Planet Money: "Moving to the American Dream? (Update)" – Detailed Summary

Host: Greg Rosalski, NPR’s Planet Money
Episode Title: Moving to the American Dream? (Update)
Description: Revisiting the quest to make the American Dream a reality through housing policy experiments, examining past studies, recent revelations, and future prospects with leading economists.

1. Introduction

Greg Rosalski opens the episode by referencing a five-year-old Planet Money episode that delved into the American Dream and the economic ladder's accessibility. He introduces the resurgence of interest in this topic, spurred by new research from Raj Chetty and his team at Harvard. Rosalski sets the stage for a comprehensive update on previous findings and the latest insights into economic mobility in America.

Quote:
"Five years ago we did an episode about the American Dream. What does it take to climb up that economic ladder? And how real is that ladder anyway?"
— Greg Rosalski [00:51]

2. Revisiting the Original Moving to Opportunity (MTO) Experiment

Karen Duffin, the episode’s narrator, recounts the inception of the Moving to Opportunity (MTO) experiment initiated by the Department of Housing and Urban Development (HUD) in 1994. The experiment aimed to test whether relocating low-income families from high-poverty neighborhoods to low-poverty areas could improve their socioeconomic outcomes.

Key Participants:

• Mark Schroeder, an economist at HUD, describing the initial skepticism within HUD regarding the experimental approach.

Implementation:

• Families were randomly assigned to one of three groups:
  1. Control Group: Remained in public housing with no change.
  2. Standard Voucher Group: Received a Section 8 voucher without relocation restrictions.
  3. Experimental Voucher Group: Received a Section 8 voucher contingent on moving to low-poverty neighborhoods (where ≤10% of neighbors are classified as poor).

Notable Quotes:
"Hasn't been an experiment quite like this ever before."
— Mark Schroeder [01:49]

"A big part of the program had always been unlimited choice of neighborhood."
— Mark Schroeder [02:35]

3. Initial Findings and Their Implications

After five years, the MTO experiment yielded unexpected results. While the primary goal was to assess the impact on long-term economic indicators such as education, employment, and income, the findings were underwhelming in these areas. Surprisingly, significant positive effects were observed in health-related outcomes, including mental and physical health improvements.

Mark Schroeder reflects on the initial results, expressing astonishment at the minimal impact on economic mobility despite improved health metrics.

Notable Quotes:
"Impacts we expected in many ways didn't happen. Impacts that we didn't expect that did happen."
— Mark Schroeder [10:07]

"We did not find any impacts on children's test scores. We did not find any impacts on grownups earnings."
— Mark Schroeder [10:59]

Conclusion at the Time:
The final report suggested that housing alone was insufficient to drive economic mobility, leading to a redirection of research and funding towards other avenues for improving lives.

4. New Analysis by Nathan Hendren and Raj Chetty

Years later, economists Nathan Hendren and Raj Chetty accessed comprehensive IRS tax records, allowing for a more granular analysis of the MTO participants' long-term outcomes. Their research uncovered that moving to a low-poverty neighborhood did have significant positive economic effects, but primarily for those who moved during childhood, especially before the age of 13.

Key Insights:

• Age Matters: Children who moved before age 13 experienced substantial economic benefits, including higher earnings, increased likelihood of attending college, and lower teen pregnancy rates.
• Data Precision: The extensive IRS data enabled Hendren and Chetty to detect patterns that previous analyses had missed due to data limitations.

Notable Quotes:
"Having that much data allows them to be so much more precise."
— Nathan Hendren [12:21]

"One of the basic findings that's emerged in this research over the past decade is that where you grow up plays an enormous role in shaping your long term outcomes."
— Raj Chetty [22:28]

Implications:
The reanalysis challenged the initial conclusions, suggesting that the MTO experiment did, in fact, support the hypothesis that moving to higher-opportunity neighborhoods can improve economic outcomes, contingent upon the timing of the move during a child's development.

5. Rebooting the Moving to Opportunity Program

Building on the new findings, Hendren and Chetty spearheaded a reboot of the original MTO program. This new iteration introduces additional support mechanisms to encourage voluntary relocation to high-opportunity areas, addressing the low uptake observed in the original experiment.

