1  Introduction

In New Zealand, as in other countries, there is increasing concern that the government should maximise the benefits arising from its expenditures. But there is no systematic approach to articulating objectives and spending priorities. Nor is there a systematic approach to identifying the services and other interventions that will achieve these outcomes and evaluating whether they are effective. There is weak link between government objectives and resource allocation decisions and difficulty in stopping doing things that are ineffective. Identifying the outcomes that matter and the cost-effectiveness of interventions can provide information that focuses decision-makers on effective ways to deliver results.

A key issue for governments is the prioritisation of expenditures across the social sector, which accounts for a large proportion of their total spending. Current allocations implicitly reflect judgements about the expected net benefits of expenditures, but with no clear or systematic way of comparing them across different types of intervention. The paper addresses a range of important, but difficult, questions about social policy:

What factors contribute most to negative outcomes for children and young adults, and what factors can protect against these negative outcomes?

Which interventions are most cost-effective?

How should interventions be targeted?

How can interventions be designed to deliver the best results?

The central aim of this paper is to provide a conceptual and analytical framework for identifying interventions that can improve outcomes for children and young adults. Considering how the government might best intervene in the social area requires a consideration of the factors that lead to poor outcomes, both in childhood and adulthood, and a logic that links interventions to improved outcomes. It also requires a means of comparing interventions so that limited resources can be deployed efficiently. Crucial information for such comparisons includes estimates of the cost-effectiveness of interventions. There are thus two components to the framework. The first is a life course approach that examines how childhood experiences and influences affect adult outcomes. The second is a social investment approach that evaluates the cost-effectiveness of interventions intended to improve outcomes.

The analytical approach underpinning this report therefore draws on a broad range of disciplines including sociology, science, medicine, psychology and economics. The starting point is the notion that people seek to improve their well-being and that of their children.[1] But in fact well-being varies considerably between individuals. Most people do well, and most children grow up to be well-adjusted and productive adults. But some people’s lives have poor outcomes – in terms of health, wealth or education, for example – and the roots of these may lie in childhood. The way that childhood and the context in which children are born and grow up affects well-being in adulthood is a core feature of the analysis.

Interventions designed to improve outcomes and to enhance well-being can be considered as social investments that involve current expenditure to produce a future benefit. Viewing interventions, from legislation to targeted assistance, as investments allows the costs to be arrayed against the benefits over time, and permits choices to be made among them. It also allows a portfolio of interventions to be selected.

A vast literature is available related to the core issues of this report. The impracticality of examining all the relevant literature has meant that we have had to be selective, attempting to identify relevant and robust meta-analyses and systematic reviews in the first instance and narrative reviews where these do not appear to be available. The evidence on causal linkages between childhood and adulthood relies on data from longitudinal surveys, which are particularly valuable for helping understand the mechanisms that link developmental factors to later outcomes.[2]

This paper provides a starting point for identifying ways that the government can intervene to improve well-being. It adopts a social investment approach that links government actions to expected improvements in outcomes.[3] Understanding why and how interventions can work requires an appreciation of the developmental pathways of children and adolescents. It is also important to understand how the process and experiences of childhood have a later impact on well-being. Case studies of youth suicide, teenage pregnancy, educational underachievement and youth inactivity provide evidence from the international literature about what interventions work.

Section 2 describes outcomes of significant concern in New Zealand: youth suicide, teenage pregnancy, educational underachievement and youth inactivity. Models that explain how child development can affect later adult outcomes are described in Section 3, while the factors that can lead to poor outcomes for adults and children are described in Section 4. Section 5 outlines a social investment approach to assessing the value of social expenditures. Evidence from the literature about what interventions work to address selected outcomes is presented in Section 6. Section 7 summarises the findings from the empirical literature and presents conclusions about effective interventions.