Adverse Childhood Experiences, Poverty, and Inequality: Toward an Understanding of the Connections and the Cures

Abstract

"The most valuable of all capital is that invested in human beings; and of that capital the most precious part is the result of the care and influence of the mother" Alfred Marshall 1890.

Despite Marshall’s early recognition of the importance of mothering, modern day human capital theory scarcely reflects the role of parents and the home environment as factors influencing the production of human capital. The purpose of this paper is to look more deeply into the earliest phase of child development, from birth to two or three years of age, in order to understand the implications of this development for human capital theory. Recently, important noneconomic research has revealed the growing prevalence of adverse childhood experiences (ACEs) among young children and the role this plays in impairing their brain functioning and contributing to later age physical and mental ailments. Accordingly, this paper explores the role of ACEs for understanding the growth of poverty and inequality of both income and academic achievement. This paper attempts to build on James Heckman’s important contributions related to human capital formation in early childhood.

In contrast to other economic and socio-economic theories explaining the growth of inequality of academic achievement (and income), this paper focuses on the magnitude and growth of ACEs and poor parenting within the lower socio-economic class. Other theories no doubt have some validity, but if they leave out ACEs, they are missing a crucial causal factor. The implications of this theory for remedies to ACEs and related early childhood stressors are explored. These remedies involve different ways to build human capital during the early childhood years so that children will ultimately arrive at school (and later workplaces) with their brains unimpaired. Doing the caring work of making these human capital investments works better if these efforts are part of what ordinarily happens in a caring economy and part of a sensible human capital strategy.

Keywords: Adverse childhood experiences, human capital, noncognitive human capital, neuro development, educational inequality, early childhood development

JEL Classification: I14, I18, J24