Adverse Childhood Experiences, Poverty, and Inequality

In 1890, Alfred Marshall wrote “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” (as quoted in Cunha and Heckman 2009, p. 321). Despite Marshall’s early recognition of the importance of mothering, modern day human capital (HC) theory scarcely reflects the role of parents and the home environment as factors influencing the production of HC. Also, there has until recently been relatively limited understanding of what schooling actually does. “In the traditional investment model, schooling itself is often treated as a black box: individuals enter, something happens, and productivity … increases” (Oreopoulos and Salvanes 2011, p. 159). The purpose of this chapter 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 HC 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 chapter explores the role of ACEs for understanding poverty and the growth of inequality of both income and academic achievement.