August 22, 2022

Protecting vulnerable kids

Joseph Doyle discusses the history and economics of foster care in the United States.

Source: Angelov

Every year, hundreds of thousands of kids enter the US foster care system. And yet, improving their welfare remains an understudied topic among economists, according to a paper in the Journal of Economic Perspectives

Authors Anthony Bald, Joseph J. Doyle Jr., Max Gross, and Brian A. Jacob lay out an economic framework for understanding the US foster care system.

They detail what economists have learned about both the demand side and supply side of foster care, such as the causes of child maltreatment and the incentives to provide high-quality care.

Doyle recently spoke with Tyler Smith about the history and impact of foster care in the United States, as well as opportunities for future research.

The edited highlights of that conversation are below, and the full interview can be heard using the podcast player.


Tyler Smith: What are some of the important changes that have occurred in the US foster care system since its inception?

Joseph Doyle: It has a long history, not only in the United States but around the world. It goes back to what were known as orphan trains in the 1800s. They would take kids from cities out to farms in the Midwest on trains, but there was a backlash against that. They were separating families in ways that people didn't like. That was actually the genesis of providing funds for mothers to take care of kids. The beginnings of cash welfare was a response to these family separations and trying to keep parents and moms and kids together. It's evolved over time to incorporate family foster care, which is now the main way that we try to protect vulnerable kids. But about 20 percent of kids are still in group homes. There used to be a lot of orphanages, but it's moved gradually toward family foster care. In the last 30 years, there's been a move toward using kin—grandparents, aunts, and uncles—to provide that family foster care. That's about 30 percent of kids in family foster care. Another change that's happened is that over the last hundred years there’s been a shift from child abuse to neglect.

Smith: To people who are non-economists, it might seem a little strange to talk about foster care in terms of supply and demand, but this is central to your approach to looking at the problem. Can you talk a little bit about how an economic framework can help clarify this issue?

Doyle: The demand side would be why kids are going into foster care. For example, we think that poverty is strongly correlated with abuse and neglect cases, which result in removals. Starting with the research of Gary Becker, economics can be used as a framework for studying family dynamics, such as altruistic behavior within families and the economics of crime, specifically child abuse. In this framework, we can ask how to deter child abuse by setting up penalties or trying to prevent it from occurring in the first place by changing those stressful circumstances that can lead to abuse and neglect. I think that's a really important way to start thinking about how families function. Plenty of disciplines think about that, including economics, and obviously we emphasize incentives and the trade-offs that families are making and how to make people's lives better. 

On the supply side, we think about the incentives of foster families to provide high-quality care. Much of foster care is also supervised by private agencies. So we like to think about the optimal functioning of a firm, and in this case we have these nonprofit agencies that are administering foster care. We can ask what kind of incentives we can set up in public policy, such as performance-based contracting types of incentives, to improve the well-being of children. How do we organize services in a way that is optimal for improving child well-being?

Smith: The reason that kids are entering the foster care system has changed over time. It's become more a matter of neglect as opposed to abuse. Can you explain what's behind this shift?

Doyle: I like to put it in the context of crime more generally. We saw this dramatic increase in crime over the 1980s and a pretty dramatic fall in crime since then. There are lots of reasons why crime fell, but that's the pattern, and child abuse as a type of crime follows that pattern. So as the number of kids entering foster care for abuse were going down, the proportion of kids going in for neglect naturally rose. But furthermore, one of the main reasons for neglect is due to substance abuse, and we've had this opioid epidemic. So that's a reason why we could be seeing an increase in neglect and a decrease in abuse at the same time, leading to a rise in caseloads over the last ten years.

The whole system should be geared toward improving foster kids’ well-being. I think there could be tons of interest and a lot of support for trying out more intensive case management.

Joseph Doyle

Smith: There's been a trend toward using more kinship care for mistreated children. Do you think the child-care system is doing enough to keep children in these extended family networks or should it be doing more?

Doyle: Every county is essentially its own microcosm. The question is, can we characterize them? I'm coming at it from a viewpoint of my own work. I looked at children investigated in Illinois in the 1990s in order to look at long-term outcomes, like employment and crime. I had this strategy where I looked at kids who were, effectively, randomly assigned to investigators. Some investigators were more likely to have kids placed in foster care than others. This random assignment almost mimics a clinical trial, which gave me a natural experiment to compare very similar kids. Some wound up in foster care; some didn't. I found that kids on the margin of foster care placement—where the investigator mattered for whether they went in or not—had much worse outcomes if they were placed in foster care than if they had just remained at home. They were more likely to end up in prison—roughly two to three times more likely—and more likely to have a teen birth.

But in other states like Rhode Island, Michigan, and South Carolina, there are some suggestions of improvements in outcomes, especially educational outcomes. One reason why I find that to be fascinating is that every foster care system will be more or less aggressive in how many kids they remove. So, kids on the margin will be affected differently in different places. Also, the quality of foster care itself will be different in different places. So the answer to the questions “Are we removing too many kids? Are we providing too many services or too few services?” depends on the context. There is no simple answer; we need to have better research to figure out which family preservations work best for which types of patterns.

Smith: What do you think are the most important areas of future research on the foster care system and child care in general?

Doyle: The whole system should be geared toward improving foster kids’ well-being. I think there could be tons of interest and a lot of support for trying out more intensive case management. That could be mentorship programs or it could be improved legal services. Start with every kid in institutional care and group homes and have a review in a particular state or area. Let's have a caseworker see if a child still belongs in a group home. Could we find a relative to take them? Could we find a family foster situation or not? Maybe the group home is the right place, but taking stock of kids in foster care and trying to make their lives better in various ways seems to me very testable in ways that we could learn what works and then scale up. And even before people get into foster care, these family preservation or foster care prevention services deserve a lot of attention to see what works. Is there an injection of cash that needs to happen? Or maybe it would be better to use conditional cash transfers where parents are incentivized to take up programs that have been seen to work in keeping kids out of foster care? 

On the supply side, we should be learning a lot more about what types of foster care benefit which types of kids. Which kids really need kinship foster care? Which types of non-relative foster care works best for kids? With modern tools, we should be trying to make better matching programs that determine where kids go. Do we actually see them improving in terms of these wider range of outcomes that we've been discussing? We should also be thinking about what the right licensing requirements are for foster parents. And then, last, a lot of foster care is provided by private agencies. What types of agencies work well for what types of kids? Are bigger agencies better because of learning and economies of scale? Or are they worse because they don't have as much focus on the individual kids? For a lot of these questions, we don't have great answers at the moment, and there's lots of research to be done.

Economics of Foster Care” appears in the Spring 2022 issue of the Journal of Economic Perspectives. Music in the audio is by Podington Bear.