New Evidence on the Heckman Curve

Rea, David; Burton, Tony

doi:10.1111/joes.12353

Cited by 25 publications

(17 citation statements)

References 49 publications

(58 reference statements)

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“…Our findings contrast with, for example, Rea and Burton (2020), who do not find evidence of a Heckman curve. There are several potential reasons for this difference.…”

Section: Discussioncontrasting

confidence: 99%

“…We are only aware of few studies that attempt to find empirical support for the Heckman curve. A study by Rea and Burton is based on 314 cost–benefit analyses conducted by the Washington State Institute of Public Policy, that is, U.S. data (Rea and Burton, 2020). They plot the benefit–cost ratios against the average age of the intervention group and also perform regression analyses.…”

Section: Introductionmentioning

confidence: 99%

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Are Impacts of Early Interventions in the Scandinavian Welfare State Consistent With a Heckman Curve? A Meta‐analysis

Rosholm

Alexander

Bleses

et al. 2020

Journal of Economic Surveys

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Early intervention" has been a mantra in recent debates about human capital investment. Strong theoretical models motivate this focus by predicting that investment in children is most costeffective when they are young. The "Heckman curve" summarizes this idea visually (Heckman, 2006). However, hardly any reviews scrutinize this hypothesis empirically in modern welfare states such as those in Scandinavia that already invest heavily during early childhood. Any such review is ideally based on interventions conducted as randomized controlled trials (RCTs), set in the same welfare state, and comparable across ages through cost-standardized effects. This meta-analysis assembles cost-standardized effect estimates from 10 RCTs, including a total of 18 intervention arms and 30,578 participants (aged 1.5-24 years), conducted by the same research center in the Scandinavian welfare state of Denmark. These interventions show significant effects relative to their costs, despite the large baseline investment level. Interventions targeted at younger children tend to produce larger effects, consistent with the Heckman curve. However, variation in the effect size within age groups is as large as it is across age groups. This indicates that both the quality and timing of investments matter and that "early interventions" are not necessarily superior to later interventions.

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“…Our findings contrast with, for example, Rea and Burton (2020), who do not find evidence of a Heckman curve. There are several potential reasons for this difference.…”

Section: Discussioncontrasting

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Are Impacts of Early Interventions in the Scandinavian Welfare State Consistent With a Heckman Curve? A Meta‐analysis

Rosholm

Alexander

Bleses

et al. 2020

Journal of Economic Surveys

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show abstract

“…Teens may also have been neglected due to a belief that intervention is more likely to be effective earlier in childhood. Yet recent reevaluations of the literature that cast a wider net in terms of which programs and studies they include in their evaluations suggest that it may be just as cost-effective to intervene in adolescence, particularly since at that age, it may be possible to more closely target intervention to the children who need it (Hendren & Sprung-Keyser, 2019;Rea & Burton, 2018). Even if a specific intervention in adolescence had a smaller "bang for the buck" per child, a targeted intervention might still prove more costeffective than a universal early childhood initiative.…”

Section: The Problem Of the Missing Middlementioning

confidence: 99%

Child health as human capital

Currie

2020

Health Economics

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Child health is increasingly understood to be a critical form of human capital, but only recently have we begun to understand how valuable it is and how its development could be better supported. This article provides an overview of recent work that demonstrates the key role of public insurance in supporting longer term human capital development and points to improvements in child mental health as an especially important mechanism.

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“…The Washington State Institute for Public Policy (WSIPP (2018)) conducts ongoing cost-benefit analyses to assess policies relevant to state legislatures. See alsoRea and Burton (2018) for an application of the WSIPP data to comparative welfare analysis.12 The individual is willing to pay $1 for the tax cut and the government receives a $1 benefit from increased tax revenue from the behavioral response to the tax. In traditional cost-benefit analysis, increases in government tax revenue are included in the numerator of the expression.…”

mentioning

confidence: 99%

A Unified Welfare Analysis of Government Policies

2019

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We conduct a comparative welfare analysis of 133 historical policy changes over the past half-century in the United States, focusing on policies in social insurance, education and job training, taxes and cash transfers, and in-kind transfers. For each policy, we use existing causal estimates to calculate both the benefit that each policy provides its recipients (measured as their willingness to pay) and the policy's net cost, inclusive of long-term impacts on the government's budget. We divide the willingness to pay by the net cost to the government to form each policy's Marginal Value of Public Funds, or its "MVPF". Comparing MVPFs across policies provides a unified method of assessing their impact on social welfare. Our results suggest that direct investments in low-income children's health and education have historically had the highest MVPFs, on average exceeding 5. Many such policies have paid for themselves as governments recouped the cost of their initial expenditures through additional taxes collected and reduced transfers. We find large MVPFs for education and health policies amongst children of all ages, rather than observing diminishing marginal returns throughout childhood. We find smaller MVPFs for policies targeting adults, generally between 0.5 and 2. Expenditures on adults have exceeded this MVPF range in particular if they induced large spillovers on children. We relate our estimates to existing theories of optimal government policy and we discuss how the MVPF provides lessons for the design of future research. We first and foremost thank the several hundred researchers whose empirical results form the foundation of our estimates. We are also deeply indebted to a wonderful team of research assistants:

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New Evidence on the Heckman Curve

Cited by 25 publications

References 49 publications

Are Impacts of Early Interventions in the Scandinavian Welfare State Consistent With a Heckman Curve? A Meta‐analysis

Are Impacts of Early Interventions in the Scandinavian Welfare State Consistent With a Heckman Curve? A Meta‐analysis

Child health as human capital

A Unified Welfare Analysis of Government Policies

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