CREATING MOVES TO OPPORTUNITY Peter Bergman, Raj Chetty ...
Creating Moves to Opportunity: Experimental Evidence on Neighborhood Choice Among Housing Voucher Recipients Peter Bergman, Columbia Raj Chetty, Harvard and NBER Stefanie DeLuca, Johns Hopkins Nathaniel Hendren, Harvard and NBER Lawrence Katz, Harvard and NBER Christopher Palmer, MIT and NBER September, 2019 With special thanks to our partners who implemented this experiment: Seattle and King County Housing Authorities, MDRC, and J-PAL North America Motivation: Four Facts on Neighborhoods and Economic Opportunity 1. Childrens prospects for upward income mobility vary substantially across neighborhoods (and even nearby neighborhoods) The Geography of Upward Mobility in the United States Average Household Income for Children with Parents Earning $27,000 (25 th percentile) Seattle Salt Lake City $37.2k $35.2k Chicago $30.7k
Cleveland $29.4k Boston $36.8k Baltimore $28.2k San Francisco Bay Area $37.2k Washington DC $33.9k > $44.8k Los Angeles $34.3k Atlanta $26.6k Note: Blue = More Upward Mobility, Red = Less Upward Mobility $33.7k < $26.8k The Geography of Upward Mobility in Seattle Average Income at Age 35 for Children with Parents Earning $27,000 (25 th percentile)
North Queen Anne $44k Percentile Rank in Adulthood Eastgate $43k > 60 ($55k) Central District $26K 48 ($39k) < 30 ($20k) Source: Chetty, Friedman, Hendren, Jones, Porter (2018) Motivation: Four Facts on Neighborhoods and Economic Opportunity 1. Childrens prospects for upward income mobility vary substantially across neighborhoods 2. Moving to better neighborhoods improves childrens (economic) outcomes in adulthood significantly in proportion to exposure and improves the health and well-being of adult movers
Estimates of Childhood Exposure Effects Source: Chetty, Friedman, Hendren, Jones, Porter (2018) Denmark Source: Faurschou (2018) Montreal, Canada Australia United States Source: Deutscher (2018) MTO: Baltimore, Boston, Chicago, LA, NYC Source: Chetty, Hendren, Katz (AER 2016) Source: Lalibert (2018) Chicago Public Housing Demolitions Source: Chyn (AER 2018)
Motivation: Four Facts on Neighborhoods and Economic Opportunity 1. Childrens prospects for upward income mobility vary substantially across neighborhoods 2. Moving to better neighborhoods earlier in childhood improves childrens outcomes in adulthood significantly 3. Low-income families who receive housing vouchers predominantly live in low-opportunity neighborhoods Most Common Locations of Families Receiving Housing Vouchers 25 most common tracts where voucher holders lived before the CMTO experiment Percentile Rank in Adulthood > 60 ($55k) 48 ($39k) < 30 ($20k) Motivation: Four Facts on Neighborhoods and Economic Opportunity 1. Childrens prospects for upward income mobility vary substantially across neighborhoods
2. Moving to better neighborhoods earlier in childhood improves childrens outcomes in adulthood significantly 3. Low-income families who receive housing vouchers currently live predominantly in low-opportunity neighborhoods 4. Differences in rent only partially explain why low-income families live in low-opportunity areas The Price of Opportunity in Seattle and King County Average Incomes of Children with Low-Income Parents ($1000) Upward Mobility versus Median Rent by Neighborhood 60 50 40 30 20 500 1000 1500 2000 Median 2-Bedroom Rent in 2015
2500 The Price of Opportunity in Seattle and King County Average Incomes of Children with Low-Income Parents ($1000) Upward Mobility versus Median Rent by Neighborhood 60 Opportunity Bargains 50 North Queen Anne 40 30 Central District 20 500 1000 1500 2000 Median 2-Bedroom Rent in 2015 2500
Question: Why Dont Low-Income Families Move to Opportunity? Two classes of explanations: 1. Preferences: families may prefer to stay in current neighborhoods because of other amenities (e.g., commute time, proximity to family) 2. Barriers: families may be unable to find housing in high-opportunity areas because of lack of information, search frictions, or landlords tastes If barriers are what is driving segregation, can we reduce them through changes in affordable housing policy? Creating Moves to Opportunity in Seattle and King County Randomized trial to develop and test policy-scalable strategies to reduce barriers housing choice voucher recipients face in moving to high-opportunity areas in Seattle and King County Definition of Opportunity Areas Intervention focuses on families with young children (1+ child below age 15) Therefore, use Opportunity Atlas to define opportunity areas as places where historically children from low income families have had the highest upward mobility Starting point: Census tracts in top third of distribution within Seattle (SHA) and King County (KCHA) Adjust definitions in collaboration with housing authorities to account for two issues:
Neighborhood change (using test score data to assess stability) Creating contiguous areas Designation of High-Opportunity Neighborhods Shoreline Seattle City Boundary Lake City Cottage Lake Inglewood Northeast Seattle Magnolia Redmond Central District West Seattle
Bellevue Rainier Valley Newport Burien Tukwila East Hill Des Moines High-Opportunity Area Kent Lea Hill, Auburn Cougar Mountain Issaquah
Treatment Interventions CUSTOMIZE D SEARCH ASSISTANCE DIRECT LANDLORD ENGAGEME NT SHORTTERM FINANCIAL ASSISTANCE On average, non-profit staff spend 6.3 hours with each household 52% of rentals in highopportunity areas made through links via nonprofit staff Average financial assistance of $1,100 for security deposits, application fees, etc.
