Calculating the Safety Net’s Return on Investment
Safety net policies targeting children – particularly direct investments in the health and education of low-income children – offer the highest return on investment, according to a new working paper from two Harvard University economists published by the Opportunity Insights project. The researchers analyzed 133 policy changes – including education and job training, taxes, cash and in-kind transfers and social insurance – over the last half century and calculated the ratio of the cost to the government and the policy’s benefit to recipients (measured by their willingness to pay). Many investments in low-income children’s health and education pay for themselves, while return on investment was generally lower for policies targeting adults.