Innovations in the Rebooted Program:

• Housing Counselors: Assigned to assist families with logistics such as transportation and security deposits.
• Voluntary Participation: Families retain the freedom to choose their destination, enhancing autonomy compared to the previous mandatory relocation condition.

Pilot in Seattle:
An initial test in Seattle demonstrated promising results, with over half of the assisted families opting to move to neighborhoods with higher economic opportunities.

Notable Quotes:
"It really is possible to change places and make them higher opportunity areas for the kids living there."
— Raj Chetty [25:17]

"It didn't strike me as the most what would have been the most effective going in."
— Housing Counselor [20:45]

Outcomes:
The augmented support significantly increased the likelihood of families moving to advantageous neighborhoods, suggesting that barriers to relocation can be mitigated with proper assistance.

6. Recent Research Findings: "Changing Opportunity"

Raj Chetty’s latest research, encapsulated in the paper "Changing Opportunity," examines the dynamics of economic mobility across different demographics and regions in the United States.

Scope of the Study:

• Data Set: Analysis of 57 million individuals born between the late 1970s and early 1990s.
• Focus: How the likelihood of moving from low to high-income brackets has evolved over time.

Key Findings:

• Racial Disparities:
  • Black Americans: Improved upward mobility due to increased employment rates in low-income black communities.
  • White Americans: Declining upward mobility as employment rates in low-income white communities have decreased.
• Social Capital:
  • Increased interaction between low and high-income individuals in a community correlates strongly with higher economic mobility.
  • Thriving communities where adults can inspire and provide opportunities significantly influence children's long-term economic outcomes.

Notable Quotes:
"The black white gap in economic mobility has fallen by one third, in part."
— Raj Chetty [24:29]

"If you're growing up in a thriving community where lots of adults can inspire you to pursue a career... that puts you on a very different trajectory..."
— Raj Chetty [24:33]

Implications:
The study underscores the importance of employment and social interactions within communities as critical factors driving economic mobility, suggesting that comprehensive social policies are essential for fostering the American Dream.

7. Conclusions and Future Directions

The episode concludes by highlighting the transformative potential of informed housing policies backed by robust data. The rebooted MTO program, supported by recent research, offers a renewed sense of hope that strategic interventions can enhance economic mobility for disadvantaged families.

Final Reflections:

• Policy Impact:
  The bipartisan support for replicating successful programs nationwide signifies a pivotal shift in addressing economic inequality.
• Ongoing Research:
  Raj Chetty and his team continue to explore the multifaceted drivers of economic mobility, promising further insights and policy recommendations in the years to come.

Notable Quotes:
"Housing policy can be hopeful. Housing policy, we are sorry we underestimated you."
— Karen Duffin [21:52]

"That's what this most recent study shows, titled Changing Opportunity. It's actually possible to change places and make them higher opportunity areas for the kids living there."
— Raj Chetty [25:17]

Summary

"Moving to the American Dream? (Update)" intricately weaves the narrative of the MTO experiment's evolution, from its initial inconclusive findings to the groundbreaking revelations sparked by advanced data analysis. By integrating comprehensive IRS tax data, economists Hendren and Chetty unearthed the nuanced effects of neighborhood relocation on economic mobility, particularly for children. The subsequent revitalization of the MTO program, equipped with supportive measures, has demonstrated a higher success rate in facilitating upward mobility. Complemented by Chetty's broader research on social capital and its influence on economic outcomes, the episode paints a hopeful picture of how targeted housing policies can indeed make the American Dream attainable for more Americans.

Key Takeaways:

• Timing of Relocation Matters: Moving during childhood, especially before age 13, is crucial for reaping economic benefits.
• Support Systems Enhance Success: Housing counselors and logistical support significantly increase the likelihood of successful relocation to high-opportunity areas.
• Social Capital is Fundamental: Interaction between low and high-income individuals within a community is a strong predictor of economic mobility.
• Policy Implications: Informed and supportive housing policies can play a pivotal role in enhancing the American Dream's accessibility.

Credits:
Produced by Aviva de Kornfeld, Edited by Bryant Urstadt
This Update was produced by Sean Saldana and fact-checked by Sierra Juarez.
Executive Producer: Alex Goldmark
Host: Amanda Aronczyk
NPR