The Woodhill Foundation
May 11, 2000
The True Cost of Head Start
Head Start was founded in 1965 by LBJ as part of his War on Poverty. The NASDAQ composite index was founded in 1971. This table shows how much the money spent on Head Start would be worth for each child at age 18, 21, 24 and now (as of market close on 5/05/00).
Cost per child |
Cost per child |
Value (1999$) at |
|||||||
Year of |
First Year in |
at age 3 |
at age 4 |
NASDAQ = 3816.82 |
|||||
Birth |
Head Start |
Nominal |
In 1999$ |
Nominal |
In 1999$ |
Age 18 |
Age 21 |
Age 24 |
May 5, 2000 |
1968 |
1971 |
$906 |
$3,726 |
$993 |
$3,957 |
$9,049 |
$9,526 |
$11,557 |
$61,509 |
1969 |
1972 |
$993 |
$3,957 |
$1,057 |
$3,967 |
$10,238 |
$8,984 |
$14,497 |
$66,626 |
1970 |
1973 |
$1,057 |
$3,967 |
$1,145 |
$3,869 |
$13,268 |
$15,368 |
$21,202 |
$95,521 |
1971 |
1974 |
$1,145 |
$3,869 |
$1,157 |
$3,584 |
$17,777 |
$21,568 |
$30,742 |
$114,792 |
1972 |
1975 |
$1,157 |
$3,584 |
$1,264 |
$3,700 |
$14,801 |
$23,883 |
$35,950 |
$109,764 |
1973 |
1976 |
$1,264 |
$3,700 |
$1,426 |
$3,921 |
$17,448 |
$24,072 |
$43,341 |
$108,452 |
1974 |
1977 |
$1,426 |
$3,921 |
$1,597 |
$4,080 |
$20,182 |
$28,766 |
$51,619 |
$107,414 |
1975 |
1978 |
$1,597 |
$4,080 |
$1,755 |
$4,027 |
$21,908 |
$32,978 |
$71,991 |
$100,688 |
1976 |
1979 |
$1,755 |
$4,027 |
$1,953 |
$3,949 |
$20,489 |
$36,891 |
$92,312 |
$92,312 |
1977 |
1980 |
$1,953 |
$3,949 |
$2,114 |
$3,874 |
$22,343 |
$40,094 |
$83,432 |
|
1978 |
1981 |
$2,114 |
$3,874 |
$2,303 |
$3,977 |
$28,088 |
$61,317 |
$85,760 |
|
1979 |
1982 |
$2,303 |
$3,977 |
$2,198 |
$3,676 |
$30,148 |
$75,440 |
$75,440 |
|
1980 |
1983 |
$2,198 |
$3,676 |
$2,252 |
$3,611 |
$30,826 |
$64,145 |
||
1981 |
1984 |
$2,252 |
$3,611 |
$2,378 |
$3,682 |
$47,013 |
$65,754 |
||
1982 |
1985 |
$2,378 |
$3,682 |
$2,303 |
$3,501 |
$54,733 |
$54,733 |
||
1983 |
1986 |
$2,303 |
$3,501 |
$2,532 |
$3,713 |
$47,957 |
|||
1984 |
1987 |
$2,532 |
$3,713 |
$2,690 |
$3,788 |
$51,436 |
|||
1986 |
1989 |
$2,690 |
$3,788 |
$2,739 |
$3,679 |
$51,032 |
|||
1987 |
1990 |
$2,739 |
$3,679 |
$1,945 |
$2,479 |
$42,143 |
Source: The Woodhill Foundation.
Calculated from HHS, Census Bureau, and NASD data.
Methodology: We took the total expenditures on Head Start for each year and divided it by the number of children in the program. Then, for each year the child was in the program, we divided that cost per child by the NASDAQ composite in that year. At each age, we multiplied that ratio by the NASDAQ composite for that year (which was a simple average of the monthly closings for 1971 to 1996, and a simple average of daily closings for 1997 to 1999). This is the value of the hypothetical trust fund in that given year. We divided by CPI deflators to convert those numbers to real 1999 dollars. The current (2000) figure is not converted to 1999 dollars.
Implications: The opportunity costs of financing Head Start are unjustifiable given that there is no conclusive evidence that the program benefits participants. Therefore, we recommend that Head Start be replaced by the Parental Educational Investment Choice program, wherein the money current allocated to Head Start would instead be placed in individual trust funds for the eligible low-income children.