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Article Excerpt
I. INTRODUCTION
American society is polarizing. Proportionately more American youth are graduating from college than ever before. At the same time, American-born youth are graduating from high school at lower rates than 40 years ago.
This paper reviews and interprets these trends. The origins of inequality are examined and policies to alleviate it are analyzed. Families play a powerful role in shaping adult outcomes. The accident of birth is a major source of inequality. Recent research by Cunha and Heckman (2007a, 2008b) shows that about half of the inequality in the present value of lifetime earnings is due to factors determined by age 18. Compared to 50 years ago, relatively more American children are being born into disadvantaged families where investments in children are smaller than in advantaged families. Policies that supplement the child rearing resources available to disadvantaged families reduce inequality and raise productivity.
The argument of this paper is summarized by the following 15 points:
1. Many major economic and social problems such as crime, teenage pregnancy, dropping out of high school, and adverse health conditions are linked to low levels of skill and ability in society.
2. In analyzing policies that foster skills and abilities, society should recognize the multiplicity of human abilities.
3. Currently, public policy in the U.S. focuses on promoting and measuring cognitive ability through IQ and achievement tests. The accountability standards in the No Child Left Behind Act concentrate attention on achievement test scores and do not evaluate important noncognitive factors that promote success in school and life.
4. Cognitive abilities are important determinants of socioeconomic success.
5. So are socioemotional skills, physical and mental health, perseverance, attention, motivation, and self confidence. They contribute to performance in society at large and even help determine scores on the very tests that are commonly used to measure cognitive achievement.
6. Ability gaps between the advantaged and disadvantaged open up early in the lives of children.
7. Family environments of young children are major predictors of cognitive and socioemotional abilities, as well as a variety of outcomes such as crime and health.
8. Family environments in the U.S. and many other countries around the world have deteriorated over the past 40 years. A greater proportion of children is being born into disadvantaged families including minorities and immigrant groups. Disadvantage should be measured by the quality of parenting and not necessarily by the resources available to families.
9. Experimental evidence on the positive effects of early interventions on children in disadvantaged families is consistent with a large body of non-experimental evidence showing that the absence of supportive family environments harms child outcomes.
10. If society intervenes early enough, it can improve cognitive and socioemotional abilities and the health of disadvantaged children.
11. Early interventions promote schooling, reduce crime, foster workforce productivity and reduce teenage pregnancy.
12. These interventions are estimated to have high benefit-cost ratios and rates of return.
13. As programs are currently configured, interventions early in the life cycle of disadvantaged children have much higher economic returns than later interventions such as reduced pupil-teacher ratios, public job training, convict rehabilitation programs, adult literacy programs, tuition subsidies, or expenditure on police.
14. Life cycle skill formation is dynamic in nature. Skill begets skill; motivation begets motivation. Motivation cross-fosters skill and skill cross-fosters motivation. If a child is not motivated to learn and engage early on in life, the more likely it is that when the child becomes an adult, he or she will fail in social and economic life. The longer society waits to intervene in the life cycle of a disadvantaged child, the more costly it is to remediate disadvantage.
15. A major refocus of policy is required to capitalize on knowledge about the importance of the early years in creating inequality in America, and in producing skills for the workforce.
The evidence assembled in this paper substantially amends the analysis of The Bell Curve by Herrnstein and Murray (1994). Those authors made an important contribution to academic and policy analysis by showing that cognitive ability, as captured by achievement test scores measured in a child's adolescent years, predicts adult socioeconomic success on a variety of dimensions. Heckman, Stixrud, and Urzua (2006) and Borghans, Duckworth, Heckman, and ter Weel (2008) demonstrate that personality factors are also powerfully predictive of socioeconomic success and are as powerful as cognitive abilities in producing many adult outcomes. Achievement tests of the sort used by Herrnstein and Murray reflect both cognitive and noncognitive factors.
The Bell Curve assigned a primary role to genetics in explaining the origins of differences in human cognitive ability and a primary role to cognitive ability in shaping adult outcomes. If cognitive ability is genetically determined and is primary in shaping adult outcomes, public policy towards disadvantaged populations is limited to transfer payments to the less able. Recent research, summarized in this paper, establishes the power of socioemotional abilities and an important role for environment and intervention in creating abilities. The field of epigenetics surveyed in Rutter (2006) demonstrates how genetic expression is strongly influenced by environmental influences and that environmental effects on gene expression can be inherited. Evidence is presented in this paper that high quality early childhood interventions foster abilities and that inequality can be attacked at its source. Early interventions also boost the productivity of the economy.
