As time progresses, we get better and better data about what helps people avoid poverty.
The old school story was that it was about your parents’ income: the richer they were, the richer you were likely to be.
The new school story, developed in other parts of macroeconomics over the last 30 years, is that once we correct for readily observable differences (like parents’ income), what’s left over as a residual is the effects of the harder to measure institutions that make up societies and cultures. And those institutions seem to make a lot of difference, although we have trouble pinning down what they are.
There’s new research discussed in an article in The New York Times entitled “Detailed New National Maps Show How Neighborhoods Shape Children for Life” that shows this. You have to click through to run the interactive graphic: I just have screen captures below.
What they found is that children of poor families in some neighborhoods did better than those from other neighborhoods. A half-mile radius makes a difference, which is why they use the word hyper-local for this effect.
Of course, my guess is that most of you could identify a neighborhood close to where you grew up where you could just bet that many peoples’ lives didn’t work out well.
Cedar City doesn’t work too well for this (we’re too small). I’m going to go back to a neighborhood where I used to live in New Orleans. If you saw the house we used to live in, by Utah standards you’d think we were poor. But New Orleans is expensive, so I assure you it was an upper middle class neighborhood. But it wasn’t rich. It’s the greenish area under the darker blue rectangle in the center, next to the big park (in white). It would take 10 minutes or less to walk it from west to east.
You don’t know this, but I do: New Orleans is a great example for something like this because rich and poor live much closer and more spottily than in other cities (if you’ve never been to the South, more limited zoning makes them far less segregated than you’d expect).
Even though this was a good neighborhood, the map shows only outcomes for kids that grew up in poor households in these neighborhoods (richer kids are not shown here at all).
And what you see is that a poor neighbor where we used to live, would have kids that would grow up into middle incomes, but only so far. The poor kids just to the north, who would have gone to the same elementary school ended up a lot better off. The poor kids just to the north and a little west did well, but not as well as the ones straight north (our best — and much richer — friends lived in that neighborhood that somehow did less for the poor). All the way to the north along the lake … which was super rich, poor kids did pretty well, but not as well as in other neighborhoods nearby. That little greenish triangle southeast of where I lived was not regarded as a great neighborhood … but somehow kids there do fairly well.
Here’s Salt Lake City, which I’m guessing is far more segregated by income:
Yes, the south end of the valley is richer, but that isn’t shown here. But there’s something about it that helps poor kids turn into rich adults. And if you look at The Avenues, there are some neighborhoods there (that are pretty much all rich) where poor kids are not getting something they need to improve their lives.
You probably need to go to the interactive graphic to zoom in, but in my old neighborhood (now called Westpointe because no one liked being associated with Rose Park) the dividing line goes down the main street by our old apartment. The neighborhood was all apartments, but poor kids in our complex turned out better (on average) than poor kids in the complex just across the street. Weird.
It’s also interesting to compare the two maps. These are all for kids whose families had the same incomes in New Orleans as they did in Salt Lake City. But there’s something about Salt Lake City that helps those kids grow up to be financially better off than kids from big chunks of New Orleans. Somehow the culture in SLC is one in which the poor do better.
On a different note, the article discusses a policy choice made by the Seattle Housing Authority.
This should be fairly obvious by the time you reach this class: passing policies is easy, finding policies that work is hard.
In this case, they’ve assumed that it’s something in the good neighborhoods. So they’re subsidizing poor people with vouchers to cover higher costs in the good neighborhoods. That will have a direct effect of increasing the number of poor households in those neighborhoods. But there will be an indirect effect: the vouchers will shift demand to the right, pushing up prices, and pushing out some of the marginal people who could afford those neighborhoods without the voucher.
Even so, this is problematic. This policy does not acknowledge that people may have self-selected into those neighborhoods, and their choices may be correlated with other behaviors. If good outcomes result from what residents do rather than what they have, then this sort of policy is likely to be a waste of money. An important caveat to that is that it may be helpful to push poorer families to move nearer to families with better habits, in which case the policy will work. But in contemporary society, that’s viewed as inappropriately judgmental. Politically, that tends to trump whether it works or not.