How much does where you live matter? People living in high-poverty areas tend to fare worse in education, earnings, health and criminal involvement than people who live in wealthier neighborhoods. But determining to what extent neighborhood conditions contribute to these outcomes has been difficult.
New findings based on two decades of research are reshaping how we understand the importance of neighborhood environments for adults and children, both contemporaneously and over the long-term.
The longer children live in a higher-opportunity neighborhood the bigger the impact on educational attainment and on adult income.
There’s a very strong correlation between a person’s economic success and the poverty rate of their neighborhood. People who live in poor neighborhoods have lower employment rates, lower earnings, and shorter life expectancy than those who live in more well off neighborhoods (see here).
The children and adolescents growing up in these neighborhoods score poorly on standardized achievement tests. Over the longer term they are less likely to go to college, are more likely to have lower adult earnings—even after taking into account their parents’ income—and tend to have more involvement with the criminal-justice system.
Does the neighborhood itself play a role in causing these outcomes? While social scientists have long pondered this question in the U.S. context, it has proven difficult to assess the causal effects of neighborhoods on life outcomes.
For example, it may be almost mechanical that people who for any reason have lower earnings opportunities end up living in less attractive neighborhoods because they can’t afford housing in other areas. Similarly, it could be that a parental characteristic that makes it more likely that the family ends up in a disadvantaged neighborhood also leads to negative outcomes for their kids.
So, the association between disadvantaged neighborhoods and negative outcomes may not tell you anything about whether the neighborhoods themselves play a role, but might just tell you about the types of people who live in different neighborhoods. The distinction matters because if neighborhoods play a causal role, then individuals can improve their life’s chances and their children’s economic outcomes by moving to a different neighborhood. Or, alternatively, policies might be able to target specific neighborhood characteristics to improve residents’ outcomes.
Moving to Opportunity, a housing-voucher program implemented in the mid-1990s, has allowed researchers to study the effect that neighborhoods can have on adults and children over time. One way to observe the causal effect of neighborhoods is to randomly assign families that have comparable characteristics and live in similar initial circumstances to different neighborhoods—and follow them over time.
A window to do this arose when, following the 1992 Rodney King riot in Los Angeles, Congress allocated resources to improve policies to help families in the highest poverty, most segregated U.S. neighborhoods. Designed as a large-scale randomized experiment, the Moving to Opportunity program provided about 4,600 families living in public-housing projects in deeply impoverished neighborhoods in Baltimore, Boston, Chicago, Los Angeles, and New York the ability to participate in lotteries to receive housing vouchers and assistance to move to higher opportunity neighborhoods.
Beginning in 1994, the families were randomly placed in three different groups: one that was offered housing vouchers that could only be used to move to low-poverty areas and mobility counseling services; a second group that was offered regular Section 8 housing vouchers with no location constraints or additional counseling; and a control group that participated in the lottery but received no assistance through the program.
The program has allowed researchers to study the effect that having the opportunity to move to lower-poverty neighborhoods had on families during the span of two decades.
Adults who were able to move to better neighborhoods through Moving to Opportunity saw large improvements in well-being, though not in income and economic outcomes. Policy makers hoped that a move to a lower poverty neighborhood would make it easier for adults to find jobs and reduce dependence on social services. The less-disadvantaged location might have more employment opportunities or, perhaps, being surrounded by a larger share of employed individuals would provide connections and know-how when it comes to job search, for instance.
However, subsequent research has found little evidence of that: getting an opportunity to move to a lower poverty area had essentially zero effect on employment and earnings for adults (after 4-7 years, 10-15 years, or even longer term).
In contrast, those who moved saw very large effects on well-being and health. The opportunity to move from a neighborhood with a high level of poverty to one with a lower level of poverty was associated with potentially important reductions in the prevalence of extreme obesity and diabetes. For example, one study found that after 10-15 years, moving to a lower-poverty neighborhood reduced the prevalence of having a body-mass index of 40 or more by 7 percentage points and the prevalence of diabetes, measured from blood samples and defined as having a level of glycosylated hemoglobin (HbA1c) ≥ 6.5, by 10 percentage points.
