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Return on Investment

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Recent research in the field of economics establishes the direct link between the well-being of children and the economic vitality and viability of the communities in which they live.  Economic research also shows that, in terms of economic benefits, investing in the development of young children yields the highest return on investment.  Research, such as the landmark HighScope Perry Preschool study, place returns on investment as high as 16 percent, with an estimated annual rate of return of $8.74 for every dollar invested.1

Spurred by this research, for more than a decade states and local communities across the country have been investing to promote the development of young children in order to realize economic benefits that include:

  • Building a skilled workforce
  • Promoting economic development
  • Increase wages and rates of home ownership
  • Reducing welfare and the costs of social and educational services
  • Improving the overall quality of community life

Cities and states across the country have launched major multi-sector initiatives to promote early childhood development, improve child health, promote school readiness, increase the quality of schools, make broad provision for youth development, and improve the safety of local communities.  The success of these initiatives and the benefits they produce are well documented.

While the social, educational and economic benefits produced by these initiatives are realized by all children and communities, gains are particularly marked for high risk, high need children and neighborhoods.  This finding has particular relevance for he St. Louis region that has an unusually large and geographically concentrated number of children for whom basic life needs are not met.

The St. Louis region has been slower to recognize and employ this key economic development strategy than many of the metropolitan areas with which we compare and compete.  If the St. Louis region is to be economically competitive and vital, initiatives to effectively address the critical developmental needs of young children must be added to our arsenal of community and economic development strategies.

To promote economic success, improve the overall quality of community life, and ensure that the St. Louis region has the skilled workforce required to support the growth of the region’s businesses, it is necessary for the community to come together to make strategic investments to improve the well-being of children and ensure that adequate provision is made for meeting their early developmental needs.  Rob Grunewald of the Federal Reserve Bank of Minneapolis identifies three key ingredients of these early childhood initiatives:

  • Put research into practice to achieve high-quality Early Childhood Development
  • Target at-risk children, but make programs available for all
  • Ensure accountability and be innovative

In December 2009, Vision for Children at Risk and the St. Louis Children’s Agenda, in partnership with the Office of Mayor Francis G. Slay, hosted a special business and civic leaders breakfast as part of  the St. Louis Metropolitan Children’s Summit.  The breakfast featured Rob Dugger, chair of the Advisory Committee for the Partnership for America’s Economic Success.  Dugger outlined the business case for investing in children to promote economic success.  In the wake of the Children’s Summit and Dugger’s presentation, a new Invest in Kids initiative has been launched in the St. Louis region under the aegis of the St. Louis Metropolitan Children’s Agenda.

Invest in Kids is a broad-based collaborative effort in the St. Louis region promoting child-focused human capital development.  It is directed to: (1) raising public awareness around this issue; and (2) engaging key representatives of the public, private, and nonprofit sectors in the St. Louis region in developing and implementing strategies to ensure that children and youth throughout the area have the skills and abilities required to be prepared for school, succeed in school, secure good jobs, contribute to the economy of the region, achieve life success and be productive citizens.  The goal of the initiative is to increase the number of healthy young people who possess the life skills, academic skills, and employment skills needed to succeed personally and to spur economic growth and development in metropolitan St. Louis.  The result will be an improved quality of life for children, their families, and the region as a whole.

1Rolnick, A. & Grunewald, R. (January 24, 2003).  Early Childhood Development: Economic Development with a High Rate of Return.

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The Literature

    • Early Education's Big Dividends: The Better Public Investment (pdf, 631.52 KB)
      Details ▼

      Date: February 20, 2008.  Pages: 3.  Publisher: Federal Reserve Bank of Minneapolis.  Keywords:  economic research, policy analysis, Rolnick, Grunewald, Minneapolis Fed, early education, Headstart, public investment, stadium, convention center, cost/benefit analysis, return on investment, workforce development, St. Paul, kindergarten readiness, community development, economic revitalization, economic development.

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