Program Cost: $2,600 per family issued a voucher (2.2% of average voucher payments over 7 years) Note: Families not required to move to high-opportunity areas 60 50 40 30 20 10 0 Share of Households Who Have Moved to High Opportunity Areas Fraction of Families Who Leased Units in High Opportunity Areas Control Treatment 60 50 40 30 20
10 Historical mean rate: 11.6% 0 Share of Households Who Have Moved to High Opportunity Areas Fraction of Families Who Leased Units in High Opportunity Areas Control Treatment 60 50 40 30 20 10 14.3% Historical mean rate: 11.6%
0 Share of Households Who Have Moved to High Opportunity Areas Fraction of Families Who Leased Units in High Opportunity Areas Control Treatment 60 20 30 40 50 54.3% 10 14.3%
Historical mean rate: 11.6% 0 Share of Households Who Have Moved to High Opportunity Areas Fraction of Families Who Leased Units in High Opportunity Areas Control Difference:40.0 pp SE: (5.2) Treatment 100 87.8% 20 40 60 80
84.2% 0 Share of Households Who Have Moved Fraction Who Has Leased Any Unit within Six Months of Voucher Issuance Control Difference: 3.6 pp SE: (4.2) Treatment Destination Locations for Families that Leased Units Using Housing Vouchers Lake City Inglewood Magnolia High-Opportunity Area Northeast Seattle Central District
West Seattle Control Bellevue Newport Rainier Valley Cougar Mountain Burien Tukwila East Hill Des Moines Kent Lea Hill, Auburn Issaquah
CMTO Treatment Percent of Households Who Moved to High Opportunity Areas 0 20 40 60 80 Treatment Effects By Race and Ethnicity 65.9% 60.5% 46.2% Diff. = 55.6 (10.2) Diff. = 33.9 (7.3) 23.5%
12.3% Control Diff. = 37.0 (10.8) 10.3% Treatment Black Non-Hispanic Control Treatment White Non-Hispanic Control Treatment Other Race/Ethnicity Tradeoffs in Unit Characteristics Are families making sacrifices on other dimensions to move to highopportunity areas?
