1. Abstract

Cost and benefit analysis is a method in economic sciences that compares the costs and benefits of a specific undertaking or policy in footings of pecuniary values. Using this method, this paper deals with a cost and benefits analysis for preschool instruction in Turkey and describes its consequences. The paper is divided into five subdivisions, including the followers: ( 1 ) abstract, ( 2 ) debut, ( 3 ) literature reappraisal, ( 4 ) analysis, and ( 5 ) decision. The literature reappraisal subdivision briefly explains some of the many surveies conducted on this topic. The analysis subdivision discusses costs and profit analysis method, the premises, the informations, and the application of the method for preschool instruction. The decision of the analysis is given in the 5th subdivision. A concluding subdivision presents the mentions.

For the intent of this paper that is limited to 12-15 pages, the analysis uses major and quantifiable informations. Within this model, it assumes edifice and runing a kindergarten as the costs and it assumes the alteration in the participants ‘ lifetime income as the benefits ; utilizing the fact that the economic return to instruction is increased net incomes. The addition in the general instruction degree for persons who attended kindergarten instruction compared to those who did non is computed based on a survey by Kagitcibasi, Sunar, Bekman and Cemalcilar, named “ Continuing Effectss of Early Intervention in Adult Life ” , published in April 2005.

Although the paper trades with one dimension of preschool instruction, viz. the increased net incomes, the consequence shows that benefits of preschool instruction exceed its costs by a ratio of 1,24.

2. Introduction

Early instruction is important for the development of kids. As shown on the below figure the encephalon development occurs most quickly during the period of preschool instruction.

Figure 1: Brain Development by Age 1

By preschool instruction, Turkish Education Ministry aims that kids are prepared for primary instruction, they speak decently and right, they get good wonts, and that a common environment of upbringing is provided for kids coming from disadvantaged background. Preschool instruction includes “ intercessions ” to better kids physically, mentally and emotionally. Childs who are holding preschool instruction “ be given to be more successful in ulterior school and more competent socially and emotionally ” 2 in their future life. When looked from this point of position, the investing in preschool instruction is a valuable investing in a state ‘s human resources.

Although preschool instruction has many dimensions such as instruction in household, this analysis will cover with the formal instruction supplied in pre-primary instruction establishments. In Turkey, these establishments, non being compulsory, may be established as independent kindergartens or, as baby’s room categories within a primary instruction school or as pattern categories affiliated to other related instruction establishments.

Harmonizing to the latest informations announced3 on November 9, 2010 by Nimet Cubukcu, the curate of instruction, the registration rate for the preschool instruction in Turkey increased to 39 % 3. The rate was 11 % 3 in 2002. Despite increased, this registration rate is low compared to universe norm shown on the below figure.

Figure 2: 2008 Regional Average for Preschool Enrollment Ratios4

Turkey is a underdeveloped state. Its economic system faced many crises. The deficiency of fiscal resources may be the ground for low investings in preschool instruction and accordingly low registration ratio. Even so, public outgo portion in instruction for Turkey is 3,4 % whereas it is 5,2 % in Canada and 4,6 % in OECD countries5 harmonizing to the latest information announced by Turkish Statistical Institute. However, higher benefits of preschool instruction would cast visible radiation for the policymakers in Turkey on the necessity to spread out preschool instruction.

Within this model, this analysis will cover with a cost and benefit analysis for preschool instruction in Turkey.

3. LITERATURE REVIEW

Preschool instruction is handled widely in the universe literature ; the benefits are stressed in those plants. The following tabular array adapted amended from Donald Verry ( 1992 ) by Gordon Cleveland and Michael Krashinsky grabs the nucleus of costs and benefits of preschool instruction and provides a general lineation.

Table1: Costss and Benefits of Preschool Education6

Type of Effect

Potential Benefits

Potential Costss

Effectss on Children

Stimulates the development of kids in the of import early old ages

Improved encephalon and societal development of kids in early old ages can better school preparedness and have long term final payments in abilities, income, productiveness and economic growing, reduced delinquency and condemnable activity, improved wellness, higher revenue enhancement grosss and better citizenship.

The cost of resources necessary to supply good quality early childhood instruction. Besides, the extra load costs of higher revenue enhancement.

Ensures high-quality non-parental child care for kids

Good quality licensed child care provided by trained and dedicated child care professionals is better for kids than many current informal agreements. There is grounds that, either because of unequal incomes or inability to judge accurately the quality of child care, excessively many parents choose unequal attention.

The excess resources needed to supply higher quality child care.

Provides a more equal start in life for kids.

