How disadvantaged neighborhoods amplify racial inequality

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• JUDY WOODRUFF:

  Tonight, we launch a yearlong series focused on finding solutions to some of the country's most pressing racial issues. We're calling it Race Matters.

  And special correspondent Charlayne Hunter-Gault will be our guide.

  She begins tonight with a conversation with Harvard University visiting professor Raj Chetty, a recipient of the MacArthur Foundation Genius Award.

  Chetty's research focuses on the ability of people, especially children from disadvantaged backgrounds, to improve their economic opportunities.

• CHARLAYNE HUNTER-GAULT:

  Professor Chetty, thank you for joining us.

• RAJ CHETTY, Harvard University:

  Thank you for having me.

• CHARLAYNE HUNTER-GAULT:

  You have written that where children grow up shapes their prospects as adults. Explain that.

• RAJ CHETTY:

  So, we find when looking at very large data sets covering the American population that where a child grows up in America, which county they happen to grow up in has a profound effect on their chances of moving up in the income distribution.

• CHARLAYNE HUNTER-GAULT:

  Like what cities?

• RAJ CHETTY:

  Atlanta's a good example of a city that's quite sprawling, where there's a sharp division between where blacks and whites live, between where low-income and high-income families live.

  And lots of cities in America look like that. Detroit is another example of a city that looks like that. And those cities, there are various reasons you might think, you know, you would get lower mobility in those areas, lower upward mobility, one of which is kids from disadvantaged backgrounds come into less contact with children from more affluent backgrounds. There have fewer role models, fewer people to kind of look up to and see the different career paths that you might pursue.

  They also have less resources in their public schools. So another strong correlated factor that we find is the quality public schools in an area. Cities that tend of have better schools for middle-income families, they tend to have much better prospects for kids moving up in the income distribution.

• CHARLAYNE HUNTER-GAULT:

  You have looked at some five million children in the past few years. Tell me about the Dallas experiment, and how it confirms what you have just been telling me.

• RAJ CHETTY:

  Every extra year you spend in a better environment makes you more likely to go to college, less likely to have a teenage pregnancy, makes you earn more as an adult, makes you more likely to have a stable family situation, be married, for instance, when you're an adult.

  So, in many dimensions, you see substantial improvements. Now, the Dallas study that you're referring to, or more generally, a set of work related to what's called the Moving to Opportunity Experiment, which gave families housing vouchers to move to better areas, confirms what I just described to you.

• CHARLAYNE HUNTER-GAULT:

  You're talking about black families primarily.

• RAJ CHETTY:

  Black families and white families. This experiment involved a very large number of black families.

• CHARLAYNE HUNTER-GAULT:

  But poor people.

• RAJ CHETTY:

  Exactly, families earning something like $10,000 a year, so really the low-income population.

  And what this experiment did is, it gave these families vouchers to rent apartments in better areas, in lower-poverty areas. And you got these vouchers just through a lottery. So, by chance, you might've gotten a voucher, and I also applied for this program, and I didn't get a voucher.

  And what that does is, it sets up an experiment where we can compare the outcomes of your kids with the outcomes of my kids, and test exactly, like in a science experiment, whether this policy really seems to matter. Does where you grow up matter?

  And what we find is that there are really substantial effects for kids who move at young ages to better environments. If you move to a lower-poverty area, when you were, say, like 5 or 8 years old, you're earning 30 percent more as an adult, you're 30 percent more likely to go to college. There are all these very big improvements for both blacks and whites in many cities around the U.S.

• CHARLAYNE HUNTER-GAULT:

  Vouchers have been in effect for 45 or so years, and many of them have not worked.

• RAJ CHETTY:

  Yes, so I emphasize the result that if you move kids at young ages, you see substantial gains.

• CHARLAYNE HUNTER-GAULT:

  How young?

• RAJ CHETTY:

  Below age 8, let's say, so, you know, when kids are early on in their lives.

  The other aspect, which is very important, is we have had — we have a big program, as you mentioned, of housing vouchers in the U.S., where we spend about $20 billion to $25 billion a year giving families vouchers to move to different areas. Those vouchers don't really encourage you in a particular way to move to better neighborhoods.

  And what we find is, it really matters where you move, right?

• CHARLAYNE HUNTER-GAULT:

  Well, one of the things I read about your experiment in Dallas was from the Dallas Housing Authority chief, who said that the reality is that many benefited, but some have fallen under the bus.

  So, how successful is this experiment? And is it in a position that you can broaden it out…

• RAJ CHETTY:

  Yes.

• CHARLAYNE HUNTER-GAULT:

  … to other locations?

• RAJ CHETTY:

  So, that's a great question.

  So, this experiment…

• CHARLAYNE HUNTER-GAULT:

  I try.

• RAJ CHETTY:

  …. the Moving to Opportunity Experiment, was conducted in several cities around the U.S., Baltimore, Chicago, New York, Los Angeles and so on.

  We find pretty similar results across all of those areas. What makes it challenging as a policy that you would kind of want to scale up to address poverty in the U.S. more broadly is, you can't move everyone, right? You can move a small number of families, but your policy can't be you're just going to take everybody who lives in neighborhoods that you're worried about, and move them somewhere else.

  And so, ultimately, I think to really have an impact on poverty in the U.S., you have to go in and fix the neighborhoods that don't seem to be doing so well. For example, the city of Baltimore is really detrimental. We estimate that if you grow up in Baltimore, you earn 30 percent less than if you grew up in the average place in America.

  Ultimately, the solution can't be you're going to move everybody out of Baltimore. You have got to figure out how you can fix things in Baltimore, I think.

• CHARLAYNE HUNTER-GAULT:

  How do you see this affecting the racial climate in this country?

• RAJ CHETTY:

  Twenty-five percent of the gap in earnings between blacks and whites that all of us know about is driven simply by the fact that blacks tend to grow up in neighborhoods that are much worse, on average, than whites.

  And so, because we have this vast disparity across areas in the U.S., in terms of the opportunities they're giving kids, we're actually amplifying these racial divisions.

• CHARLAYNE HUNTER-GAULT:

  When you look at these communities that you have talked about, what is the cost of racism?

• RAJ CHETTY:

  I think there's a cost in terms of things like lost innovations that would occur if these children were given better opportunities.

  So, let me give you an example. In some work we're doing at the moment, we look at where inventors come from, people who have patents. And we find that, if you look at very talented kids who are scoring at the top of their class in terms of math scores, for instance, in third grade, if these kids are white and they're from affluent backgrounds, they're quite likely to go on and become an inventor, go on to patent something.

  If they're from — if they're black or if they're from low-income families, they're much, much less likely, something like 10 times less likely to go on to become inventors. So why is that an important fact? It says that, if we give black kids and low-socioeconomic status kids, even among white populations, better opportunities, not only helps them do better, but if they invent something that ends up benefiting society as a whole, they come up with a new drug or the new next iPhone, that's going to help everyone.

• CHARLAYNE HUNTER-GAULT:

  Well, thank you for joining us.

• RAJ CHETTY:

  All right. Thank you very much.

• JUDY WOODRUFF:

  And for more on the series, please find the Race Matters page on the PBS NewsHour Web site.