False economies: Childcare centers vs. Home visits, Round 2!

False economies: Childcare centers vs. Home visits, Round 2!

Mercedes Mateo 24 agosto 2017 Comments

This entry is the continuation of last week’s post that you can find here.

Are we using the right tools to distinguish between good and bad investments?  Sometimes, important social outcomes cannot be captured in a simple cost-benefit equation. Childcare policies for instance, have inter-generational consequences because they affect social norms. But, how do you give a monetary value to having a more equal society as the result of a policy?

We know that gender earning differentials grow over the lifetime and are related with childbearing and an unequal division of labor at home. Parents and peers are role models and women’s labor force participation contributes to change those role models.

In a dynamic approach, you could estimate a value for some of the outcomes these changes will generate. For example, differences in social norms are related to important social outcomes like fertility, education, or labor force participation. Cultural proxies are significant (statistically and in magnitude) in explaining how much women work. Beyond mothers’ employment, subsidized care and education for young children can also be a strong contributor to closing the gender pay gaps.

New research also suggests that children of working mothers could enjoy other benefits: daughters complete more years of education are more likely to be employed; more likely to have supervisory roles and have higher incomes. Sons of working moms tend to be more likely to have a wife who works; and could be spending more time on childcare and housework. So far, so good. These are all things you could eventually estimate.

But what is the intrinsic value of equality?

This is a fundamental issue. In social terms, greater equality can materialize as both very tangible things such as greater survival rates or as other intangibles but not less important such as increased individual freedom, quality of life, trust or happiness.

Inequality takes on discrimination and discrimination underlies social unrest. The transaction costs in low trust environments are extremely high. I always remember this anecdote, one day walking in the country side. A friend took me to what seemed to be a house. The door was open, we entered and there was a table full of eggs in large carton boxes and a money box. Nobody around. Just a sign with the price and the following note: please leave the money in the box and take your change; if an egg is broken don’t pay for it. How do you quantify that peace of mind? Childcare policies can help reduce inequalities, create a greater sense of fairness, and support families and communities to get a step closer to that peace of mind. Through higher household income with female participation in the labor market and quality education for children, we are helping to build better opportunities for the present and the future.

When it comes to the issue of gender, vulnerability and family disadvantage at the very early age seems to affect boys more than girls. If you think about maximizing your investments, you might end up concluding that the additional costs for quality childcare to bring those boys up to the levels of their female counterparts could not be worth the effort. The question is: would that feel right? Is it morally acceptable to assume that you will be leaving behind those kids? The extra investment might not make immediate economic sense but the value in terms of correctness goes beyond the utility rational.

Is complete information a delusion?

It is absolutely critical that countries move to evidence-based decision making: no doubt about it. However, having some evidence does not immediately imply that you have complete information to make decisions. Rigorous evidence involves randomization, and you might end up with a quite (unintentionally) biased body of evidence towards those policies you could actually experiment with, and with simple answers to very complex questions.

This requires intellectual honesty about the limits of what we can and we cannot answer with what we have. People want straight answers. We don’t want to hear the words “inconclusive evidence”. However very often existing evidence is scarce and presents a very narrow and incomplete view of the real world.

In our recommendations to policy makers, we tend to privilege this incomplete and partial evidence we have about certain policies over no evidence. Our attempts to objectivize policy making processes very often end up oversimplifying the world we live in. But, it all comes down to real people with complex problems, and countries cannot afford making mistakes.

Even if evidence-based decision making is desirable, the reality is that we work with imperfect information, and countries will have to continue making decisions in the absence of it. Making people believe that methodologically perfect but very narrow/partial models will be able to identify the best solutions and offer the best policy advice is, at the very least a distorted version of reality.

If there is one, single clear policy recommendation is that making decisions based on the cheapest alternative might not be the best way of dealing with social policies. Cheap could be expensive: you might get what you paid for. If we want high returns, countries should spend more in childcareand pay for high quality services that also include convenience features for working families.

Benefits of high quality early childhood interventions offset program costs: they can generate tax revenues from adults increased employability, reduce government expenditures on remedial and compensatory programs (medical treatments, security, special education), and also important: they can contribute to change cultural norms, generate a greater sense of fairness, and create a more safe, livable, and equal world for all.

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