Copyright © 2017. Interamerican Development Bank. If you wish to republish this article, please request authorization at sph-communication@iadb.org.

By Florencia López-Boo.

Para leer este artículo en español, haz click aquí.

Poor child development has important consequences for the wellbeing of children in particular, and of society as a whole. Profound socioeconomic problems, such as poverty, inequality and social exclusion exacerbate the dire circumstances in which millions of children in the world live. Indeed, societies pay a high price, both in the present and into the future, for failing to take action on behalf of children.

The good news? Early intervention policies can help alleviate these consequences by promoting better health, education, and social and child protection services.

What is the cost of inaction and what are its implications?

Existing literature has established that the economic returns to certain investments in early childhood are high. Early childhood interventions include a set of actions addressing different domains of child development, including health, nutrition, cognitive, language, socioemotional, and motor development (gross and fine), among others. Interventions in health and early childhood stimulation are particularly important (and affordable).

While many costs of programs are immediate and relatively easy to quantify, benefits are more difficult to monetize, in part, because they occur over the life cycle. A recent study estimates the cost that society pays for not undertaking these evidence-based interventions. We refer to this cost as the social Cost of Inaction (CoI). The Col is higher when the benefit-cost ratio per child affected is higher and the number of children affected is larger. A particular intervention may have a high benefit-cost ratio but low CoI if relatively few children are affected by it.

In the aforementioned study, we simulate the CoI for two different early childhood interventions in different regions. First, we calculate the CoI for reducing stunting to a 15% prevalence rate in 11 high-burden countries in Sub-Saharan Africa and South Asia. Second, we estimate the CoI for eliminating delays in receptive language in six Latin American and Caribbean countries, which have data available for both benefits and costs of the interventions.

The CoI around the world

To give specific examples, Figure 1 presents the CoI as percentages of Gross Domestic Product (GDP) for reducing stunting in 11 countries. We present the results using different discount rates (d) and time spans (t) (see Richter et al, 2016 for methodological details). The CoI for reducing stunting is more than 10% of GDP in Madagascar and Tanzania in the less conservative combination of t and d, while it remains below 3% of GDP for the Democratic Republic of Congo and Nigeria. This means that the CoI in Madagascar and Tanzania is almost double of what these countries are actually spending in health, as a proportion of the GDP. Moreover, India’s CoI is twice what it currently spends on health by not taking action to reduce stunting from 48% to 15%. The costs are considerable: US$176.8 billion per birth cohort.

Figure 1: Cost of inaction for nutrition interventions, % GDP

In the case of interventions aimed at addressing delays in preschool coverage and receptive language, Figure 2 presents the CoI as percentages of GDP for (i) universal preschool coverage and (ii) home visits for all children with scores below two standard deviations from the normed mean in the Spanish version of the Peabody Picture Vocabulary test (PPVT). In countries where access to preschool education services is lower, the CoI rises. As the figure below shows, the CoI in this case is equal to 4% of GDP in Nicaragua and 3.6% in Guatemala, using a discount rate of 3%. In Chile, Ecuador and Peru, the CoI are <0.5% GDP because initial coverage of preschool is higher.

Figure 2: Cost of inaction for not reaching universal preschool coverage or not addressing delays in receptive language, % GDP

Combating the cost of inaction with… Action

Since early childhood development is considered one of the pillars driving human development and guiding progress towards the Sustainable Development Goals (SDG), the cost of inaction has important consequences on the potential an individual can reach in their lifetime, financially and beyond. For instance, a child experiencing stunting as a result of extreme poverty will likely have less opportunities in his lifetime, and will forfeit about a quarter of average adult income per year.

As the mentioned publication from The lancet indicates, these are some ways to ensure action is taken:

Expanding political will and funding through advocacy for the SDGs

Creating supportive environments for families to provide nurturing care for young children

Capacity-building to promote early childhood development in health, education, social and child protection

Strengthening multisectorial coordination in support of early childhood development initiatives

Ensuring accountability for early childhood development services and propelling leadership and action

What are some ways in which the CoI is affecting your country? What steps are being taken to reduce it? Tell us in the comments section or mention @BIDgente on Twitter.

Florencia López-Boo is Senior Economist of the Social Protection and Health Division at the Inter-american Development Bank.