Beat the baseline

It turns out that America's Earned Income Tax Credit, the basic model underlying later things like New Zealand's Working for Families, improves children's school achievement.

Brookings's Grover Whitehurst explains things here. America's spending billions on pre-K programmes, but it looks like just giving parents money through EITC is more effective.

I have compared the effects of direct income transfers to low-income families (such as the earned-income tax credit, or EITC) with programs designed to increase school readiness (universal preschool and Head Start). It turns out that putting money directly into the pockets of low-income parents, as many other countries do, produces substantially larger gains in children’s school achievement per dollar of expenditure than does a year of preschool or participation in Head Start. The results throw water on the conventional wisdom.

The results show that while the EITC isn’t specifically designed to boost academic achievement, it does so anyway — and not just for younger kids. The EITC is also a bargain compared with the programs specifically designed to help poor kids academically.

Specifically, each of four evaluations of U.S. family income support programs found substantially larger test score increases per $1,000 of public expenditure than resulted from programs specifically aimed at improving educational outcomes by focusing on school readiness. In particular, neither pre-K nor Head Start provided the same amount of improvement as the family support programs did. Other studies of the EITC also show impacts on even later outcomes — such as college enrollment and earned income.

The current annual federal expenditure on the EITC is about $65 billion. During the 2013 tax year, the average EITC was $3,074 for a family with children. In contrast, Head Start runs about $8,000 per child. Boston’s and the District’s pre-K programs run more than $16,000 per student. Spending less (EITC) is actually more effective than spending more (Head Start, universal pre-K). It’s a win-win.

Former senator Daniel Patrick Moynihan likened government bureaucracies dispensing social services to the poor as “feeding the sparrows by feeding the horses.” The school readiness option feeds the horses. Perhaps it is time to rethink our paradigm for supporting poor families. Let’s give them what they desperately need — more money — and let them decide how to spend it on the early care and education of their children.

Straight cash transfers should be the baseline against which other 'helping people' programmes would be assessed.