Public policy choices regarding early intervention can be viewed from a variety of perspectives, one of which is economics. The unique contribution of the economic perspective is that it insists that policy makers take into account the trade-offs involved in decisions about how to provide early intervention services, including all of the benefits produced and all of the resources consumed. Most often, economic analysis has been used to provide information about the costs and, to a lesser extent, the benefits of early intervention services. This type of information can help inform policy makers regarding the level of funding required to support a set of early intervention services and to decide what types of early intervention programs are desirable. Economic analysis can also be used to address the question of how government should fund and administer with the available resources a system of early intervention services that will produce the greatest benefits for children and families.

This chapter introduces the methods and findings of economic research on early intervention and explores the implications for research, policy, and practice. The chapter begins with an overview of methodology and terminology. This is followed by an introduction to cost analysis and a review of cost estimates for early intervention programs. The next section introduces benefit-cost analysis by way of a detailed example and a brief review of the literature on the long-term benefits of early intervention emphasizing studies that examined both costs and benefits.