Geography of Opportunity

 

It’s essentially a 50-50 shot as to whether you’re going to do better than your parents.

Raj Chetty William A. Ackman Professor of Economics, Harvard University; Director...
Session

Geography of Opportunity

Setup

How do we develop scalable policy solutions that will empower families throughout the United States to rise out of poverty and achieve better life outcomes? How we can improve children’s opportunities in communities that currently offer limited prospects for upward income mobility? Award-winning Harvard scholar Raj Chetty, whose research focuses on equality of opportunity, shares remarkable, data-driven insights that can inform policy solutions at every level — and region — of society.

Is the American dream alive and well?
Is the American dream alive and well?
Economic mobility is way more localized than you’d think
The later you move, the worse your outcomes
What makes some areas better than others?
From research to policy: three pillars
1.

Is the American dream alive and well?

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01:04

The American dream means a lot of things, says economist Raj Chetty, but broadly speaking it signifies equal opportunity for socioeconomic advancement. Chetty was curious if this promise of generational growth holds water, so he looked at the numbers:

Raj Chetty 2019
Is the American dream alive and well?

  • Raj Chetty

Someone born in the 1940s had over a 90 percent chance of earning more than their parents, says Chetty. But that number has plummeted, and today “it’s essentially a 50-50 shot as to whether you’re going to do better than your parents.” Chetty goes on to say that even those 50 percent odds aren’t the whole picture. Some places are doing better than others, and there are clear geographic indicators that determine if the American dream is alive in your neighborhood.

2.

Economic mobility is way more localized than you’d think

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12:02

When Raj Chetty displays maps of economic mobility around the country, it’s easy to think that whole states or cities are more or less upwardly mobile. Chetty says that isn’t so, and he uses an example from New York City to prove his point:

Raj Chetty 2019
Economic mobility is way more localized than you’d think

  • Raj Chetty

By zooming into a block-by-block map of economic mobility, Chetty shows that a city like Manhattan, which as a whole seems upwardly economic mobile, can have neighborhoods just a few blocks apart that are on opposite ends of the economic mobility spectrum. Chetty says this phenomenon shows up almost everywhere around the country, and that generalizing whole cities and states as more or less upwardly mobile erases important details.

Chetty’s team developed an interactive tool called the Opportunity Atlas that lets you explore economic mobility in the US, down to the level of your city block. See what’s happening in your neighborhood: https://www.opportunityatlas.org/
3.

The later you move, the worse your outcomes

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20:35

Raj Chetty tracked young people as they moved from areas of less opportunity to areas of greater opportunity in the Seattle metro in order to better understand geography’s relationship to economic mobility. He discovered three critical takeaways: 

This excerpt has been lightly edited for clarity

  • Raj Chetty: The first is that where you grow up really seems to matter… If you take a given child and help that child move to a higher opportunity area where we're seeing better outcomes for kids who grew up there from birth, that child ends up doing much better, has significantly better life outcomes, not just in terms of earnings, but a variety of other outcomes like college attendance rates, lower rates of incarceration, and so forth. Second, what really seems to matter is childhood environment rather than where you're living as an adult. We see in this study and in other analyses we've done that helping people move to a different area after they're 23 or so has essentially no impact on their economic outcomes. Third, you see that every extra year of childhood exposure to a better environment leads to better outcomes. So there's kind of a dosage response here. If you spend two years in a better area that yields some benefit. If you spend four years or six years in a better area, you get a cumulatively larger impact.

Chetty says that these findings should have major implications for policy makers as they try to allocate funds and resources to have the greatest impact.

4.

What makes some areas better than others?

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23:49

The evidence is plain that geography plays a huge role in economic mobility, says Raj Chetty. The question is, why? Chetty points to four main reasons:


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What makes some areas better than others?

  • Raj Chetty

Although these aren’t hard and fast rules, Chetty says that lower poverty rates, more stable family structures, greater social capital, and better school quality are all strongly predictive of economic mobility within any given neighborhood.

5.

From research to policy: three pillars

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27:55

If researchers understand the root causes of unequal economic mobility, says Chetty, they can give concrete advice to policy makers. Chetty has put together a plan to level the playing field of economic mobility, centered around three main pillars:

  1. Reduce segregation
  2. Place-based investments
  3. Improve higher education

Reducing economic segregation (helping families move to more advantaged neighborhoods) is a comparatively straightforward solution, says Chetty, but not scalable enough to address the whole problem. To improve communities themselves, Chetty advocates for targeted, place-based investments that stay in communities. And lastly, higher education becomes a critical component of economic mobility that’s both neglected and underutilized.

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