Tradeoffs in Neighborhood and Unit Quality Treatment Effects on Distance Moved and Unit Size Unit Size 1500 1419.9 500 1000 1278.8 0 Square Footage of Unit Distance Moved Control Difference:141.1 sq. ft. SE: (110.1) Treatment Satisfaction with New Neighborhoods
Based on Surveys Six Months Post-Move Satisfaction with New Neighborhood Certainty about Wanting to Stay in New Neighborhood Conclusions Economic residential segregation in the United States appears to be partially driven by barriers in the housing search process Services to reduce barriers can increase moves to opportunity and thereby increase upward mobility substantially for low-income children Program cost is about $2,600 per family issued a voucher, or $4,700 per opportunity move CMTO is predicted to increase the lifetime household income of each child who moves at age 1 by $210,000 (10.4%) Also predicted to increase college attendance rates, reduce teen birth rates, and reduce incarceration rates significantly Seattle and King County Housing Authorities Andria Lazaga, Sarah Oppenheimer, Jenny Le, Jodi Speer MDRC James Riccio, Nandita Verma, Jonathan Bigelow, Gilda Azurdia J-PAL North America Jacob Binder, Graham Simpson, Kristen Watkins Opportunity Insights Federico Gonzalez Rodriguez, Jamie Gracie, Martin Koenen, Sarah
Merchant, Max Pienkny, Peter Ruhm, James Stratton, Kai Matheson Johns Hopkins Fieldwork Team Paige Ackman, Christina Ambrosino, Divya Baron, Joseph Boselovic, Erin Carll, Devin Collins, Hannah Curtis, Christine Jang, Akanksha Jayathi, Nicole Kovski, Melanie Nadon, Kiara Nerenberg, Daphne Moraga, Bronte Nevins, Simon Robbennolt, Brianna So, Maria Vignau-Loria, Allison Young, MEF Associates From Jasmine, 7 years old, whose family moved to a high-opportunity area in This research was funded by the Bill & Melinda Gates Foundation, Chan-Zuckerberg Initiative, Surgo Foundation, the William T. Grant Foundation, and Harvard University Appendix Tables and Figures Key Elements in the CMTO Intervention CUSTOMIZ ED SEARCH A S S I S TA N CE INCREASED LANDLORD
ENGAGEME NT S H O R TTERM FINANCIA L A SS I S TA N CE High-opportunity area education to increase families knowledge about high-opportunity areas. Rental application coaching to increase families competitiveness for rental units by addressing credit history and preparing a narrative. Housing locator services to help families identify suitable units in high-opportunity areas. Cultivate relationships with landlords in designated high-opportunity areas to create housing opportunities for CMTO families. Expedite lease-up processes by completing PHA required documents and conducting housing inspections more quickly. Insurance fund to mitigate risks of property damage. Grants to defray move-in expenses, such as application fees and security deposits (on average $1,100).
Next Steps Completion of CMTO Seattle-King County Phase I analysis with full sample of 421 with at least 6 months to lease-up and analysis of persistence in new neighborhoods CMTO Phase 2 ongoing in Seattle-King County does a CMTO lite version work and role of financial incentives alone Going forward, we plan to partner with other cities to expand CMTO nationally Aim to increase cost-effectiveness of program and better understand mechanisms Of course, not all families can move to opportunity also studying which place-based investments have the biggest impacts on upward mobility in low-opportunity areas Phase 2 Design: Three Treatment Arms PHASE 1 A p r. 2 0 1 8 t o F e b . 2 0 1 9 * PHASE 2 July 2019 to June 2020* 1. Comprehensive Support $ Comprehensive Support $ Financial Assistance Financial
Assistance Retain phase 1 program Navigator Services 2. Financial Incentives Only Navigator Services $ Provide only financial incentives Financial Assistance 3. Cost-Optimized Comprehensive Support Reduce financial incentives and increase navigator Navigator Financial caseloads Services
Assistance $ * Enrollment timeframes (interventions continue beyond Creating Moves to Opportunity Program Costs Average Cost A. Total Costs Cost of CMTO services per family issued Cost of CMTO services per family leased Cost of CMTO services per opportunity move Cost of CMTO services per family issued / 7-year HAP costs per family $2,573 $2,926 $4,712 2.2% B. Costs by Service Category Cost of CMTO financial assistance per issuance Cost of CMTO program services per issuance Cost of PHA CMTO administration per issuance Cost savings of PHA services paid by CMTO $1,070