Promotes equality of chance, a cardinal value in most advanced societies. All kids can profit from some sum of early childhood instruction. Children from low-income households incur particularly big benefits.

Effectss on Mothers and Families

End revenue enhancement favoritism against employed female parents

Failure to allow deductibility of child care costs from nonexempt income creates revenue enhancement inequality which reduces female parents ‘ employment. Increased public support will cut down this consequence. Society portions in improved productiveness through higher authorities revenue enhancement gross from those freshly employed.

Deductibility will cut down revenue enhancement gross from presently employed female parents. Employed female parents will evoke family production.

Supplying aid o immature households biddy outgos are high and incomes are low.

Government support of ECEC when parents are immature and higher revenue enhancement when older Acts of the Apostless like a long-run loan programme to let parents to do better life-time determinations about work and kids.

Aid to immature households, and more family-friendly leave and benefit policies at work, may promote higher birthrate, raising public costs.

Encourage female parents to keep labour force fond regard, continuity of occupation experience, take occupation publicities, work full-time instead than part-time.

Mothers are encouraged to do work determinations in long skyline model to allow sensible fiscal independency, avoid poorness if divorced, in old age, etc.

Mothers may endure tenseness from “ super-mom ” work and household activities unless gender functions continue to alter and household policies are supportive.

Change immature adult females ‘s premises about future occupation waies and chances. Promote gender equity throughout society.

Young adult females make instruction and other human capital determinations based on chances available to their female parents. Public funding of early child care expands female parents ‘ chances, leting their girls to do durable early human capital investings based on ability instead than gender.

Have to work on altering immature work forces ‘s premises about gender functions excessively.

Reduce the occupation disincentive effects of societal aid and child care costs

Reduced immediate and longer term societal aid costs, effectual decrease of kid poorness, terminal of poorness rhythm. Increased future instruction, productiveness, self-pride of kids and revenue enhancement gross for authoritiess.

Costss of good quality ECEC, possibly home-visit programmes, developing programmes, alterations in societal aid policy.

Effectss on Society

Common societal and educational experiences when kids are immature

Encourages societal coherence, good citizenship, the integrating of immigrant households, early showing of kids with behavioral, societal or cognitive troubles. Provides early foundation for integrating of kids with disablements.

Increased revenue enhancements. Possible sense of reduced parental pick.

One survey in cost and benefit related with preschool instruction is “ A benefit-cost analysis of the Abecedarian early childhood intercession by Masse and Barnett, 2002 ” . This study7 presented an analysis for the Carolina Abecedarian Preschool Program. In this analysis, the estimated cost constituted of the preschool plan costs. Program benefits were handled for the undermentioned classs for which it was possible to obtain pecuniary values: net incomes and fringe benefits of participants and of future coevalss, maternal employment and net incomes, simple and secondary instruction cost-savings, improved wellness, higher instruction costs, and public assistance usage. The benefit-cost ratios varied from 1,23 to 1,88 among different scenarios.

Another study8 in this field is “ The High Scope Perry Preschool Program ” by Belfield, Nores, Barnett and Schweinhart, 2006. This survey presented a cost-benefit analysis of the Perry preschool Program, utilizing informations on persons aged 40. The participants were from three and four twelvemonth old African American kids holding low parental instruction and coming from disadvantaged background. The cost constituted of plan costs. The benefits constituted of net incomes, condemnable activity, and public assistance reception. Net present values were calculated for participants ; the decision was that benefits were about 13 times more than the cost. The high benefit chiefly stemmed from lower condemnable activities of the participants. In fact, this survey was an update to an earlier cost-benefit analysis conducted by Barnett ( 1996 ) , in which the benefits were six times more than the cost.

On the other side, one cost and benefit study9 for preschool instruction particular for Turkey was found to be conducted by Kaytaz, Mehmet on March 2005. In his work, Kaytaz stressed the importance of preschool instruction. He presented Cleveland and Michael Krashinsky ‘s cost and benefits in his work, analyzed them and concluded benefit-cost ratios runing from 2,09 % to 6,31 % for different scenarios he used. In his work, he so proposed assorted funding methods.

4. Analysis

4.1 Cost and Benefit Analysis

Cost and benefit analysis is a method in economic sciences that compares all the costs and benefits of a specific undertaking or policy in footings of pecuniary values. One of the chief issues in cost and benefit analysis is showing all the benefits and costs in pecuniary footings. Another issue is that cost and benefits should be in footings of present value to be comparable. For this, a method in finance is used to dismiss future pecuniary values to show values. “ Clearly, income received this twelvemonth is more desirable than the same sum received in ulterior old ages. A price reduction rate is used to bespeak how much more desirable it is. Normally in pattern a price reduction rate of 5 % or 10 % is chosen, connoting that income received one twelvemonth from now is perceived to be deserving 5 % less, severally 10 % less, than the same sum of income received this twelvemonth. “ 10

4.2 Specifying Costss and Benefits

The above tabular array on pages 5-6 by Gordon Cleveland and Michael Krashinsky grabs the nucleus of costs and benefits related with preschool instruction and provides a general lineation for the possible costs and benefits widely defined in the surveies in this country.