The plan of this paper is as follows. Section II reviews some evidence on growing polarization in American society. Section III reviews evidence on the importance of cognitive and noncognitive abilities in producing a variety of socioeconomic outcomes. Section IV shows how the abilities that are so powerfully predictive of adult success and failure emerge early in the life of a child. This evidence has important implications for policies designed to alleviate poverty. Section V summarizes the evidence that a greater fraction of American youth is being born and reared in disadvantaged families compared to 50 years ago. It also discusses the question of the best way to measure disadvantage. Section VI reviews evidence on the role of families in producing abilities. Section VII shows the evidence that enriching early environments can partially compensate for the effects of early adversity, and draws general lessons from the recent literature on the optimal timing of investment in disadvantaged children. Section VIII discusses practical issues that arise in designing and implementing early childhood interventions. Section IX concludes. An Appendix presents a more technical and comprehensive version of the discussion about the optimal timing of investment and some additional evidence.
II. GROWING POLARIZATION OF AMERICAN SOCIETY AND ITS IMPLICATIONS FOR PRODUCTIVITY
The high school graduation rate is one barometer of the performance of American society and the skill level of its future workforce. Throughout the first half of the 20th century, each new cohort of Americans was more likely to graduate high school than the preceding one. This upward trend in secondary education increased worker productivity and fueled American economic growth (see Aaronson and Sullivan, 2001, and Delong, Katz, and Goldin 2003).
In the past 30 years, growing wage differentials between high school graduates and high school dropouts have increased the economic incentive to graduate from high school. The real wages of high school dropouts have declined since the late 1970s while those of more skilled workers have risen (see Autor, Katz, and Kearney, 2005). Heckman, Lochner, and Todd (2008) show that in recent decades, the internal rate of return to graduating high school compared to dropping out has greatly increased and is now over 50 percent per year.
It is thus surprising and disturbing that, at a time when the premium for skills has increased and the return to graduating high school has risen, the high school dropout rate in America is increasing. This trend is rarely noted in academic or policy discussions. The principal graduation rate issued by the National Center for Educational Statistics (NCES)--widely regarded as the official rate--would suggest that U.S. students responded to the increasing demand for skill by completing high school at increasing rates and that a greater fraction of high school graduates go to college and complete it. According to what many regard as the official high school graduation rate, U.S. schools now graduate nearly 88 percent of students and black graduation rates have converged to those of non-Hispanic whites over the past four decades.
The evidence in Heckman and LaFontaine (2008a) challenges these claims and establishes that the high school dropout rate has increased among native-born American children. Using a wide variety of data sources, they estimate U.S. graduation rates. They establish that (1) the U.S. high school graduation rate peaked at around 80 percent in the late 1960s and then declined by 4-5 percentage points. (2) About 65 percent of blacks and Hispanics leave school with a high school diploma. Minority graduation rates are substantially below the rates for non-Hispanic whites. Contrary to claims based on the official statistics, they find no evidence of convergence in minority-majority graduation rates for males over the past 35 years. (3) Exclusion of incarcerated populations from the official statistics substantially biases upward the reported high school graduation rate for black males.
The contrast between the "official" rate and the true rate is demonstrated in Figure 1. The official rate is plotted as the line with circles in Figure 1. The official dropout rate has steadily declined since 1968. However, the dropout rate adjusted for high school dropouts who are exam certified as high school equivalents, but who perform in the labor market at or near the level of high school dropouts who do not certify, is very different. (1) The adjusted rate, plotted in the line with dark rectangles, has risen.
[FIGURE 1 OMITTED]
The slowdown in the rate of growth of college attendance that has been noted by many scholars is not primarily due to a slowdown in the rate of growth of college attendance among high school graduates. (2) The curve marked "[DELTA]" in Figure 2 shows that the college attendance rate among high school graduates has not slowed down as much as the rate for college attendance. The primary source of the slowdown is the growth in the high school dropout rate (see the curve with the light rectangles). This pattern is mainly due to males. (Compare Figures 3 and 4 which are in a format comparable to Figure 2.) A gap has emerged in the education of men and women. This is another source of the growth of inequality in America. Black female college enrollment is converging to that of white male enrollment. Across all ethnic groups, women are doing better than men. (3) For recent birth cohorts, the gap in college attendance between males and females is roughly ten percent. However, the gap in college attendance given high school graduation is only five percent. Half of the growing gender gap in college attendance documented by Goldin, Katz, and Kuziemko (2006) can be explained by the declining rate of male high school graduation (Heckman and LaFontaine, 2008a).
Table 1 performs standard growth accounting, decomposing the change in college graduation into the change due to high school graduation, the change in college attendance given high school graduation, and the change in college graduation given college attendance. The table shows that in the first half of the 20th century, growth in high school graduation was the driving force behind increased college enrollments. Growth in high school graduation no longer contributes to growth in college attainment for cohorts born after 1950, especially for men. High school graduation as a source of growth in educational attainment diminishes and turns negative for more recent cohorts of Americans. The decline in high school graduation rates since 1970 (for cohorts born after 1950) has flattened college attendance and completion rates and has slowed growth in the skill level of the U.S. workforce at a time when the economic return to skill has increased. (See Figure 5.)
