Where You Live (& Are Born) Matters

Raj Chetty, a Harvard researcher, has done some pretty interesting work that shows that the zip code you are born into can have a huge impact on how much money you earn over the course of your life. Down to the neighborhood level, where you live, the people around you, and the connections you happen to make in life can be major determining factors in what job you take, what college your children attend, and how well off you end up financially speaking. We don’t like to address this very often, but we recognize that it is true, and we have seen increased segregation as we try to separate ourselves from living next to undesirable people and places.

 

In his book The Complacent Class: The Self-Defeating Quest for the American Dream, Tyler Cowen writes, “in 1970, only about 15 percent of families lived in neighborhoods that were unambiguously affluent or poor. By 2007, 31 percent of American families were living in such neighborhoods.” We are moving in directions where we separate ourselves from people who are not like us in terms of socioeconomic status (SES). Today, relative to 30 to 50 years ago, we are less likely to interact with someone who is very poor if we are rich. We are less likely to know anyone who does not share a generally similar SES, and we are far less likely to have any meaningful interactions with someone from a different SES. Cowen continues, “for where you live, income matters more than ever before, as can be shown by a simple perusal of the apartment ads for most of America’s leading cities.” 

 

This segregation by home value and SES has some obvious consequences, such as schools becoming more segregated by income and race and skyrocketing home prices in some regions of town coupled with deterioration and disinvestment of other regions. However, as the research from Chetty shows, there are other, less obvious consequences from our SES segregation. Where you live influences the opportunities available to you and your children.

 

We like to think that it is our own effort, talent, and hard work which determines how much money we make and where we end up financially and in terms of the home we are able to buy. Since talent, intelligence, and work ethic are evenly distributed on a genetic level, we would expect that everyone could achieve the same ends regardless of where they happened to be born. Instead, we see huge disparities by zip codes and neighborhoods in terms of ultimate SES. Our segregation is leading to situations where those who are born in wealthy areas are able to make valuable connections, learn the unwritten rules of networking to getting ahead, and receive visible reminders of what can be achieved through hard work and perseverance. Certainly people from the lowest SES background can still network and can still see the benefits of hard work, but research also suggest that when people from the lowest SES don’t have any interactions with people who are economically well off and successful in their careers, they do worse.

 

Cowen argues that our segregation by SES is making us a less robust society. Partially because we are leaving other people out, but also because it narrows the world for all of us (not just those in low SES neighborhoods) and stymies innovation, development, and progress. We are comfortable in neighborhoods with people who have a similar background and SES to our own, but this does not help us better understand the world, does not help us advocate for and support policy which might help us and others, and does not help us identify and encourage the top talent born in our country. Our complacency as we all search for our own individual American dream is crippling the American dream that we share as a nation by segregating us into complacent bubbles.

The Responsibility of Those Affected

About a one or two years ago I remember hearing an interesting fact. There are more white people living in poverty in the United States than there are black people. But when you ask someone to picture a person living in poverty, most people vision a black person struggling to get by. In her book The New Jim Crow Michelle Alexander gives us some background of how racial attitudes developed in our country, particularly in how race was used as a political tool to shape ideas and thoughts regarding low income black people. She explains the ways in which black people were framed as dangerous, flawed, and undeserving and how these descriptions were used politically to establish political attitudes based on race within the United States. Overtime, these attitudes have persisted, and have been intentionally used to split low socioeconomic status white people in our country from black people and minority populations.

Alexander writes, “by 1972, attitudes on racial issues rather than socioeconomic status were the primary determinant of voters’ political self-identification. The late 1960s and early 1970s marked the dramatic erosion in the belief among working-class whites that the condition of the poor, or those who fail to prosper, was the result of a faulty economic system that needed to be challenged. As the Edsalls explain, ‘the pitting of whites and blacks at the low end of the income distribution against each other intensified the view among many whites that the condition of life for the disadvantaged—particularly for disadvantaged blacks—is the responsibility of those affected, and not the responsibility of the larger society.’”

