The National Guard Youth ChalleNGe program is a residential program coupled with post-residential mentoring that seeks to alter the life course of high school dropouts ages 16-18. A cost-benefit analysis employing estimates of the program's effectiveness from a random assignment program evaluation indicates that every dollar invested in the ChalleNGe program yields $2.66 in social benefits, an estimated return on investment of 166 percent.

Cover: A Cost-Benefit Analysis of the National Guard Youth ChalleNGe Program
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A Cost-Benefit Analysis of the National Guard Youth ChalleNGe Program

by Francisco Perez-Arce, Louay Constant, David S. Loughran, Lynn A. Karoly

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Research Questions

  1. Do the social benefits of the ChalleNGe program outweigh its costs?
  2. Do the social benefits of the ChalleNGe program support continued public investment in the program?

Decades of research show that high school dropouts are more likely than graduates to commit crimes, abuse drugs and alcohol, have children out of wedlock, earn low wages, be unemployed, and suffer from poor health. The ChalleNGe program, currently operating in 27 states, is a residential program coupled with post-residential mentoring that seeks to alter the life course of high school dropouts ages 16-18. A rigorous evaluation of the ChalleNGe program employing random assignment has demonstrated that the program has positive effects on educational attainment and employment. The cost-benefit analysis presented in this document estimates that those and other program effects yield $25,549 ($2010) in social benefits per individual admitted to the program, or $2.66 in social benefits for every dollar expended for a return on investment of 166 percent. The program's benefits accrue mostly in the form of higher lifetime earnings attributable to higher levels of educational attainment induced by the program. Under baseline assumptions, this cost-benefit analysis suggests continued operation of existing ChalleNGe sites will yield substantial net benefits to program participants and society at large. This quantitative finding supports public investment in the ChalleNGe program as currently operated and targeted.

Key Findings

The ChalleNGe Program Has Many Positive Effects

  • Admission to the National Guard Youth ChalleNGe program, an intensive residential and mentoring program for high school dropouts ages 16-18, is projected to increase the present discounted lifetime earnings of ChalleNGe admittees by $43,514 ($2010).
  • ChalleNGe admission generates labor market earnings and other benefits of $2.66 for every dollar expended on the program and an estimated return on investment of 166 percent.
  • This cost-benefit analysis supports public investment in the program as currently operated and targeted.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Methodology

  • Chapter Three

    Valuing Program Costs

  • Chapter Four

    Valuing Program Benefits

  • Chapter Five

    Comparison of Costs and Benefits

  • Chapter Six

    Conclusions

  • Appendix

    Alternative Models of Lifetime Earnings Effects

Research conducted by

The research described in this report was sponsored by the National Guard Youth Foundation and was conducted jointly by RAND Labor and Population and the Forces and Resources Policy Center of the RAND National Defense Research Institute.

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