For the intent of this paper that will be limited to 12-15 pages, the analysis will be limited to the of import and quantifiable informations. “ Harmonizing to the human capital position of instruction, schooling raises worker ‘s rewards because it makes them more productive ” 11

Within this model, the analysis will presume edifice and runing a public independent kindergarten as the undertaking costs and it will presume the alteration in the participants ‘ gross income as the undertaking ‘s benefits. It will presume all other variables changeless. Therefore the decision in this survey will be one dimension merely, go forthing out many of the benefits cited in table 1. All the pecuniary values will be in Turkish Lira. The mean rate of exchange is 1CAD=1,45TRY for 2010 ( at terminal November ) 18. The life-time will be assumed to be 75 old ages, with a work period of 37 old ages for ages between 24 and 60. The price reduction rate will be assumed to be 5 % . The rising prices will be assumed zero, go forthing the monetary value degree invariable.

4.3 Cost Appraisal

This analysis will presume constructing a populace kindergarten which will hold 5 categories for 10 kids each of which is 30 square metres ( 1 square metre is 10,764 square pess ) , and each category is used for two pupil groups, one forenoon group the other midday group as usual for Turkey. This will so do a kindergarten of 150 square meter country with a capacity for 100 kids. Assuming 2 instructors for one category, there will be 10 instructors.

The costs related with these 100 kids, will be for 4 old ages for ages from 3 to 6.

First, the edifice cost will be calculated gauging that utile life of the edifice will be 30 old ages. The mean edifice cost announced by Turkish Revenue Administration is 290 TRY12 per square metre. The entire cost of edifice is 150 * 290 = 43.500 TRY. Annual cost will so be 43.500 / 30 = 1.450 TRY.

Second, the rewards of the instructors will be assumed to be 2.000 TRY gross, monthly, which is considered a good degree for instructors working in Turkey. The entire cost for instructors will so be 2.000 * 5classes * 2teachers * 12m = 240.000 TRY for one twelvemonth.

Third, all other costs such as cleansing, electricity, gas, H2O, fix, care and others will be calculated. Harmonizing to the latest information announced by Turkish Statistical Institute the sum of instruction outgos per pupil in pre primary instruction in 2002 was 155 TRY13. However sing rising prices, this sum is deserving 330 14 TRY in 2010. For 100 pupils, the entire sum will so be 330 * 100 = 33.000 TRY for one twelvemonth.

4.4 Benefit Appraisal

For the benefit appraisal, a projection of 100 individuals ‘ degree of lifetime income in instance they participate into preschool instruction and in instance they do n’t take part will be made. The difference will give the benefit of engagement.

It will foremost be assumed that the scattering of 100 individuals who did non take part to preschool instruction will non be different from the general scattering in Turkey as presented in the undermentioned tabular array:

Table 2: Proportion of Population by literacy and instruction level15

Primary school and below

Junior high school or vocational school at junior high school degree

High school or others at high school degree

Higher instruction

Entire

71,42

8,23

12,55

7,80

100

The consequences of a survey by Kagitcibasi, Sunar, Bekman and Cemalcilar, “ Continuing Effectss of Early Intervention in Adult Life ” will be used to gauge the difference in instruction degree for participants and for non-participants. Harmonizing to this survey, the attending to higher instruction of kids who had a preschool instruction increased from 30,6 % to 44,1 % 16 in the sample used, which means an addition of 44,1 % ( ( 44,1 / 30,6 ) – 1 = 44,1 % ) . Increased higher instruction would intend a general addition in the degree of instruction. Having no item informations, this analysis will presume the same addition per centum for other degrees get downing from higher school towards primary school. The scattering of 100 individuals who participated to preschool instruction will so be as followers:

Table 3: Dispersion of 100 individuals who participated to preschool instruction

Primary school and below

Junior high school or vocational school at junior high school degree

High school or others at high school degree

Higher instruction

Entire

58,80

11,87

18,09

11,24

100

Table 4: Annual mean gross net incomes by educational attainment17

Primary school and below

Primary instruction and secondary school

High school

Higher instruction

9.676

9.640

11.802

27.310

By uniting the two different scatterings presented in table 2 and 3 with the mean net incomes presented in table 4, we will hold the followers tabular array where Group A stands for individuals that did non take part to preschool instruction, and Group B stands for individuals that participated to preschool instruction:

