Cost-benefit analysis of a micronutrient supplementation and early childhood stimulation program in Nicaragua

Abstract

This paper estimates the cost-benefit ratio for an integrated early childhood development program in Nicaragua (PAININ). Using longitudinal data, we estimate the average treatment effects of PAININ including micronutrient sprinkles on the prevalence of anemia and hemoglobin levels among disadvantaged children aged 6-36 months. We also estimate the effects of PAININ excluding sprinkles on cognitive outcomes among children aged 2.5-5 years. In the younger age group the program reduced anemia by 4 percentage points after 8 months and nearly 6 percentage points after 1 year; the latter is a 26% decrease in anemia. In the older age group, the program improved verbal and numeric memory after a year and a half, but the effects were modest (0.13 SD). When analyzing its potential impact on earnings, we conclude that the discounted annual costs of the program per child are less than the discounted annual increase in beneficiary earnings. Specifically, we estimate a cost-benefit ratio of 1.50 from the PAININ plus sprinkles package. Our sensitivity analysis suggests a range for this ratio between 1.30 and 2.30. © 2014 New York Academy of Sciences.