[FIGURE 2 OMITTED]
[FIGURE 3 OMITTED]
[FIGURE 4 OMITTED]
The trends in high school graduation rates reported in Figures 2-4 are for persons born in the United States and exclude immigrants. The recent growth in unskilled migration to the U.S. increases the proportion of unskilled Americans in the workforce apart from the decline in skills due to a rising high school dropout rate. This trend further reduces the growth in workforce productivity, and promotes inequality in society at large. Estimates by Aaronson and Sullivan (2001) and Delong, Katz, and Goldin (2003) suggest that annual growth in labor productivity has slowed by 0.17 to 0.35 percent per year due to trends that reduce the growth of labor force quality.
[FIGURE 5 OMITTED]
A greater percentage of the workforce of tomorrow will come from traditional minority populations where the levels of educational attainment are lower and the rate of growth in the supply of skills for males is smaller. Table 2 taken from Ellwood (2001) shows that in the period 2000-2020, American society will generate less than half of the number of college graduates that it produced in the previous 20 years despite growth in the size of the total population.
Trends in the production of skills from American high schools coupled with a growing influx of unskilled immigrants have produced more people with low skills in the U.S. Consider the performance of the American workforce on a basic level of literacy. (See Figure 6.) At level 1, depicted in the figure, a person cannot understand the instructions written in a medical prescription. American (and UK) workers perform poorly by this measure both absolutely and in comparison with counterparts in Germany and Sweden. More than 20 percent of American workers do not possess this basic competence.
[FIGURE 6 OMITTED]
What forces have produced these low levels and adverse trends? Are the public schools responsible? Can we look to school reform to fix the problem? Are higher college tuition costs to blame? Contrary to widely held views, accounting for the ability of a child at the age college decisions are made, tuition costs and schooling quality explain trivial fractions of the gaps in educational attainment by socioeconomic status.
III. THE IMPORTANCE OF COGNITIVE AND NONCOGNITIVE ABILITIES
Cognitive and noncognitive abilities are important determinants of schooling and socioeconomic success. In the U.S. and many countries around the world, schooling gaps across ethnic and income groups have more to do with ability deficits than family finances in the school-going years. A substantial body of research shows that earnings, employment, labor force experience, college attendance, teenage pregnancy, participation in risky activities, compliance with health protocols, and participation in crime are strongly affected by cognitive and noncognitive abilities. (4) By noncognitive abilities I mean motivation, socioemotional regulation, time preference, personality factors, and the ability to work with others.
American public policy currently focuses on cognitive test scores or "smarts." The No Child Left Behind Act in the U.S. focuses on achievement test scores to measure success or failure in schools. Yet an emerging literature shows that, as is intuitively obvious and commonsensical, much more than smarts is required for success in life. Motivation, sociability (the ability to work with others), the ability to focus on tasks, self-regulation, self esteem, time preference, health and mental health all matter.
The importance of noncognitive skills tends to be underrated in contemporary policy discussions. Only recently have such traits been measured and there are competing measurement systems. (5) Recent evidence shows that the workplace is increasingly oriented towards a greater valuation of the skills required for social interaction and for sociability. (6,7)
Compelling evidence on the importance of noncognitive skills comes from the GED program (Heckman and LaFontaine, 2008b; Heckman and Rubinstein, 2001). GEDs are dropouts who pass a test to certify that they are equivalent to high school graduates. Participation in the GED program is growing. Currently 14 percent of U.S. high school certificates issued are to GEDs. The GED is successful in terms of measuring performance on tests of scholastic ability.
Heckman, Hsee, and Rubinstein (2001) and Heckman and Rubinstein (2001) show that GED test scores and the test scores of persons who graduate high school but do not go on to college are comparable. Figure 7 displays the distribution of achievement test scores for regular high school graduates who do not go on college (the graph with dark rectangles) and GEDs (the circles). The two distributions are very similar for all ethnic and gender groups. Yet GEDs earn at the rate of high school dropouts (see Heckman and LaFontaine, 2006, 2008b). GEDs are as "smart" as ordinary high school graduates, yet they lack noncognitive skills. (8) The GEDs are the wise guys who cannot finish anything. They quit their jobs and marriages they start at much greater rates than ordinary high school graduates. Most branches of the U.S. military recognize this in their recruiting strategies. Until the recent war in Iraq, the armed forces did not generally accept GEDs because of their poor performance in the military (Laurence, 2008). This and other evidence shows that both cognitive and noncognitive skills matter in a variety of aspects of life.
It is useful to summarize additional evidence on the power of noncognitive skills. (9) Consider the effects of both cognitive and noncognitive skills on many measures...
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