With Whom Did You Grill on Memorial Day?
June 1, 2015
Last Monday was Memorial Day in the United States, a holiday established in 1868 to honor those fallen Civil War soldiers who, in the immortal words of Abraham Lincoln, “gave the last full measure of devotion.” For those of you who spent part of the holiday honoring America’s fallen, thank you. Beyond the solemn purpose of this holiday, for many it marks the start of summer (still-to-arrive summer solstice notwithstanding) and an opportunity to grill hamburgers, hot dogs, and other summer fare. If you are looking for a conversation starter around that next barbeque, we draw your attention to a remarkable new pair of studies that prompt an important question. With whom did you grill on Memorial Day?
Raj Chetty is one of the brightest economists on the planet. A recent recipient of a MacArthur “Genius” Fellowship and of the John Bates Clark Medal (an award given every other year to the best American economist under 40), one of his most important lines of ongoing research is on economic opportunity. U.S. presidential aspirants of both parties are voicing ideas about what policies might better allow individuals and families in America to improve their economic circumstances.
To inform any first-order policy topic like economic opportunity, we believe that systematic research should always trump anecdote and assertion. Raj Chetty and a set of co-authors have an ongoing research project, the Equality of Opportunity Project, that any serious Presidential aspirant should examine.
This team’s two remarkable new studies examine the impact of neighborhoods on children’s long-term outcomes. Does growing up in a financially affluent, socially vibrant neighborhood enhance a child’s income in adulthood? Or is the local environment irrelevant, trumped by considerations such as a family’s level of education or that child’s innate abilities? To answer these questions based on evidence beyond Horatio Alger tales, Chetty and Project collaborators applied the most current statistical methods to rich and large data sets. The bottom-line result: neighborhoods matter. “We find that every year of exposure to a better environment improves a child’s chances of success.” The common research design of both studies is to examine families that move across neighborhoods within the United States.
One study, “The Impacts of Neighborhoods on Intergenerational Mobility: Childhood Exposure Effects and County-Level Estimates,” analyzes more than five million moving families as tracked in anonymized Internal Revenue Service tax records from 1996 through 2012. To isolate the causal effect of neighborhoods the authors take a number of approaches, such as examining children within the same moving family. Their clear finding is that “the outcomes of children whose families move to a better neighborhood—as measured by the outcomes of children already living there—improve linearly in proportion to the time spent growing up in that area.” These better outcomes include greater college attendance, lower teen birth rates, and higher marriage rates. And, perhaps not surprisingly, income. “For children growing up in families at the 25th percentile of the income distribution, each year of childhood exposure to a one standard deviation better county increases income in adulthood by 0.5 [percent].”
The second study, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Project,” trades off a smaller data set for one with truly random variation in neighborhood choice—variation created by the Moving to Opportunity experiment of the U.S. government in the 1990s “offered randomly selected families living in high-poverty housing projects housing vouchers to move to lower-poverty neighborhoods.” The clear finding here is again that better neighborhoods foster better opportunities for the children in them. “We find that moving to a lower-poverty neighborhood significantly improves college attendance rates and earnings for children who were young (below age 13) when their families moved. These children also live in better neighborhoods themselves as adults and are less likely to become single parents.” A key nuance of this study is that the older kids are when moving to better neighborhoods, the smaller are the adult benefits of moving. It is not moving to a good neighborhood per se that matters, but rather the total childhood time in that neighborhood.
Important though these two new studies are, they do not provide the final answer to everything. In particular, they do not elucidate the exact mechanisms by which good neighborhoods nurture children. This limitation is mainly one of the data, not the authors’ aspirations and abilities. No one can now dispute that through various mechanisms, the neighborhood in which you convene your Memorial Day barbeque and pursue the myriad other activities of life matters enormously for the prospects of your children. What we all should ponder more at the next such gathering is how we can create more nurturing neighborhoods, both for us adults today and our children of tomorrow.
Articles © 2015 Matthew Slaughter and Matthew Rees. All rights reserved.
Publication © 2015 Trustees of Dartmouth College. All rights reserved.