SMART Investing

Nebraska has a national reputation of being fiscally prudent. Nebraskans use common sense to responsibly manage limited resources. One of Nebraska’s greatest resources is its people. Finding qualified, capable people to fill open jobs is also one of our state’s biggest economic challenges.

For continuous economic growth, Nebraskans must find ways to maximize resources with investments that yield substantial and reliable returns. Investments that mitigate state costs over time are also beneficial.  Economists and business leaders agree investing in the earliest learning and developmental experiences of children, particularly children at risk, is a smart investment.


An Economic Growth Investment

Rates of Return from Investing in Human Capital

Education is one of the best mechanisms for supplying businesses with skilled workers. These skilled workers fulfill the demands for products and services which increase Nebraska’s GDP.  To maximize the skills of our workers and maximize our skill development pipeline, Nebraskans must consider the supports in place to develop skills and support parents in this process from the beginning.

Investments in early human development yield the strongest outcomes of lifelong productivity according to research by Nobel Laureate in economics James J. Heckman. His research on the economics of human development indicates that later investments are also essential to sustain and build upon early gains in skills.  However, it is investments in the earliest years that return lifelong dividends. Dollar-for-dollar investments targeting the early years produce higher rates of return than investments in the later years. 

A Cost-Saving Investment

Economically, early investments promote efficiency in skill development. The reason for high rates of return is the process of skill formation. With the foundation for skill development built in the first years of life, remedial programs in the adolescent and young adult years are much more costly in producing the same level of skill attainment. According to Heckman’s research and other economists, most remedial programs are economically inefficient.

Early investments reduce achievement gaps that exist before a child enters kindergarten. Reducing the achievement gap this early decreases social expenditures later on. A child who receives quality early childhood experiences is more likely to grow up with the cognitive and social-emotional skills necessary for success.

Three of the most rigorous long-term early child care studies found a range of returns between $4 and $9 for every dollar invested in early learning programs for children of families with low-incomes. Program participants followed into adulthood benefited from increased earnings. Taxpayers received returns in the form of reduced special education, welfare, and crime costs. Taxpayers also received increased tax revenues from program participants. Reduced reliance on costly state systems makes better use of existing fiscal resources, but also increases productivity and raises the overall quality of life that makes Nebraska a desirable place to conduct business and locate new jobs.