Inequality Ignores the Negative Effects: Reveals Study

According to a new study, moving from a high-poverty to lower-poverty neighborhood spurs long-term gains in the physical and mental health of low-income adults. There is also a substantial increase in their happiness, despite not improving economic self-sufficiency said the researchers at the University of Chicago and partners at other institutions.

Although moving into less disadvantaged neighborhoods did not raise incomes for the families that moved, these families experienced important gains in well-being in other ways. Moving from a high-poverty neighborhood to one with a poverty rate 13 percentage points lower increased the happiness of low-income adults by an amount equivalent to the gains caused by a $13,000 rise in family income.

Using data from a large-scale randomized social experiment called Moving to Opportunity, the authors found that neighborhood income segregation had a greater impact than neighborhood racial segregation in shaping the outcomes of adults in the study. "This finding is important, in part, because racial segregation has been trending down since 1970, but income segregation has gone up steadily since then," said lead author Jens Ludwig, the McCormick Foundation Professor of Social Service Administration, Law and Public Policy at UChicago and director of the University of Chicago Crime Lab. "So the problem of adverse neighborhood effects on low-income families seems to be getting worse, rather than better, over time."

Another implication of the study is that looking at the growth over time in inequality with respect to family income — a key focus of much of the inequality discussion — understates the growth in inequality of well-being. Focusing on income inequality ignores the negative effects on poor families from growing residential segregation by economic status. The researchers estimate that the drop in happiness of low-income adults due to growing residential income segregation since 1970 is large enough to offset the full income growth for low-income Americans over the past four decades.

"Focusing just on trends in income inequality over time in the U.S., while ignoring the growth of income segregation over time, understates the trends towards greater inequality in well-being in America," Ludwig said.

The new paper, "Neighborhood Effects on the Long-Term Well-Being of Low-Income Adults," was co-authored by a national team of collaborators in addition to Ludwig. It relied on data from 4,604 low-income families that enrolled in Moving to Opportunity, an experiment that used a random lottery to offer some families initially living in distressed public housing projects the chance to move into lower-poverty areas. The Science paper looks at outcomes among adults 10 to 15 years after they moved.

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The U.S. Department of Housing and Urban Development operated Moving to Opportunity from 1994 to 1998 in five cities: Baltimore, Boston, Chicago, Los Angeles and New York. Families volunteered for the study, and some were picked at random to receive housing voucher subsidies to move to lower-poverty communities. Other families were randomly assigned to a control group that received no special assistance under the program.

People in the study were extremely disadvantaged economically. Most households were headed by African American or Hispanic females —fewer than 40 percent of whom had completed high school. Their primary reason for participating was to get away from gangs and drug activity and find better apartments and better schools for their children.

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A previous paper found that MTO participants who moved had fewer problems with extreme obesity and long-term risks. The study in Science showed that neighborhood environments have much broader effects on well-being for low-income families and implicate neighborhood income segregation as the key feature of distressed urban neighborhoods that seems to matter most for well-being.

"These findings suggest the importance of focusing on efforts to improve the well-being of poor families, rather than just the narrower goal of reducing income poverty, and the potential value of community-level interventions for achieving that end," Ludwig said.

Source-Eurekalert