kids.

Chancellor: But Sojourner and Wiswall say that a disconnect here is that families of young children are typically those with the fewest resources.

Sojourner: We ask the most of families when they have the least. So, families, when their children are youngest, they have the least past earnings because when your kids are young, you’re young and you’ve worked for fewer years and you’ve had less chance to save. You also have lower current earning power than you will when your kids are older because when your kids are older you’re older and you have more experience, maybe more education, you can earn higher wages per hour. What we documented also is that when your kids are younger you tend to have lower credit scores which means have you have less access to future income. That’s a little surprising because you do have more future income when you’re younger, but there’s this problem in the credit markets, basically you don’t have access to that future income. Families with younger children, the youngest children, have less private resources. They have less past income, they have less current income, and less access to future income. That’s all the private income—past, present, and future. So, when your kids are young, you have less.

Chancellor: And Sojourner says that instead of compensating for this, public policy compounds the problem.

Sojourner: We invest more in kids when they’re older than we do when they’re younger. So when kids are older, we invest in the K-12 system and other kinds of investments. And the best evidence is that we investment is about 50 percent more once kids hit kindergarten than after kindergarten. So there are less private resources when kids are younger, there are less public resources when kids are younger. Now this might make sense if it was cheaper to provide appropriate care when kids are younger—but it’s not because when kids are young, you need like one adult on maybe three or four kids, you can’t split up the adult’s time finer than that, whether it’s a parent who’s providing that care directly and giving up a wage that they might be earning in the labor market or whether it’s not a parent providing care and doing it for pay, or as a favor, you still need one adult with just a few kids. Later on, you can split the cost of the adult 25 ways or 30 ways and have bigger class sizes one kids are in K-12, just as a developmental matter, it’s more appropriate, it’s fine. But not when kids are young, so it’s more expensive to provide care. You need more adult time per kid when kids are younger and there’s less resources. So there’s this crisis—it presents many faces. It presents as unaffordable child care, unavailable child care. This crisis that families find themselves in is entirely predictable because —what else could we possibly expect to happen if families are being asked the most at a time when they have the least?

Chancellor: So, for Sojourner and Wiswall, this raises the question of, if we’re going to subsidize child care, how should subsidy policies be designed to take account for various tradeoffs.

Wiswall: The fundamental issue that you have to think about is that child care doesn’t happen in a vacuum. If children are getting care from some particular provider, that means they’re getting less time from somebody else. It could be the mother, the father, grandma. So there are these tradeoffs. So when you kind of evaluate how effective a particular child care program is, you have to always think about what it’s trading off with respect to and it could be better or worse care that it’s trading off. So that’s the complication when you start thinking about these issues.

Chancellor: Could you break that down a little more for me? What sort of things are we trading off?

Wiswall: I think the issue is, if you think about a high quality program—the more hours a child spends there they might spend fewer hours in lower quality care or with parents. When you sort of quantify these effects on kids, it could be higher or lower. It could actually be an offer of program care that’s low quality—some parents may take it up because it’s free and they’re constrained, they have few resources but that may not benefit their children because that’s maybe taking them away from higher quality care that they provide at home. So the quality of the programs that are being offered and subsidized by the government matters, and particularly it matters when you think about what it’s trading off with. Because some parents are able to afford or provide higher or lower quality care themselves. It makes it very complicated.

Chancellor: And, Wiswall and Sojourner say that it’s important to think about these differences when evaluating these programs and thinking about policy.

Sojourner: From a policy perspective, we tend to focus on the costs of care and as parents we are kind of overwhelmed by the costs of care. That’s at the front of our minds—uggh, it’s so expensive, how are we going to deal with this? What we’re trying to call attention to is that there are also benefits to care. If we just kind of cope and get by and hope that—muddle through and provide minimal care, kids will survive and will get through, but we’re missing out because now we’ve lost the chance and we can’t go back because we’ve lost the chance to put that kid on a better trajectory for development. That kid is going to be part of our family and part of our community for decades to come and we just have this one short window where we can put that kid on this path. Again, it’s not like the die is cast and there’s nothing we can do later, but it is one particular time when experiences matter a lot and the quality of experiences matter a lot and resources can make a big impact. And so, just trying to understand this time in kids’ life and in families’ lives as a scarce opportunity to have a big positive impact that goes away later. Or diminishes is part of what we’re trying to say. And so we really should attend to making sure we take advantage of this opportunity and put resources towards it.

Wiswall: I think the word investment is key here. Like Aaron said, we tend to focus on the costs not the benefits. I think, as a society, we’re comfortable with the idea that we make investments in roads and airports and all sorts of things. You expect there to be a payoff in the future and we’re ok borrowing in order to do that. In fact, we’re somewhat comfortable with borrowing for k-12 schooling, issuing bonds to build new schools or hire new teachers at that level. So I think we should be just as comfortable thinking about that at the early childhood level, because all the research tells us that the benefits are even larger. So there’s even more bang for every dollar that you can invest in early childhood. And so, the benefits just outweigh the costs and so we need to get over this idea as a society that it’s expensive—it may be, but it’s going to pay off.

Sojourner: I think there are challenges in moving from the little demonstration project to policy scale. The quality assurance piece is really critical because it is possible to pour money into low quality care that doesn’t deliver. And so getting that right is THE challenge of policy in this area, I think.

Chancellor: What’s our takeaway here?

Wiswall: You’ve got to pull out more Frederick Douglass quotes here. That was a nice one.

Sojourner: Thanks. I’ve got an Alfred Marshall quote too.

Wiswall: Great. Throw an economist in there.

Sojourner: Alfred Marshall wrote Principles of Economics back in like the 1880s. And wrote that the most valuable of all capital is that invested in people. And I think that’s right. I think that community prosperity is driven by productive people. That’s the foundation of every community’s success. And, that’s the secret to, I think, the success of Wisconsin’s economy, Minnesota’s economy. We recognize that we invest in our people and they grow up to flourish and invent and build and create. And you pay a cost up front, like any investment, but you reap benefits, a stream of benefits into the future, and we have to figure out the right way to do that and the best ways to do and the tradeoffs in the ways to do that, that’s the work that we’re engaged in.

Wiswall: I think that’s well said. There’s very little controversy, I think, within people who have studied this issue, that we should be investing more. The government should be doing more. The form of it, we’re not exactly clear on. So, I think that’s where the research really lies is what form should this take? Should this be government funded childcare centers, which is the form it takes in many other countries? Should it be vouchers that people can take with them and use at any private childcare center? Should it just simply be tax credits or income transfers? It’s unclear and I think that’s where the debate lies and there’s a lot of experimentation going on at the local level and I think that’s all very ,very valuable. So I look forward to seeing new evidence.

Chancellor: Thanks to Aaron Sojourner and Matt Wiswall for talking with us.

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