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Child Welfare Programs Pay for Themselves, New Study Finds

Spending federal dollars on children helps in the short term and pays off in the long term.

If federal policy spoke for American values, it would speak pretty clearly to the fact that we don’t care much for children. Currently, about 9 percent of the federal budget is spent on programs for children. That’s compared to 45 percent of the budget being spent on adult welfare programs. The spending on children has only grown by 6 percent since the 1960s, compared to a 34 percent increase in spending on adults. And even as the spending on adult welfare programs is expected to take up a full 50 percent of the budget in 2028, according to projections by the nonprofit Urban Institute, spending on children is expected to contract to 6 percent. Very soon, the federal government will be allotting more funds to pay the interest on the national debt than it spends on children.

This is a problem. Some call it a national crisis of conscience, others a sign of misplaced family values, but a growing number of experts have a third complaint: The uneven spending represents a missed investment opportunity. Spending money on children pays, and it pays big if we can find the tolerance for sticking with a long-term investment in our nation’s children. 

A new study from Harvard University economists Nathaniel Hendren and Ben Sprung-Keyser found that social programs that are aimed at children, and particularly impoverished children, offer real returns on the money spent. According to their study, A Unified Welfare Analysis of Government Policies, that’s simply not the case with welfare programs for adults. Moreover, looking at spending data related to a wide range of social programs directed at a diverse age range of beneficiaries, the duo discovered that not only do social programs for kids pay for themselves, but do so well into the future. 

To reach the finding the Harvard researchers calculated the ratio between a social welfare programs’ cost to the government and the value of the benefit to the recipient. Programs aimed at children’s education like the Carolina Abecedarian Study, which provided high-quality education to a study group of at-risk children, were calculated to not only have paid for themselves but also offered returns to the government beyond the cost of the program.

The 56 kids who received early intervention from the Abecedarian study when it began in 1972, are now in their 40s. Looking at their outcomes offers an excellent insight into how exactly these programs aimed at at-risk children can recoup their costs. The Abecedarian participants are far more likely to have graduated with a four-year college degree, are more likely to be engaged in a high-skilled job and are five times less likely to have relied on public assistance as an adult. 

Education is not the only area where investment in children pays off. Studies prior to the Harvard analysis have shown that investment in children’s health also appears to pay for itself in the long run. This is of particular interest as state governments mull over the decision to expand Medicaid, which has been proved to increase the number of children with medical insurance in participating states.

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Since the passage of the Affordable Care Act in 2014, 36 states have decided to expand Medicaid. Another 17 states have declined. This has set up a natural experiment allowing researchers to look at outcomes of the Medicaid expansion programs over the past five years. 

Turns out a couple of things happen when more adults are insured — the effects of that coverage spill over to the children they care for. A recent study in the journal Pediatrics found that children in states where Medicaid is expanded see an increase in regular well-child visits. A 2015 longitudinal study looking at the effect of well-child visits found that not only do they lead to better health outcomes at the age of 40, they also lead to better economic prospects for the children who receive them. That study suggests the reason for these outcomes is due to the fact that well-child visits not only include direct healthcare, but also child-rearing information for parents, like how to provide proper nutrition. Parents who change their behaviors, offering better foods than they might have, raise kids that are better able to learn. Kids who learn better earn more. 

The positive effect of investing in health is also borne out in Hendren and Sprung-Keyser’s study. They found that, as in early education, money spent on the Medicaid expansions allowed by the Affordable Care Act is not only being paid back but will likely result in a return beyond the initial investment. That’s because as children’s health outcomes improve, the burden of their care by the state is diminished and they grow to become healthier, longer-lived, and more productive workers who can contribute to the economy and increase the tax base. 

Investing in children through Medicaid and education programs takes time. After all, the children have to grow up to give back to society. This is why there’s very rarely any serious political talk of boosting the economy through increases in spending on children. In a way, it’s like investing in Government bonds where returns are not expected for as long as 20 years after the bond is purchased. That makes social investments in children a hard sell for politicians whose constituents prefer to see immediate results from government spending.

There are immediate results of social welfare spending on kids, of course. The result is healthier, better-fed kids. 

As the national debt balloons and constituents worry over deficit spending, politicians naturally look for budget items to cut or trim. Social programs have become a perennial target. Consider the 2020 Whitehouse budget proposal that suggested cutting funds to the Special Supplemental Nutrition Assistance Program and Medicaid through a systemic restructuring of the programs. In a conservative ideological framework, the cuts make sense, particularly if you feel the spending is wasteful and being abused by the communities who collect the benefits. But that kind of thinking denies the fact that these programs have a diverse range of beneficiaries and goals. It also fails to make the calculation that lifting up a child out of poverty has wide-ranging economic implications that are harder to calculate than the simple benefits that tax cuts bring the bottom line of businesses throughout the country.

As much as it sounds like a platitude, children are our future. They grow to become the people who keep our country moving and thriving. Spending money on their early education and health has been shown time and again to be not only affordable but a good investment. What studies like the one out of Harvard show us is that it’s also the best way toward continued economic and social prosperity in America. It’s time to start spending more on kids.