In Decemeber 2019, Professor Raj Chetty gave his lecture as part of the 2018-2019 SMU Tate Lecture Series. Raj Chetty is one of the most influential economists of this generation, both in academia and also in public policy. His work on public policy, specializing in various aspects of equality, has received a huge amount of well-deserved attention including a MacArthur “Genius” Fellowship. Not only did Professor Chetty give a lecture, he also spent valuable time with Economics PhD and undergraduate major students. According to senior undergraduate student Andrew Sneed, “Throughout our conversation, Professor Chetty’s demeanor was marked by kindness. After spending just a few minutes with him, it seemed clear that the care for people he showed in his research was consistent with the care for people he practiced on a personal and conversational level.”
Overall, the theme that ran through Chetty’s lecture and conversations was his desire to restore the “American Dream”, epitomized through the phrase that “through hard work, any kid can earn more than his/her parents did.” Specifically, Chetty explained how his research has been largely informed by three themes:
- Using big data to study the methods by which public policy can increase upward mobility
- Analyzing a broad range of interventions, from childhood to adulthood
- Focusing on the sharp local differences in rates of upward mobility
The lecture began with a colorful map of the US showing stark differences in economic mobility for children born in different areas of the US. Some states in the north demonstrated great economic mobility, while most states in the south demonstrated poor economic mobility. Great economic mobility was defined as earning much more than your parents, while low economic mobility was defined as earning the same as, or less than, your parents.
Chetty began by refuting a couple of intuitive, but incorrect, explanations for why economic mobility varies by geography. First, he stated that the variance is not a result of varying types of employment by region. Chetty cited Charlotte as one of many cities that have high job growth and extremely low mobility (for people born in Charlotte). Charlotte, and other cities like it, import talent. He said that the data does not link the health of the local job sector with economic mobility. Second, Chetty said that race also fails to explain the geographical variance in economic mobility. On average, mobility is bad for black men and good for white men. This is true throughout the US, and the two are not correlated with each other. Race matters, but it doesn’t explain geography.
To further his point, Chetty showed that if you zoom in on a city, you see that the economic mobility provided by certain neighborhoods vary significantly from those nearby. A city map varies as much as a national map. So, Chetty concluded that the issue isn’t federal or statewide; it’s much more granular. Chetty relayed that NPR, inspired by his research, investigated Dumont Street in NYC. Black kids south of Dumont Avenue have experienced significantly better mobility than black kids north of Dumont Avenue. This emphasizes that where kids grow up really matters. Moving as an adult to a better neighborhood doesn’t help nearly as much as moving as a kid.
So, why do some areas generate better outcomes for kids than others? Chetty cited four characteristics of high mobility areas, evidenced by his research:
- Areas that are more socioeconomically integrated tend to have higher upward mobility
- Areas with more stable family structures tend to have higher upward mobility
- Areas with greater social capital tend to have higher upward mobility (high levels of religious participation and connectedness)
- Areas with better schools tend to have higher levels of upward mobility.
Finally, Chetty spoke on how he has attempted to bridge the gap from research to policy. He shared some experiences from his non-profit that has helped Seattle families in the housing choice voucher program move to areas with high economic mobility. He also advocated investments in areas and education, though he said the best way to do both of these is still being learned.
This piece was largely written by senior undergraduate Econ major student Andrew Sneed