Opportunity Investments: The Struggle to Increase Political Will

Written by: Jessica Landgraf

Primary Source:  Green & Write, February 23, 2017

As reported in previous articles in this blog, early childhood education and development are worthwhile investments (see here and here). Research has shown positive impacts of early childhood education throughout an individual’s life-span, including, but not limited to, increased lifetime earnings, lower rates of special education needs, higher educational achievement, better health, and benefits for parents’ (and especially mothers’) earnings and participation in the labor market.

With strong evidence showing the private and public impact of investments in early childhood development—especially for low-income and disadvantaged families—it is surprising that we haven’t seen more significant policy progress in this area.

Future Spending Opportunities

According to an op-ed in U.S. News, there is a deeply held belief that our country’s fiscal and demographic realities make it unlikely that a large-scale investment will be affordable in the next several decades. However, the article cites an Urban Institute report that finds “for all the talk of austerity, federal spending and tax incentives are slated to grow by $15,000 per household over the next 10 years.” The report argues that this increase in funds should be spent on early childhood education and activities to promote economic growth. However, unless policymakers change how they currently allocate resources, very little of these funds will actually be spent on those things. Instead, the funds will likely continue to fund more of the same, foregoing new investments that could have better long-term returns (referred to as “opportunity investment”).

Opportunity Investments

According to the Urban Institute report linked above, an opportunity investment is something that aims to encourage or help individuals increase their private earnings, financial wealth, and human and social capital.

Currently, opportunity investments benefit mainly higher income brackets. If we are unable to create policies that allocate more funds to opportunity investments, rethinking how and where current investments are made would be a step in the right direction. Investing the same amount of money in more effective ways could be the most influential way to shift thinking over time and gain the political will needed to approve increased spending on these types of investments.

The report warns that if we don’t change how we are allocating resources, spending on early childhood and education programs will shrink as part of the GDP over the next decade.

The Unfunded Promise of Early Childhood Investment

Despite decades of research evidence and policy recommendations for increasing federal and state funding for early childhood education and development programs, little action has been taken. The expansion has moved far too slowly in comparison to the strength of the evidence.

Moving forward, it is important to not only think about how we can support people better in the current moment and how our economy can be grown in the near future, but also to take a long view and put policies in place that will support future growth. Through supporting and investing early in all children and families, we can take steps to improve the economy of generations yet to come.

Contact Jessica: landgr16@msu.edu

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