Guest op-ed: Investment in children lays foundation for human capital growth

Investment in children lays foundation for human capital growth

Human capital consists of skills and knowledge and is one of the most significant sources of economic growth in the country. Human capital makes people more productive and, as opposed to physical capital such as machines and instruments, it is the source of innovations and technical change. It also increases the productivity of people who interact with knowledgeable and skilled people, called externality or spillover effects. Thus, it makes economic sense that if a labor force with knowledge and skills is a significant source of innovation, productivity and growth, the country must make significant investments to grow human capital.

Such an investment strategy not only calls for the development of human capital in adults but also in children. The CDC reports, “the first 8 years can build a foundation for future learning, health and life success.” The CDC further elaborates that brain development depends upon 1) adequate nutrition during pregnancy, 2) no exposure or minimum exposure to toxins and infections and 3) very early experiences with parents, family members and other care givers, who are early teachers in the development of skills essential for future success in life. This requires investment of deliberate time and resources.

Resource-poor, low-income and less educated families start with a disadvantage in the brain development of their children, since such families are less capable and experienced in providing stimulating environments to their children. Professor James Heckman, 2000 Nobel laureate in economics, has done extensive research on children’s education. He commented in The Region (Minneapolis Fed, June 2005), “The most economically efficient way to remediate the disadvantage caused by adverse family environments is to invest in children when they are young.” Furthermore, “Enriched early intervention programs targeted to disadvantaged children have had their biggest effect on noncognitive skills: motivation, self control and time preference.” Resource-poor families are unable to seek knowledgeable caregivers, who could provide the skilled care to their children that prepares them for learning and success in schools.

The economic interest of the country warrants that there is adequate investment in children to develop knowledge and especially noncognitive skills, which will provide the motivation and drive to succeed in obtaining more human capital and success in the labor market. Such investment in developing human capital will have a very significant payoff to all Americans and the country in the future in the form of more innovation, productivity and growth.

A significant proportion of American youths are now failing to develop essential skills, both cognitive and noncognitive, and are having a difficult time getting high-wage jobs in the technology era. NSF reported that a National Assessment of Educational Progress study found that only 25% of 12th graders are proficient (competent) in math and science. Black, Hispanic and Native American students are facing even worse outcomes. Utah is no exception to the poor education record of children in low-income and disadvantaged families. On the 2000 NAEP mathematics eighth grade assessment, 26% performed at the proficient or better level and the gap between whites and Latino students has widened (www.eric.org). Students are also facing adverse health outcomes, emotional problems (often resulting in suicides) and coping skills for socioeconomic success.

All politicians and decision makers in the federal government must face this problem and make a commitment to invest in early childhood education and other family support services for all deserving and disadvantaged families. Professor Heckman proposes that such intervention could be done in partnership with the private sector and be made universal. But it could be offered on a “sliding fee schedule by family income” to reduce inefficiency (Economic Inquiry, July 2008).

Vijay Mathur is a former chairman and professor in the Economics Department and now professor emeritus at Cleveland State University, Cleveland, Ohio. He resides in Ogden.

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