• The rights agrument
• The economic argument
• The social capital argument
• The cost of inaction argument
• The institutional argument: the MDG

The Economic Argument

Public investments in human capital are often economically justified by the fact that they strengthen the population's income earning capabilities and prevent anti-social behavior that could potentially be costly to both individuals and to society. Individuals and households often will see the cost-effectiveness of such human capital investments and invest accordingly, but due to market failures there are many cases where the cost-benefit of human capital investments will only be substantial or feasible to society as a whole.

In short, there are two large economic costs to not investing in OVC:

1. The GNP lost because OVC grow up to become adults with low productivity; and
2. the cost of addressing the social consequences of having a large population of disaffected young adults.
   

Investing in OVC may appear as more expensive than investing in less vulnerable children because outreach is more complicated and because the children themselves often have barriers to participation that are costly to overcome. However, public investments in OVC can be economically justified by the fact that non-investment potentially bears much higher negative costs for this group than for less vulnerable children. Hence, the cost-benefit ratio may actually be better for OVC than for non-OVC. For instance, while a non-OVC will go from getting a low paid job to getting a better paid job after an investment in education, a disabled child after a similar investment can go from depending on others to becoming self-reliant. The cost of the time of future caretakers is saved and the child becomes a net producer.

Many studies have been conducted on the cost-effectiveness of investment in particularly vulnerable children. In the US, for instance, a study showed a return of $1 to $7 on early investments in high-risk young children (Perry/High Scope). A 2003 ILO global study of the costs and benefits of eliminating child labor and providing children with education shows the same rate of return. Note however, that although investments in the most critically vulnerable children can be cost-effective, investments are typically more cost-effective the higher up in the downward spiral of vulnerability they are made (see the section on definitions). A severely traumatized child is typically very costly to rescue and rehabilitate, and the rate and degree of success is not encouraging from an economic perspective.

For more information on the economic costs of non-intervention related to the HIV/AIDS pandemic, see Bell, Deverajan and Gersbach; "The Long-run Economic Costs of AIDS; Theory and an Application to South Africa".