The quote from Alexander shows us that race, racial attitudes, and the systems of support we develop in our country are flexible and open to manipulation. There is no reality behind race, but racial ideas have been used for political purposes throughout our countries history. Alexander argues (and her argument has been supported by other researchers) that bottom-up movements that placed lower classes against upper classes in the United States have been countered and broken up with the use of racial prejudices and attitudes. In the 1970’s President Nixon pushed the idea that black people were dangerous, and that the state needed to crack down on black crime. From these ideas and from this desire to break up a coalition of low socioeconomic status black and white people came racial exploitation and discrimination, leading to the start of a mass incarceration system in the United States.

What I have found particularly interesting in our country is the belief that people hold about becoming rich. We like to believe that we will all somehow reach the top socioeconomic status groups, and we tend to believe that hard work and smart decisions are all that are needed to reach those upper echelons.  While it is certainly true that hard work and smart decision making is necessary to be materially and financially successful, we should not over inflate the importance of those factors and decrease the importance of luck, familial income level at birth, and of social attitudes and thoughts about you and people who share your identities.  We must recognize that financial and material success are not solely the responsibility of the individual, and by the same logic failure and poverty are not inherently the responsibility of the individual poor. How we structure society, how we allow or bar individuals from participating in the economy, and how we treat certain groups and individuals matters in terms of who succeeds and who does not. Aspiring to become successful does not mean that we should treat the highest socioeconomic status groups differently, simply because we believe we will somehow be there and will somehow benefit from policies that clearly disadvantage us and the rest of society.

Creating Racial Resentment

Michelle Alexander in her book The New Jim Crow argues that racial caste systems have been maintained in the United States by stoking up racial attitudes to create a racial hierarchy that distracts us from economic hierarchies. She suggests that white people who have benefitted from racial caste systems in our country are less likely to take action to reverse the situation because of the social benefits of not being black or brown and not living in our country’s lowest social class. She focuses on how political support for African American’s in our country has been diminished to prevent low socioeconomic status (SES) black and white people from joining together and creating a coalition.

Early in her book she writes, “Time and again the most ardent proponents of racial hierarchy have succeeded in creating new caste systems by triggering a collapse of resistance across the political spectrum. This feat has been achieved largely by appealing to the racism and vulnerability of lower class whites, a group of people who are understandably eager to ensure that they never find themselves trapped at the bottom of the American totem pole.”

I have come across this theory in other books, podcasts, and mediums and I believe that it is accurate. We support policies in this country that appear to be race neutral at face value,  but have disparate impacts on African American and Latino populations in the Untied States. Policies that have been suggested to reduce these disparate impacts will often times improve the SES of not just black and brown people, but of low SES white people as well. However, these measures often don’t find much political support from white members of groups that would benefit from them. Alexander argues that this is a reflection of the fact that white people will lose status relative to black people if we achieve more racial parity, and to prevent this loss of status white people will vote against legislation and will not support policies that reduce inequality and improve their economic outlook.

The main reason I think Alexander’s claim is an accurate description of our politics is because I see identity, as opposed to economics or ideology, as the main driver of political behaviors. During his campaign and throughout his time in office President Trump capitalized on his ability to represent a certain American identity that is distinctly non-black or brown. He does not have any consistent ideologies or economic policy preferences,  but he does express a consistent white identity and has enjoyed overwhelming support from white demographics across the board including low SES white groups as well as higher SES white groups. Low SES white people would have likely seen greater benefits from a candidate who expressed more equitable political and economic ideologies, but such policies would not have appealed to their identity and would have diminished the small but real status advantage that white people have over black people at all SES levels in America.

I think my position is supported and can be demonstrated by the reality that most American’s don’t have consistent and intelligible policy ideologies, even those who are well informed. By policy ideologies I do not mean liberal or conservative, but rather policy ideologies formed by specific policy evaluations. Few people truly understand what any given policy does and fewer understand the research and data behind a policy and the specifics of a given policy’s implementation plan. What we do understand, are the signals provided when leaders and officials discuss policy. When looking at such policy discussions abandoning the pretense that we are actually discussing policy specifics, one can see that we are more often signaling to each other what groups and what identities should support a policy. We are voting based on identity, but telling ourselves that we are voting based on ideology. Political game theory and identity are better predictors at this point of human voting preference and behavior than self reported ideology or what we have come to describe as liberal and conservative.