Nobel Laureate for Economics James J. Heckman on “Skills, Schools and Synapses”

ZEW President Professor Wolfgang Frank was pleased to welcome Professor James J. Heckman, a professor at the University of Chicago and winner of the Nobel Prize in Economics, to the institute to give a lecture on non-cognitive skills – such as perseverance, problem solving, discipline and concentration – and their significance for the formation of human capital in economies. More than 300 invited guests attended the event held as part of the lecture series “First-Hand Information on Economic Policy” at ZEW.

At the beginning of his lecture “Skills, Schools and Synapses”, Heckman shed some light on the phenomenon on a new, growing lower class, which is increasingly replacing the traditional middle class. This phenomenon is particularly pronounced in the United States, although similar trends have been observed in a number of European countries. One of the main features of this growing lower class is a high rate of high school drop-outs and unskilled workers. In addition, this social group is characterised by a high prevalence of teenage pregnancies, high crime rates and increased health risks. This social polarisation is likely to incur significant costs for entire economies, which may manifest themselves in the form of high unemployment rates or decreasing productivity among low-qualified workers.

Currently, economies are spending large sums of money to combat these problems through, for instance, labour market programmes, special training schemes or convict reintegration initiatives.

While these social issues have in the past been attributed to a lack of cognitive skills such as adequate schooling, the real reasons behind this development are much more complex, explained Heckman. Even before children first start school, there are certain non-cognitive skills that they have picked up – or not – in their family home, which shape their further development and thus also their socio-economic success over the course of their life. These non-cognitive skills have little to do with intelligence. Rather, they include personal qualities such as perseverance, diligence, motivation, determination and confidence – characteristics that children already begin to develop at the age of five thanks to the stimulation they receive in their family environment.

These non-cognitive skills form the basis on which cognitive skills can be developed in later years. A child that has learned to focus its attention on a specific stimulus for a certain period of time, will, for instance, have an easier time reading a book. This success motivates children and opens new doors for their development. On the other hand, a child that has not experienced a structured daily routine in its family environment will find it difficult to stick to routines, such as doing homework, on a daily basis. These difficulties can have a demoralising effect and lead to a tendency to avoid new challenges. This is how non-cognitive and cognitive skills influence each other.

The basis for social inequality is thus already established in the childhood home. As has been shown multiple times, these inequalities have already manifested themselves by the time children reach the age of five. Social inequality is also characterised by their strong persistence. Numerous studies have shown that even primary school teachers have only a marginal impact on reducing these inequalities among children – regardless of the quality of their classes.

Given the growing number of children being born into adverse family environments, policy measures that aim to effectively counter negative social development in a cost-efficient way should be designed to target young children aged between 0 and 5 years. Various studies also indicate that supporting preschool children is not only associated with a low cost for society as a whole, but has also proven to be far more successful than all measures aimed at high school students or young adults. What is more, investment in early childhood education could yield higher incomes – measured in terms of the lifetime earning of an individual who received support – as a result of the interplay and the mutually reinforcing effects of non-cognitive and cognitive abilities at preschool age.

At the end of his lecture, Heckman asked the audience for their thoughts on how public authorities should be allowed to intervene in the lives of families with the aim of supporting early childhood development. The audience also discussed which institutions should be responsible for launching early childhood intervention programmes and who should finance them.