Why Early Learning Beats the Stock Market and New Stadiums

One of the leading voices in economics and child care made a simple yet compelling argument this month: Early learning’s return on investment beats the stock market and new sports stadiums.

Former Minneapolis Federal Reserve economist Art Rolnick took a look at the well known Perry Preschool’s role in the economy in a Q&A with the Federal Reserve Bank of Cleveland’s magazine Forefront. What he found was surprising,

We compared it to the stock market. The annual yield in the stock market, post-World War II, is about 5.8 percent, so we thought we would be doing well if we could beat 5.8 percent. We found that in the Perry preschool study, the annual rate of return, inflation-adjusted, was 16 percent—I don’t think you could find a better public investment. – “Stop Investing in Stadiums…Start Investing in Kids” Forefront, 10/6/10.

As any economist or investment portfolio manager wouldRolnick then pointed out we invest billions of dollars in assets that offer far lower returns than early learning: sports stadiums. Efforts to build sports stadiums make a lot of noise, but Rolnick and other economists argue provide little economic benefit.

…We spend billions of public dollars around this country building sports stadiums and arenas. There is virtually no return on these investments, because they would have been built without public subsidies. I think we have the research on our side. I think we have the economic case on our side. I think we have the healthcare case on our side. Unfortunately, we still have a long way to go politically to make all this happen.

Check out the entire Q&A with Rolnick. It is a fascinating read that offers a good overview of the model Rolnick is helping to build in Minnesota.

Early Learning Research Flood Tomorrow: Get ready. A bunch of new research papers on early childhood education will hit the digital airwaves tomorrow.

“…the Center on Children and Families at Brookings and the National Institute for Early Education Research will release a new collection of papers that assesses the field of early childhood education and child care.” – The Brookings Institution.

We will check out the findings tomorrow and post some of the top news.