Similarly, adults who moved to lower-poverty neighborhoods experienced a significant reduction in psychological stress and reported an increase in subjective well-being.
For children, the economic effects of moving were more striking—and the impact was greater for those who moved at younger ages. In the short term, researchers found few initial benefits of moving for children, especially for boys. But when researchers followed up 15 to 20 years after the move, they found robust evidence that a child’s neighborhood matters for long-run outcomes.
Moreover, the benefits depend on the length of time the children live in more advantaged neighborhoods. Children who moved to lower-poverty neighborhoods before the age of 13 did much, much better economically as adults: they were more likely to go to college and they earned an average of 30% more than those not able to move to lower poverty areas.
The longer the exposure to a lower poverty neighborhood, the bigger the economic impact. If anything, the children who moved to a lower-poverty neighborhood closer to 18 saw slightly negative effects perhaps because adjusting to a new neighborhood can be disruptive, straining social ties.
Additional studies have found that children who move to lower-poverty neighborhoods at younger ages have a lower likelihood of adverse outcomes such as teenage pregnancy, incarceration, and hospitalizations.
What are the possible pathways through which neighborhoods can impact different outcomes for adults and children? Many factors change simultaneously when people move from a high-poverty neighborhood to a less disadvantaged location: The quality of schools, the socioeconomic status of neighbors, exposure to violence, and access to jobs, among others.
Determining to what extent each of these factors is responsible for a measurable improvement in outcomes remains an area of active research. For children, at least five factors appear to be mediators of place effects: school quality, peer influences, pollution, exposure to violence, and criminal-justice policies.
For adults, the evidence suggests that a reduction in neighborhood stressors—such as the prevalence of crime and violence—and health-related behaviors (like smoking) are key channels contributing to improvements in health and well-being.
Adults who participated in the Moving to Opportunity demonstration stated that concerns about neighborhood violence and crime were the primary motivations for their desire to move out of public housing in the first place. The moves to lower-poverty areas were, in fact, associated with reductions in neighborhood violent crime rates that could have contributed to lower levels of stress and greater well-being.
In addition, the characteristics of the built environment can also lead to health improvements. A neighborhood with more grocery stores and access to healthy food or with spaces where residents can exercise might affect health-related behaviors and outcomes such as obesity.
What this Means:
In the past two decades, research using randomized field experiments and quasi-experimental research designs has refined our understanding of the ways in which the neighborhoods people live in can have an impact on multiple areas of their lives—contemporaneously and over the longer term.
The evidence suggests that residential neighborhoods matter for adult health and well-being but have little causal impact on employment or income (at least for the heads of low-income households). Adult economic outcomes are shaped more by overall commuting zone or regional labor market opportunities.
In contrast, the emerging consensus for children is that living in a higher-opportunity neighborhood has substantial beneficial causal impacts on longer-term socioeconomic outcomes. However, the impacts on children depend on the length of time that they spend in lower-poverty neighborhoods.
Lessons from Moving to Opportunity would suggest that designing housing voucher programs to encourage and support moves to higher opportunity areas is a crucial feature. Given the strong evidence that such moves convey greater benefits to children who get longer exposure to more advantaged neighborhoods, it also implies that the common use of voucher wait lists—where eligible families may wait years while their children age—may be ineffective relative to prioritizing families with younger children for more immediate assistance.
Lawrence Katz is a professor of economics at Harvard University. His research focuses on labor economics, urban economics, and education policy.
Editor’s Note: The analysis in this memo is based on Chyn, Eric and Lawrence F. Katz. Fall 2021. “Neighborhoods Matter: Assessing the Evidence for Place Effects.” Journal of Economic Perspectives, 35 (4): 197-222.
This commentary was originally published by Econofact—Can Moving to a Different Neighborhood Improve Life’s Chances?
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