Table 5: Annual mean gross net incomes for participants and non-participants

A

Primary school and below

Primary instruction and secondary school

High school

Higher instruction

Entire

Group A

690.963

79.337

148.115

213.018

1.131.433

Group B

568.949

114.427

213.498

306.964

1.203.838

Profit ensuing from take parting to primary school instruction

A

72.405

The nominal difference of income earned by two groups amounting to 72.405 TRY will be the annual nominal benefit ensuing from take parting to primary school instruction

4.5 Comparison of Costs and Benefits

Using the price reduction rate of 5 % as mentioned in the subdivision 4.2 above, present values of costs and benefits are calculated and shown in the below tabular arraies.

Table 6: Summary of Costss

A

Building Costss

Teachers Costss

All Other Costss

Entire

Cost per twelvemonth

1.450

240.000

33.000

274.450

4 Old ages – sum

5.800

960.000

132.000

1.097.800

4 Old ages – present value

5.142

851.028

117.016

973.186

Table 7: Summary of Benefits

A

Benefit

Benefit per twelvemonth

72.405

37 Old ages – sum

2.678.985

37 Old ages – present value

1.209.981

The consequence shows that the present value calculated for benefits exceeds costs by 236.795 TRY. The benefit cost ratio is 1,24.

4.6 A Position of the Analysis by Supply and Demand Curves

The supply curve gives a relationship between the supplied measure and the monetary value. Two separate supply curves for the public preschool instruction and for private preschool instruction may be presented. Since the supply of public instruction is given at a certain measure being about independent of monetary value, it will be inelastic. On the other manus, the private supply curve will follow the regular way for the supply curve demoing an addition in the measure supplied as the monetary value is increasing. The entire supply for instruction will so look like a shifted private supply curve.

The demand curve gives a relationship between the demanded measure and the monetary value. Give that public kindergartens charge a certain sum, entire public and private preschool instruction demand curve will follow the regular way for the demand curve demoing a lessening in the measure demanded as the monetary value is increasing.

Graph 1: The Supply Curve for Private Education and Public Education

A: Supply curve for public instruction, B: Supply curve for private instruction, C: Entire

The demand and supply together will find the “ market ” monetary value and measure. It is the point where they will traverse. However, the market itself does non sometimes achieve the most efficient degree of equilibrium, and authorities intercession may be needed. It is widely accepted that instruction has positive parts to the society as a whole such as take downing offense. Our analysis supported this credence.

As the “ ingestion ” of instruction increases the wellbeing of the society as a whole additions, it is called a positive outwardness. In the instance of a positive outwardness, the authorities ‘s subsidies increase the well being of the society. This is shown on the graph 2.

Before the subsidy, the equilibrium is at point e1. The consumer excess is represented by the country [ a-e1-p1 ] and the manufacturer excess is represented by the country [ b-e1-p1 ] . When the authorities subsidies preschool instruction, the measure supplied additions. This shifts the supply curve right from S1 to S2.

At the new equilibrium e2, the monetary value is lower and the measure is higher. The consumer excess is represented by the country [ a-e2-p2 ] and the manufacturer excess is represented by the country [ c-e2-p2 ] .

Graph 2: The Demand and Supply Curves for Preschool Education

Before the subsidy the entire excess is represented by the country [ a-e1-b ] . After the subsidy the entire excess is represented by the larger country [ a-e2-c ] connoting higher public assistance of the society.

5. Decision

The decision of the analysis shows that benefit cost ratio is 1,24. This is, the benefits are 1,24 times higher than the costs. However, the appraisal of costs in this analysis may be assumed to cover the chief costs, but the appraisal of benefits is merely based on income addition. Therefore, the ratio may be considered a lower limit. In other words, the survey leaves out many other benefits such as low offense, better citizens and in the existent life the benefits may be much more than 1,24 times higher than the cost. This consequence shows that at an economic sciences point of position, it is at the society ‘s wellbeing to spread out preschool instruction.

Given that the ratio is high, the policymakers in Turkey need to spread out preschool instruction. This may be the cause why the Education Minister explained that “ during the history of Turkish Republic, 2011 budget was the budget in which the Education Ministry had the most portion ” 3. In the same address, she declared that the preschool instruction will be compulsory by progressive phases. She added that major investings are made for preschool instruction as the wellbeing, success and physical and mental development of kids depend on good quality preschool instruction.