Does growing up in a disadvantaged social environment affect a person’s earnings, education, health, crime involvement and other life outcomes? People’s various concerns can lead to two opposite directions: one the one hand, a disadvantaged area may depress life outcomes by shaping exposures to peer norms or access to resources such as school or job referrals; on the other hand, living in a more affluent neighborhood could harm you because of greater discrimination and competition from advantaged peers and fewer social services for the poor.
Isolating the causal effects of neighborhood environments on behavior and well-being is difficult because the families that choose to live in better neighborhoods are likely to be different from those who choose to stay in worse neighborhoods in various aspects. Knowing the effects of living in different neighborhoods is important not only for individuals but also for policy makers.
Moving to Opportunity (MTO) experiment provides data to answer these questions. The MTO experiment of the US Department of Housing and Urban Development offered randomly selected families housing vouchers to move from high-poverty housing projects to lower-poverty neighborhoods in the mid-1990s. Those families were quite economically disadvantaged. Most household heads were African-American or Hispanic females; fewer than 40% had completed high school.
Ludwig et al. (2013) provide evidence that after 10-15 years after randomization, the MTO improve several key adult mental and physical health outcomes. Chetty et al. (2016) found that moving to a lower-poverty neighborhoods when young (before age 13) increases college attendance and earnings and reduces single parenthood rates. Surprisingly, moving as an adolescent has slightly negative impacts: the gains from moving decline with the age of children.