In a new study in Seattle and its environs, an intervention co-designed by Teachers College economist Peter Bergman has produced unprecedented gains in moving low-income families to “higher-opportunity” neighborhoods by significantly reducing common barriers in using housing choice vouchers. The vouchers are provided through the federal Housing Choice Voucher program (commonly known as Section 8), which allows private landlords to rent apartments and homes at fair market rates to qualified low-income tenants, with a rental subsidy. Previous research by several of the study’s authors has shown that every year spent in a higher-opportunity neighborhood during childhood increases the likelihood of college attendance and total lifetime earnings by $200,000.
The federal government spends $20 billion annually on housing choice vouchers, which are distributed by local housing authorities. However, at present most of the 2.2 million families receiving the vouchers live in relatively high-poverty, low-opportunity neighborhoods. The study defines “opportunity” as the income that children from low-income families who are born in a particular neighborhood attain as adults.
The study – Creating Moves to Opportunity (CMTO), a large-scale randomized evaluation in King County, Washington, of which Seattle is the seat – was conducted by Opportunity Insights, a Harvard University-based institute directed by Raj Chetty, Nathan Hendren, and John Friedman, together with the Seattle Public Housing Authority and King County Public Housing Authority.
[Read a column by the The New York Times' Nicholas Kristof on the new study.]
Families that came to the top of the voucher waitlists at the housing authorities were randomly selected to be offered access to additional services. These include education on the location of high-opportunity areas, personalized rental application coaching, housing search assistance, and financial assistance. Additionally, CMTO staff actively recruit new landlords to rent to families. (Importantly, families receiving CMTO services are not required to move to a designated high-opportunity neighborhood and maintain their housing choice voucher regardless of their neighborhood decision.)
Some 54 percent of families receiving additional basic services as part of CMTO chose to move to opportunity neighborhoods compared to approximately 14 percent of families who received standard services from the public housing authorities. Based on a sample of 274 families, the CMTO program has so far increased the share of families who lease units in high-opportunity neighborhoods by 40 percentage points. This result demonstrates that low-income families are not concentrated in lower-opportunity areas because of any preference for such neighborhoods. Rather, the evidence, suggests, these families would prefer to live in high-opportunity neighborhoods but face barriers in doing so.
Another investigator on the project, Raj Chetty, calls the new finding “the largest effect I’ve ever seen in social science,” adding “we found that a small intervention can dramatically change a family’s ability to provide their children with the upward mobility promised in the American Dream.”
Chetty calls the new finding “the largest effect I've ever seen in social science,” adding “we found that a small intervention can dramatically change a family’s ability to provide their children with the upward mobility promised in the American Dream.”
The average income for families in the study was about $19,000 per year. Most of the families had two children, and 13 percent of the families were homeless at the start of the study.
“The results of CMTO are incredibly encouraging,” says Chetty. “It shows that in Seattle and King County segregation is not a result of deep preferences that families have to live in specific neighborhoods or widespread discriminatory preferences among landlords.”
The rationale for the study was, essentially, ‘Now that we know how much these neighborhoods matter, let’s figure out how to help families move there.’ And what we’ve learned is that it’s not just one barrier that prevents families from moving to higher opportunity neighborhoods.
“The rationale for the study was, essentially, ‘Now that we know how much these neighborhoods matter, let’s figure out how to help families move there,’” says TC’s Bergman, who has played a key role in teasing out which variables most affected families’ behavior. “And what we’ve learned is that it’s not just one barrier that prevents families from moving to higher opportunity neighborhoods.”
For example, Bergman says, providing information alone is cost-effective, but “the impact isn’t huge,” and the same is true of financial assistance. Rather, what is critically important, he says, is “the ability to tailor support to meet each family’s needs.”
Bergman was recruited to join the research team led by Chetty because he was already running a related study of an intervention in which information about local school quality, which is readily accessible to middle- and high-income families through websites such as Zillow, was made available to families searching for housing through the website for the Section 8 program.
Bergman is also focused on helping Chetty’s team develop a clearer understanding of what actually constitutes a higher opportunity neighborhood and why.
“It’s an ongoing research question what the determinants of a good neighborhood really are, and whether we can affect those determinants,” he says. “How much is due to school quality? How much is due to the nature of children’s peers? Obviously, in addition to providing access to better neighborhoods, we want to improve existing lower-opportunity neighborhoods. Because we can’t move everyone.”
The cost of the intervention was $2,600 per family – but with the gains in lifetime income, “the intervention is close to paying for itself.”
“Given these huge effect sizes, the question is, could we redesign affordable housing policy to move a lot more families?” Bergman says. “We’re working now with housing authorities across the country to try to scale this up.”