The Economic Rationale for Investing in Children: A Focus on Child Care. Next Steps in Developing a Research Agenda


ASPE held the conference to generate new ideas about the economic rationale for investing in quality child care that could help the office develop its future research agenda. Throughout the day, participants identified areas in which additional research and policy analysis could be helpful. Speakers in the final session highlighted many of these ideas, which are summarized below.

Clarify objectives and priorities for public investment in child care. Several speakers and participants stated that current child care policy reflects multiple  and, at times, competing  objectives. For example, child care subsidies are viewed primarily as work supports for parents and are valued as a critical component of government efforts to help low-income parents make the transition from welfare to employment and self-sufficiency. However, the primary goal of several publicly funded early childhood programs  such as Head Start, public prekindergarten, and early intervention services  is to promote better child outcomes and enhanced school readiness. Some participants said that it may not be possible to achieve consensus about the priority that should be given to each child care policy goal. Nevertheless, participants agreed that further discussion and clarification of these goals is essential for continued policy development.

Define quality and disseminate clear information on how to measure quality. Several participants lamented the public perception that researchers do not know how to define and measure child care quality. Several child developmentalists argued strongly that child care researchers have indeed defined quality and developed reliable measures, including structural measures of child care settings and process measures related to children's experiences in care, that can be related to child outcomes. Nevertheless, most agreed that the measures are difficult to describe and complex and expensive to use. Participants agreed that child care researchers, for the most part, have not done a good job of communicating information on child care quality to policymakers and the public. Researchers need to look for ways to communicate their results in more concrete terms. Policymakers and the public need a clearer picture of what is "good or bad" about child care settings.

Conduct rigorous research that links high-quality child care to improved child outcomes. Although participants agreed that the child care research literature contains evidence that links the quality of child care to child outcomes, many participants said that more research in this area is needed. Policymakers need information about the impact of child care quality on child outcomes that is based on rigorous research designs and methods such as random assignment. Economists also would like to see analyses conducted on larger and more nationally representative samples, and with more controls for selection bias. Questions that researchers need to address include: How much difference does a particular increase in quality make for child outcomes? Which aspects of quality matter the most? Are different aspects of quality important at different ages? How does the impact of a quality child care intervention compare to the impact of a quality parenting intervention?

Identify proxy measures for process quality that are easier and less expensive to collect. Measuring process quality in child care is expensive and complex, because doing so requires trained observers to conduct reliable structured observations in child care settings. Several economists urged child care researchers to consider whether it would be possible to identify proxy measures of process quality whose collection would be less expensive and difficult. Such proxies have been identified to monitor quality in the health care sector. For example, less-expensive proxy measures in the health field include "percentage of children who receive immunizations on schedule" and "percentage of children with ear infections treated with the correct antibiotics." In the child care sector, proxies could be used as indicators for rating quality, communicating levels of quality to parents, and helping child care providers improve quality.

Conduct rigorous research on the costs and benefits of increasing child care quality. Several participants said that policymakers need more information about the levels of quality needed to produce positive child outcomes, as well as the cost associated with achieving those levels of quality. Questions raised about the costs and benefits of increasing child care quality include: How much does a given increase in quality cost, and how much does it improve child outcomes? Are the benefits of early, high-quality child care sufficiently great that shifting resources from care for older children to quality care for younger children would result in better outcomes? Can similar trade-offs be made by shifting resources from children in part-time care to those in full-time care? Are there thresholds such that increases from low quality to fair quality may be more cost-effective than increases from good quality to excellent quality?

Conduct research on whether public funds currently dedicated to child care could be distributed more efficiently and equitably. Participants noted that federal and state governments already invest in the child care market through tax credits and deductions; subsidies for low-income families; publicly funded Head Start, prekindergarten, and early intervention services; and other programs. These interventions are often not coordinated or integrated, nor is the impact of public investments on the quality of child care well understood. Several participants said that research and analysis are needed on whether the public funds already dedicated to child care and other out-of-home experiences that precede formal schooling could be used more effectively to provide high-quality experiences for children.

Design and test a comprehensive initiative to address information problems in the child care market. Participants identified information failures in the child care market as a key argument in favor of public intervention in the market. Several economists argued that a strong information intervention should be rigorously tested to determine the extent to which such an intervention could improve the child care market. Such an intervention could include aggressive outreach efforts to provide parents with information on the link between quality and child outcomes, the potential benefits of high-quality child care, and the quality of care that specific child care providers offer.

Consider child care in the broader context of children's experiences. In closing, several participants urged child care researchers to conduct their research on child care quality within the broader context of what makes children better off. Child care, parental care, health care, and other factors all contribute to child well-being. Policymakers need a broad understanding of these factors to make effective public policy that benefits children.