What drives social mobility? The answer matters to policymakers and families alike. A wave of highly publicized research has led public policy and public discussions astray. It claims that the neighborhood a child lives in is the key factor that shapes his life. While this idea has been around for decades, it has recently gained more traction. Mainstream media have promoted the idea in article after article, arguing that ZIP Code is destiny and a major source of inequality in the U.S.
If the causal relationship between neighborhoods and child outcomes is strong, policymakers can implement a simple and effective solution: relocate struggling families to residential areas with better conditions. But this has been tried. In the 1990s the Department of Housing and Urban Development moved families out of high-poverty neighborhoods in the so-called Moving to Opportunity experiment. Moving to a better neighborhood had some benefits, but it didn’t improve employment outcomes for adults or educational outcomes for youths.
The most widely cited study claiming to identify a causal relationship between neighborhood and adult outcomes is a 2018 paper by economists Raj Chetty of Harvard and Nathaniel Hendren of the Massachusetts Institute of Technology. They used Internal Revenue Service data from 1980 to 2012 to study the extent to which adult outcomes depend on the neighborhood of residence during childhood.
To isolate the effects of neighborhood from other factors, Messrs. Chetty and Hendren controlled for national rank of family income. They assumed that the effect of another year of exposure to a good neighborhood is the same across all ages of children. As an example, consider two children: Emily, who moves from Queens, N.Y., to Salt Lake City at age 4, and Jane, who makes the same move at 8. The researchers assumed that, after conditioning on parental income rank, there was no correlation between parents’ education and motivation and when in their children’s lives they moved.
Under this assumption, the difference in Jane’s and Emily’s outcomes in adulthood can be attributed to the four-year difference in exposures to their neighborhoods of residence during childhood. These claims have been widely disseminated by media and social-justice-focused foundations, inspiring move-to-opportunity projects that aim to improve the outcomes of low-income families by moving them to “high-opportunity neighborhoods.”
Advocates of this policy ignore serious flaws in the research. The methods used in this literature falsely link the disparity of outcomes across locations to the causal effect of neighborhoods. In reality, the difference is due to the parents who self-sort into neighborhoods.
Continue reading at The Wall Street Journal.
Economics of Flourishing
What drives social mobility? The answer matters to policymakers and families alike. A wave of highly publicized research has led public policy and public discussions astray. It claims that the neighborhood a child lives in is the key factor that shapes his life. While this idea has been around for decades, it has recently gained more traction. Mainstream media have promoted the idea in article after article, arguing that ZIP Code is destiny and a major source of inequality in the U.S.
If the causal relationship between neighborhoods and child outcomes is strong, policymakers can implement a simple and effective solution: relocate struggling families to residential areas with better conditions. But this has been tried. In the 1990s the Department of Housing and Urban Development moved families out of high-poverty neighborhoods in the so-called Moving to Opportunity experiment. Moving to a better neighborhood had some benefits, but it didn’t improve employment outcomes for adults or educational outcomes for youths.
The most widely cited study claiming to identify a causal relationship between neighborhood and adult outcomes is a 2018 paper by economists Raj Chetty of Harvard and Nathaniel Hendren of the Massachusetts Institute of Technology. They used Internal Revenue Service data from 1980 to 2012 to study the extent to which adult outcomes depend on the neighborhood of residence during childhood.
To isolate the effects of neighborhood from other factors, Messrs. Chetty and Hendren controlled for national rank of family income. They assumed that the effect of another year of exposure to a good neighborhood is the same across all ages of children. As an example, consider two children: Emily, who moves from Queens, N.Y., to Salt Lake City at age 4, and Jane, who makes the same move at 8. The researchers assumed that, after conditioning on parental income rank, there was no correlation between parents’ education and motivation and when in their children’s lives they moved.
Under this assumption, the difference in Jane’s and Emily’s outcomes in adulthood can be attributed to the four-year difference in exposures to their neighborhoods of residence during childhood. These claims have been widely disseminated by media and social-justice-focused foundations, inspiring move-to-opportunity projects that aim to improve the outcomes of low-income families by moving them to “high-opportunity neighborhoods.”
Advocates of this policy ignore serious flaws in the research. The methods used in this literature falsely link the disparity of outcomes across locations to the causal effect of neighborhoods. In reality, the difference is due to the parents who self-sort into neighborhoods.
Continue reading at The Wall Street Journal.
James Heckman
James J. Heckman, PhD, is a senior fellow at the Archbridge Institute and director of the Center for the Economics of Human Development at the University of Chicago. He holds appointments at the University of Chicago’s Department of Economics and Harris School of Public Policy. In 2000, he received the Nobel Prize in Economic Sciences for his development of theory and methods used in the analysis of individual and household behavior. Dr. Heckman received his Ph.D. in economics from Princeton University. He is currently co-editor of the Journal of Political Economy, and he has pushed over 300 articles and nine books.
Sadegh Eshaghnia
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