Economie considerations for analysis of early childhood development programmes

Abstract

The first section of this paper presents analytical frameworks for considering the determinants of and the impact of human resources investments in childhood development. These are investments, because resources devoted to child development may have returns not only currently, but in the future. Emphasis is placed on the underlying behaviours that determine such investments by households, given their resources and the prices and programmes that they face. Important implications are that: (1) households have their own objectives and therefore may not make the decisions that policy makers anticipate; (2) households make such decisions together with many other decisions in light of all their resources and current and expected prices and programmes, so there may be important cross-programme effects; (3) for empirical analysis or casual observations, many of the determinants of childhood development investments and many of their impacts include not easily observed variables, so inferences that do not control for such variables may be wrong; and (4) the expected returns and costs may differ substantially, depending on a range of markets, programmes, and macro contexts. Tlie second section considers estimation issues in ascertaining the determinants of and the impact of investments in childhood development: (1) random measurement error, which may bias towards zero the estimated effects of right-side variables; (2) omitted variable bias, which causes the estimated effects of observed variables to be misrepresented because these variables in part are representing the effects of the omitted variables; (3) simultaneity bias of a direction that depends on the model being considered if the right-side variables are determined simultaneously with the dependent variable; and (4) selectivity bias if data are available only on a selected sample. The third section presents a framework for policy choices related to childhood development. Tlie two basic motives for policy interventions are discussed: (1) Efficiency to obtain the maximum output for given resources and technologies and (2) distribution of resources or products among members of society. Illustrations are given, with explicit reference to possible child development policies. © 1999, The United Nations University.