Monetary Valuation of Children’s Cognitive Outcomes in Economic Evaluations from a Societal Perspective: A Review

Abstract

Cognitive ability in childhood is positively associated with economic productivity in adulthood. Expected gains in economic output from interventions that protect cognitive function can be incorporated in benefit–cost and cost-effectiveness analyses conducted from a societal perspective. This review summarizes estimates from high-income countries of the association of general cognitive ability, standardized as intelligence quotient (IQ), with annual and lifetime earnings among adults. Estimates of the association of adult earnings with cognitive ability assessed in childhood or adolescence vary from 0.5% to 2.5% per IQ point. That range reflects differences in data sources and analytic methods. We take a conservative published estimate of a 1.4% difference in market productivity per IQ point in the United States from a recent study that controlled for confounding by family background and behavioral attributes. Using that estimate and the present value of lifetime earnings calculated using a 3% discount rate, the implied lifetime monetary valuation of an IQ point in the United States is USD 10,600–13,100. Despite uncertainty and the exclusion of non-market productivity, incorporation of such estimates could lead to a fuller assessment of the benefits of public health and clinical interventions that protect the developing brains of fetuses, infants, and young children.