On Human Capital
I believe that U.S. income inequality (as a proxy for the inequality of well-being in America) has its roots in the inequality of human capital development at young ages.
You may have noticed that I used the word human capital rather than education. What is human capital?
In economics, “capital” is usually modeled as any stock of goods that can be used repeatedly in future periods to contribute to generating income future periods of time (in other words, it is durable). It is often categorized into physical capital (i.e. machines, computers, real estate) and human capital, which is anything a human possesses that can contribute to producing income repeatedly in future periods. Examples of human capital include computer programming skills, business skills, physical health, your social network, etc. Each of these examples can often be proxied by educational attainment.
Many nonprofits, including the ones promoted by this blog’s authors, are in the business of providing free or subsidized capital, whether physical or human, to the poor. For example, Samasource, which Ed Chang profiled, subsidizes training in programming skills (among other functions) for vulnerable workers in developing countries; and the Mennonite Central Committee (MCC) runs many projects that subsidize both physical and human capital.
In developed countries like the U.S., physical capital such as machines and electronic gadgets is in enough supply such that human capital has now become relatively scarcer. This implies that investing in human capital will generally be a more effective means of fighting poverty in the U.S. than investing in physical capital; for example, I think that poor urban U.S. neighborhoods don’t need more laptops and cellphones (especially since they’ve become so cheap!), but more skills, education, and health. In fact, the test results coming out of international educational assessments tell a story of the U.S. falling far behind other developed and developing countries in critical thinking skills in language and math.
The Argument for Early Intervention
And if investing in forms of human capital like education and health is more effective, then what’s the best way of investing in human capital? Experimental research from psychology, economics, and child development has pointed to the effectiveness of early childhood intervention relative to later intervention through the mechanism of nurturing socio-emotional skills. (See this study, this study, and this study.)
Economics Professor James Heckman of the University of Chicago argues that these results are consistent with a framework in which skills beget other skills, so that there is a “snowballing” effect in which the encouragement of learning skills early in life will have a greater lifetime impact than the encouragement of skills later on in life. These skills are not just test-taking skills. There is a growing body of research showing that “non-cognitive” skills like perseverance and sociability are more predictive of health and income in adult life than IQ. A website publicizing Heckman’s research features this chart:
Quite simply, the earlier one invests, the greater the impact per dollar.
Therefore I believe one of the best ways to bring justice to America’s poor while fulfilling the biblical call to look out for the widows and orphans of society is to provide quality, cost-effective early childhood programs that nurture both learning and social skills to disadvantaged children at no or little cost to their families. Not only will this help children, it will also help their often over burdened parents.
Introducing Tools of the Mind
While there are several high quality early childhood programs that are both cost-effective with proven results (i.e. Nurse Family Partnership), I would like to profile a lesser-known early childhood program that has not yet generated too much publicity in the nonprofit donor world. (It has generated quite a lot of buzz in the educational world though.) It’s an innovative preschool program called Tools of the Mind (read about it here and here) with an unconventional philosophy of teaching. Through a curriculum of individualized “dramatic play” and socially mediated learning, it focuses on developing what psychologists call “executive function” (defined as self control, working memory, and mental flexibility) to best prepare children for future learning. The research on their program (done in low-income school districts) has yielded results promising enough to be published in the prestigious journal Science.
I like Tools of the Mind not only because of its innovative approach to preschool education, but also because the program was developed with under-funded public school classrooms and disadvantaged minority children in mind. Their model is to send trainers and coaches to classrooms to train existing teachers in a public school system in the Tools of the Mind methods (No need to stir up anger with unionized teachers and such!) Further, they’ve developed curricula for Hispanic children, a fast-growing demographic, and consider themselves especially capable at working with special education children with a variety of learning disabilities. They’ve also developed a parenting curriculum to supplement the school curriculum.
And it’s cost-effective; while Montessori style methods cost about $7,000-$10,000 per child Tools of the Mind costs about $7000-$10,000 per classroom of 15 children.
I’ve met the co-founder Deborah Leong personally and seen enough examples of their classroom teaching methods to be convinced that this is a unique program with a fresh approach and perspective. I hope you would take a closer look at this program, and please feel free to comment on this blog or contact me at christina [dot] jenq [at] gmail [dot] com if you have more questions.
 This does not mean that job and skill-training programs targeted towards older adolescents and adults have little impact and should not be funded; rather, the argument is that perhaps society needs to spend more money towards early childhood programs than it already does if one were to take into account the gains from quality early childhood programs.