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Raj Chetty speaking at the Childx conference

Using big data to understand the disappearing American dream at Childx

The American dream of children growing up to earn more than their parents is harder to achieve than it used to be, and big data gives valuable insight into how it has changed.

The American dream of children growing up to earn more than their parents is harder to achieve than it used to be, and big data gives valuable insight into how it has changed, said Stanford economist Raj Chetty, PhD, in a keynote session at last week's Childx conference.

Chetty's research uses very large data sets such as census data to track what children from different financial backgrounds earn in adulthood. He's found that where children are raised has an outsized effect on their financial status as adults.

"There are sharp differences in kids' chance of climbing the income ladder in different regions of the country," Chetty told the audience at Childx.

In an analysis of adult earnings of 10 million Americans born into low-income families between 1980 and 1982, Chetty and his colleagues showed that some regions have very high upward mobility — the area in and around Salt Lake City, for instance. Mobility is moderately high on the coasts, whereas it's very low in the South. And it can vary a lot even over short distances, between neighboring counties or census tracts.

Children who move from a low-mobility (a neighborhood where very few children make more than their parents) to a high-mobility neighborhood benefit, with greater benefits for each year of childhood spent in the new place, Chetty's team has also shown. "Environment matters roughly equally throughout childhood," he said, noting that while there is a tendency to focus childhood interventions on the preschool years, improving older children's and teens' environments benefits them, too.

Economic mobility isn't equally available to every child in a given geographic area, though. As the New York Times recently illustrated with a startling infographic based on Chetty's work, race matters, particularly for boys. Black boys raised in the wealthiest families are much more likely to move down the income ladder as adults than white boys.

Geographic inequality also extends to life expectancy, in ways that interact with income. The rich live longest; for life expectancy at age 40, the richest women live about 10 years longer than the poorest women, and the richest men live about 15 years longer than the poorest men. But some areas of the country have much smaller rich-poor gaps, and the right geography affords the poor about four more years of life than they would otherwise have.

"If you're rich, it doesn't matter where you live; if you're poor, it matters a lot," Chetty said, adding that a four-year increase in life expectancy is about equivalent to what we'd expect if we cured all forms of cancer.

Chetty's team has also looked at specific neighborhoods with high economic mobility and low gaps between the opportunities of black and white kids. What was their recipe for success?

The scientists found that high economic mobility was correlated with less residential racial segregation; a larger middle class; more stable family structure, that is, more children living with two parents; more social capital and a higher quality of education. Small differences between the opportunities of kids from different races was associated with low poverty rates, lower racial bias (as measured by, for instance, local Google search results for racial epithets) and high rates of father presence for black children, a factor that was especially important for black boys.

Chetty's team is working now to test subsidized-housing interventions that help families move to better neighborhoods, as well as asking how to make more areas conducive to achievement for all children.

"The trend of the fading American dream presents an opportunity and a challenge," Chetty told the audience. Ultimately, we need to understand the places where the American dream continues to thrive and figure out how to replicate their characteristics across the country, he added.

Photo by Cris Gebhardt

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