$1,500 $392 ($389) C. Housing Assistance Payment (HAP) Costs Incremental HAP cost per lease per year Incremental HAP / average HAP costs per family $2,804 17.0% Map of Origin Tracts for Voucher Recipients High-Opportunity Area Lake City Inglewood Magnolia Control Northeast Seattle Central District West
Seattle Newport Cougar Mountain Burien Tukwila East Hill Des Moines CMTO Treatment Bellevue Kent Lea Hill, Auburn Issaquah Control Treatment
0 .05 Density .1 .15 Distribution of Upward Mobility in Destination Tracts Families Issued Vouchers by King County Housing Authority 40 45 50 55 Forecasted Child Household Income Rank (p25) in Destination Tract Control Treatment 0 .05
Density .1 .15 .2 Distribution of Upward Mobility in Destination Tracts Families Issued Vouchers by Seattle Housing Authority 40 45 50 55 Forecasted Child Household Income Rank (p25) in Destination Tract 2200 Total Rent Paid to Owner 1800 $1,795.23 1400 1000
Monthly Unit Rent ($) $1,990.00 Control Difference: $194.77 SE: (72.7) Treatment 0 Neighborhood Satisfaction 20 40 60 Satisfaction with New Neighborhood 60.0% Control Treatment n = 45 33.3% 28.6%
n=1 Very Somewhat Neither Somewhat Dissatisfied Dissatisfied Satisfied nor Satisfied Unsatisfied Difference in % Very Satisfied:33.6pp SE: (11.6) Very Satisfied Certainty About Wanting to Stay or Leave 0 20 40 60 Post-Move Treatment Effects on Neighborhood Satisfaction Certainty about Wanting to Stay in New Neighborhood Control Treatment 47.4%
n = 36 35.0% n=7 15.0% 6.6% n=3 15.8% 11.8% n=9 10.0% 20.0% 18.4% n=4 n = 12 n = 14 20.0% n=4 n=2
n=5 Very Sure Wants to Move Somewhat In the Middle Somewhat Sure Sure Wants to Wants to Move Stay Difference in % Very Sure Want to Stay:29.5pp SE: (10.7) Very Sure Wants to Stay Comparison Between MTO and CMTO Treatment Effects Upward Mobility in Destinations Conditional on Lease-up Upward Mobility in Destinations
Unconditional on Lease-up Lease-up Rates by Group Mean Household Income Rank (p=25) In New Neighborhood (Forecast) 42 44 46 48 50 Effects of Voucher Payment Standard Changes on Moves to Neighborhoods with Higher Upward Mobility Effect of KCHA 5-Tier Reform 5 Tier Reform in KCHA 2.6 ranks KCHA SHA Aug/Sep Oct/Nov Dec/Jan Feb/Mar Apr/May 2015 2015 2015/16 2016 2016
Jun/Jul 2016 Date of Voucher Issuance Effect of 5-Tier Reform: 0.38 ranks (0.65) Aug/Sep Oct/Nov 2016 2016 Mean Household Income Rank (p=25) In New Neighborhood (Forecast) 42 43 44 45 46 47 48 Effects of Voucher Payment Standard Changes on Moves to Neighborhoods with Higher Upward Mobility Effect of SHA Family Access Supplement Supplement Introduced HHs w/ Kids CMTO Pilot HHs w/out Kids
Aug/Sep 2017 Oct/Nov 2017 Dec/Jan Feb/Mar/Apr May/Jun 2017/18 2018 2018 Date of Voucher Issuance Effect of Family Access Supplement: 1.20 ranks (0.64) Jul/Aug 2018 Sep/Oct 2018 Changes to King County Housing Authority Payment Standards in March 2016 Increase in Max Rent for 2BR Apt.
> $400 $250 < $150 Opportunity Atlas vs. Other Measures of Economic Opportunity Upward Mobility (Opportunity Atlas) Shorelin e Inglewoo d Central District West Seattl e > 53 ($46k) Shorelin e Inglewoo d Central
District West Seattl e Bellevu e Cougar Mounta in Kirwan Child Opportunity Index > 0.68 SD Bellevu e 47 ($38k) Cougar Mountai n 0.23 SD Tukwil
a East Ken Hill t Tukwil a East Ken Hill t < 40 ($31k) Population-Weighted Correlation Across Tracts: 0.30 < -0.44 SD Creating Moves to Opportunity Experiment Sample frame: families with at least one child below age 15 who were issued vouchers in either Seattle or King County between April 2018 to April 2019 421 eligible families in the experiment, split randomly into control (standard services) and treatment Here we use data on 274 families issued vouchers up to December 31, 2018,
followed through June 24, 2019 141 treatment families and 133 control families Intervention Process Timeline Family Contacted Notified of selection from waitlist Intake Appointment Consent Randomization Baseline survey Voucher Issued Unit Selected Family approved by landlord for unit Nonprofit Staff Meet with Families and Landlords Rental application Search assistance
coaching Landlord recruitment Opportunity area Linking families to units education Visiting locations Lease Signed Lease Up Receive paperwork and financial assistance (e.g. assistance for deposit) PHA Nonprofit Family Milestone Summary Statistics for Experimental Sample Head of Household Characteristics Pooled Mean
Control Mean Treatment Mean Household Income % Black % High School Grad or more Head of Household's Age Childrens Mean Age % Homeless % Currently Working % Satisfied with Current Neighborhood % Poverty in Census Tract $19,639 50.2 80.8 34.2 6.5 13.6 56.4 54.2 16.1 $19,932
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