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President Barack Obama and Education Secretary Arne Duncan have often claimed that the “return on investment,” or ROI, for pre-k is 10-to-1, meaning there is a $10 payoff in the future for every dollar invested today in pre-kindergarten education. Both advocates and opponents of publicly funded pre-k often cite such figures, which can range from lows of about 1.5-to-1 to highs in the upper teens.

Returns on investment are calculated by performing cost-benefit analyses. They are typically reported as ratios – for instance, 3-to-1 indicates that every dollar invested today leads to $3 of savings (adjusted for inflation) later on, with any ratio above 1 deemed a worthwhile investment.

“The High/Scope Perry Preschool Study Through Age 40” holds the record for the highest ROI ever reported. Original estimates suggested a savings to society of $17 for every dollar spent, but a November 2009 study by Nobel Prize-winning economist James Heckman and colleagues revised the figure downward to between $7 and $10 for every dollar spent.

Understanding the economic benefits of pre-k can be helpful. But it is important to pay close attention to the specific costs and benefits included in a given analysis. Costs vary with location and whether the program is full or half-day and targeted or universal. High-quality programs almost always have the highest costs.

Benefits include long-term savings to the criminal justice system or greater earnings (and associated tax revenues) among adults who attended pre-k compared to those who did not. Analyses that include a laundry list of benefits like savings to victims of crime – both tangible (property damage, health costs) and intangible (pain and suffering) – yield impressive numbers. More conservative analyses tend to include fewer projected benefits, and often compute less exciting ROI ratios.

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