ECD Delivers 7x to 13x Returns, Economist's Research Shows

A dollar invested in early childhood development returns $7 to $13. That is the finding of Nobel Prize-winning economist James Heckman’s longitudinal research on high-quality programmes for disadvantaged families, and it frames one of the strongest capital cases in public policy. The returns flow through lower spending on special education, healthcare and criminal justice, higher tax revenues from adult earnings, and reduced reliance on social welfare. Universal systems, including the Nordic model and Canada’s national rollout, deliver near-term fiscal returns of $1.50 to $3.50 per dollar. Employers do even better on their own spending: an average of $2.00 recouped for every $1 spent on on-site childcare, backup care networks or flexible stipends, through better staff retention and lower recruitment costs.

Yet those returns cannot be captured in an economy still measured by narrow benchmarks. That is the argument Randall Carolissen advances in an opinion piece for Johannesburg Sunday World (https://sundayworld.co.za/news/opinion/randall-carolissen-the-social-and-economic-return-on-investment-case-for-a-caring-economy-in-south-africa/). Writing from a market and policy perspective, Carolissen contends that the classical definition of economics, the study of how individuals, businesses, governments and societies allocate scarce resources among competing needs and wants, does not fully capture national well-being or the true wealth of nations. Scarcity, he notes, is not always inevitable. Sophisticated marketing, monopolistic behaviour and other market mechanisms favouring the wealthy can create it. Needs and wants exist within a social context the textbook definition ignores, and questions of sustainability and the distribution of benefits go unaddressed.

The distribution question is nowhere sharper than in South Africa. The country is the most economically unequal in the world, with a Gini coefficient between 0.63 and 0.67. Income data show the richest 20% of the population controls 70% of national income while the poorest 20% hold less than 5%. Wealth is even more concentrated: the top 10% owns 86% to 95% of total wealth, while the bottom 50% hold zero or negative net wealth, meaning debts exceed assets. Globally, the richest 10% own roughly 75% of wealth and the poorest 50% about 2%. Sub-Saharan Africa has seen slower income convergence despite growth in China, India and other emerging economies, and low-income countries remain dependent on primary commodities.

Opportunity inequality compounds these gaps. Access to quality education, healthcare, employment, technology and entrepreneurship remains uneven, and the digital economy introduces new divides: countries and individuals holding artificial intelligence, digital infrastructure, data and computing resources gain a growing advantage, particularly where teaching methods remain outdated. Spatially, Gauteng generates about 34.7% of national GDP with lower unemployment, while former homeland regions suffer scarce job opportunities and weaker educational outcomes. Black workers in peripheral townships face costly transport and long commutes, and International Monetary Fund research links longer commutes to higher unemployment, lower household incomes and family structures vulnerable to crime. Climate change, meanwhile, disproportionately harms populations that contributed least to historical greenhouse gas emissions.

Carolissen traces these outcomes to the failure of both dominant systems. The free-market promise that wealth would trickle down from rich to poor has proved a fallacy rooted in greed, and centralised economic control has likewise failed to deliver well-being. Capitalist and communist systems alike have operated as elite-dominated, top-down power structures rather than governing in partnership with citizens. This frustration with slow progress towards egalitarian societies has encouraged a broader view of economic performance, one that looks beyond GDP to population well-being and environmental sustainability, especially as technology-driven industrial change shifts the emphasis from physical to intellectual assets.

The framework he draws on is Riane Eisler’s. Her award-winning book The Real Wealth of Nations argues that an economy is much broader than markets, businesses, financial institutions and government. It is an interconnected system of human, social, institutional and environmental relationships that collectively generate and sustain wealth, drawing on evolutionary science, social systems, chaos and complexity theory, and principles from quantum physics. Within this expanded ecosystem, Eisler highlights the obscurity of the household economy despite its centrality in developing human capital: a nation’s economic performance is inextricably linked to the health and well-being of its households.

Childcare sits at the centre of that case. Worldwide, childcare is increasingly treated as vital economic infrastructure rather than a family responsibility, comparable to roads and electricity in underpinning society’s functioning and labour force. Accessible childcare helps parents participate in the workforce, boosts workplace productivity, supports growth and promotes greater economic equality between women and men. Governments can expand subsidised provision in “childcare deserts” through capital grants to private and non-profit operators building facilities in rural, low-income and industrially zoned areas.

For South Africa, the stakes are concrete. The country’s household economy is highly vulnerable: economically vulnerable young children receive care in unstructured settings often reliant on volunteers, while widespread unemployment, rising lawlessness and corruption, and dependence on social welfare grants among 41% of the population deepen the fragility. Unpaid childcare, frequently provided by grandparents and other relatives in informal settings, enables young parents to participate in the labour force far from their families. Carolissen argues these caregivers should be recognised as economic contributors rather than dependants, and that their work, an important part of the informal economy, should be formalised. Social welfare policy, in his view, should support childcare from birth rather than focusing solely on preschool, and enable informal carers currently classified as unemployed to enter formal employment, creating dignified jobs and unlocking unrealised economic benefits.

Without early intervention to improve educational outcomes, the gains from growth will remain unevenly distributed, as children whose development needs are unmet must compete with peers from better-resourced families. Whether South Africa’s policymakers move to formalise this hidden workforce, and so widen the circle of who earns a return from growth, remains the open question.