ROI of early identification and early treatment of children's mental health issue

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Student mental health issues and resulting disruptive behaviors are becoming increasingly difficult for schools to manage. As a result, sometimes students are staffed into special education strictly for assistance with behavioral goals (and not academic issues). Special education costs are 2-3x the cost of general education, resulting in many school districts' having a year-end budget with a special education deficit. To cover this budget shortfall, local property taxes are often raised. Could early identification and early treatment of student mental health issues help reduce the special education costs a school district pays every year? What is the potential ROI, and how would the impact of this investment be measured?


There is a large body of research that shows that peers matter for later academic and economic success.  A prominent study in which children were randomly placed in kindergarten classes showed that children who were placed in schools with higher performing peers had higher earnings and better socioeconomic status as young adults (Chetty et al, 2011).  Children who were exposed to disruptive peers while in elementary school had 3% lower earnings as young adults (Carrell et al, 2018).  Contributing to the adverse effects of disruptive behavior in class is the impact on teachers.  Teachers are more likely to quit or disengage in settings where disruptive behavior is allowed. 

Following the work by Nobel Laureate James Heckman and his colleagues, economists make a distinction between cognitive skills (measured by standardized tests, academic success, grades or other traditional ability assessments) and noncognitive skills (ambition, perseverance, coping, interpersonal relations, …).  Both are critical to lifetime success.  The ability to develop these skills are shaped early in life.  In some of his earliest work, Heckman and his colleagues examined he outcomes of the Perry Preschool Program in Ypsilanti, MI.  The program gave 123 randomly chosen at-risk children access to 2 years of a preschool program and also provided training to their parents.  The children did not get any further special programming once they entered school. Initially, these children did better in school, but the cognitive advantages dissipated over time.  However, 40 years later, the children in the preschool program were more likely to have completed high school, were more likely to be employed, earned more, had fewer legal entanglements, and generally had much better success in life.[1]  In Heckman’s terms, these children had developed their noncognitive skills which made them more successful in school.

As shown in the graph, the reward for intervening in cognitive or noncognitive skills are much greater when they occur earliest in life.  To avoid disruptive behaviors in class, the best way is to establish those behaviors before the children are in school.  Waiting until they are in class raises the costs of mediating behavior on the school, the teacher, and the other children, and lowers the chance that the child will develop into a successful adult.

Your question deals with mental illness and Special Education.  Schools use Special Education because schools are mandated to provide it under the federal Individuals with Disabilities Education Act, even if the federal government only provides a small share of the costs.  Once you have a Special Education program, there is an incentive to use it as a catchall for truly mentally handicapped, mentally ill, emotionally disturbed, and other children who may just be disruptive but have ability.  To minimize the cost of dealing with the problem is to train children at an early age how to behave – and that would be in a preschool setting.  That may help lower the number of children who enter school with behavioral problems, and so Special Education could focus on the children it is aimed to benefit.

Peter F. Orazem, University Professor of Economics, Iowa State University

Figure 1: Rate of return by the age of child at the time of intervention.

Source: Heckman, James J. 2006.


Carrell, Scott E., Mark Hoekstra, and Elira Kuka. 2018. "The Long-Run Effects of Disruptive Peers." American Economic Review, 108 (11): 3377-3415.

Corbin, Chase, and James J. Heckman.2016.  "Capabilities and Skills." Journal of Human Development and Capabilities 17 (3): 342-59.

Chetty, Raj, John N. Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Whitmore Schanzenbach, and Danny Yagan. 2011. "How does your kindergarten classroom affect your earnings? Evidence from Project STAR." The Quarterly journal of economics 126 (4): 1593-1660.

Heckman, James J. 2006. "Skill formation and the economics of investing in disadvantaged children." Science 312 (5782): 1900-1902


[1] A summary of the impacts of the Perry Preschool Program. or at Heckman (2006).

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Last updated on July 31, 2020