Conversation with Raj Chetty — Driving Upward Economic Mobility

23:20And what they show is in randomized trials, you know, these programs increase earnings by 30 or 40 percent in a sustained way, showing that there is a great role and a great need for this sort of training, totally independent of the higher education system. I would also note that while in certain circles, I think our sort of bubble, the people living in affluent cities, certainly the culture is focused on things like getting into Dartmouth, as you said, and getting a job at Google. But there are many other circles where, for better or worse, that is, I think, not what is in the air. There are, unfortunately, neighborhoods where that's not even remotely an aspiration.

23:58You don't know anyone who's gone to Dartmouth, much less anyone who's gone to perhaps even any four-year college. And so I think for those kids, the issue is, again, perhaps a cultural one or one related to social capital, to use the term, where if you're not connected to anyone who is on that sort of track that can lead to success, be it through college or be it through other means, you just don't even think about doing that yourself. And that then leads to very different choices. You know, kids who are dropping out of high school maybe don't have the sort of support needed to get any sort of job, sometimes high rates of incarceration.

24:34So I do think there's a whole other set of issues independent from kind of the ambition wheel that you're describing, which lead to a different equilibrium that also needs to be addressed. I feel as if every podcaster should probably send a modest payment to Joe Rogan every time we do a podcast because I think he totally kind of blew open the medium for all of us. And I feel as if I should be sending you licensing fees because other than Richard Reeves, I think I quote your data more than any academic in the world. And I felt as if my two Yodas were meeting when he wrote up findings on your study on friendship.

25:11And it feels like friendship or the study of friendship, specifically the lack of friendship or the correlations between economic success and mobility that you pointed out in friendship, are really having a moment. Can you talk a little bit about the findings on your study on friendship? So what we did here is another big data sort of study trying to understand the levers that influence economic mobility and opportunity. And the big data here came from Facebook. So we set up a collaboration with the Facebook core data science team to analyze how your friendships and who you're connected to might be related to your opportunities for upward mobility.

25:47And in a nutshell, the simple finding from that paper is if I were to show you a map of economic mobility in the United States, where kids have the best chances of rising up in the income distribution, conditional on growing up in a low-income family, and then I were to show you a map from Facebook data, a different map of where low-income and high-income people are friends with each other, those two maps look practically identical. That is, if you grow up in a place where low and high income people are interacting more, you are much more likely to rise up in the income distribution yourself and achieve the American dream.

26:24So why is that? We don't know exactly why, but I think there are many plausible mechanisms, some of which we have some evidence for. One goes back to what I was saying earlier about what shapes your aspirations and what sort of the culture of a community is shaped by who people are interacting with than other structural factors. So in particular, if a lot of your friends had parents who were scientists or were successful entrepreneurs or went to college, you might think about those kinds of possibilities yourself and you might go down that path. If you've never met anyone who did that, that just may not be something you consider.

27:00In some other work, we've looked at who becomes an inventor in America by linking the universe of patent records to tax data and following people over time. And the fact you get out of that, Scott, is if kids grow up in an area where there's a lot of innovation happening, they're more likely to become inventors themselves. But it's actually even much more specific than that. If a girl grows up in an area with a lot of female inventors in a given field, say like in semiconductors, she is much more likely to have a patent in semiconductors herself when she's an adult 25 years later. But if she grows up in an area with more men who are inventors in that same field, it has no impact at all on her probability of becoming an inventor.

27:42And so those kinds of results where we see these very specific impacts by gender, by race, by class related to this Facebook data on friendships, you know, really makes us think that who you're interacting with, the social capital you have is a key driver of upward mobility and opportunity. Isn't it just that kind of old adage that you're the sum of your five closest friends? And if that is true, how do you create more exposure? And by the way, I think, and I would trust your research shows this too, I think wealthy kids develop more empathy and life skills when they're exposed to kids who aren't wealthy.

28:18So there's benefits on both sides. What can we do to increase this mixing? So I think you hit the nail on that, Scott. I mean, sometimes social science research, at the end of the day, we find the data is something that's very intuitive. And we might have guessed from introspection. And I think this is a case like that. I think the question, as you say, is exactly how do you create more of this cross-class interaction? So we actually think about that in a second of this pair of studies we released in the journal Nature last year, where we ask, what are the determinants of this cross-class connectedness?

28:51And I break it into two different things. One is just exposure. Who is coming in the doors of a given institution where people make friends? You know, it could be high schools, could be colleges, could be churches, could be many different places where people meet. Just how integrated are these places by class? If you are living in a completely segregated environment where high and low income people, rich and poor people go to different churches, go to different schools, then obviously you're not going to have a lot of cross-class connection. And so you can think about tools like changing school district boundaries, possibly providing housing vouchers, you know, many different things that would lead people to mix more physically.

29:31But what we show in this work is that's actually not enough. there's a second phenomenon that we term friending bias, which is that even if two kids are in the same school, they still might not be friends with each other, right? You still might have cliques where people are separated along class lines, along racial lines, and so forth. And so that raises a second set of potential solutions, which is how do we reduce this friending bias and create more cross-class interaction, even when people are in a given building? And that could be about thinking about things like tracking in classrooms. It could be about architectural design.

30:07Are we having cafeterias and other common places where people have different backgrounds are meeting? It could be about recreational activities. So one of the interesting patterns we find, Scott, is people are much more likely to make friends that cut across class lines in recreational groups, like in the context of sports and in the context of religious groups in churches and synagogues and so on, where, you know, maybe one explanation is if you feel like you have something in common with someone else, a team that you're rooting for or playing on a shared faith, that allows you to bridge the divide in a way that doesn't occur in other settings.

30:40And so I think it's very important to think about that latter aspect of friending bias. We've spent a lot of policy attention on just exposure and reducing segregation, but much less on the latter. And I think that's equally important. We'll be right back.

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32:22the data we've put out on how upward mobility varies by gender and by race. So one pattern you find, Scott, that I think speaks to this is there are big differences in economic mobility between Black and white Americans, but it turns out they interact very sharply with gender. So if you take a Black boy and a white boy who are starting out in a family at the exact same income level, let's say family making$30 ,000 or$40 ,000 a year, the white boy is much more likely on average to rise up in the income distribution to the middle class or beyond than Black boys at the exact same income level are.

32:58If you look at Black girls and white girls in the exact same comparison, you actually find very similar outcomes for Black women and white women in terms of their rates of upward mobility. So there's something very specific in terms of the challenges Black men are facing that is limiting upward mobility, perhaps for Black Americans more generally. So that's one example where gender seems to matter profoundly. And then more generally, we find in other settings that for all groups, boys tend to do better in neighborhoods where men are employed at higher rates or there are more fathers present in the neighborhood.

33:38And this matters much less for girls. And that's consistent with a growing body of evidence that the presence of male role models is really critical, particularly for young boys. And so if you think about how the U.S. economy has evolved over the past 50 years, white men and men more generally who might have held high-paying manufacturing jobs now have much lower employment rates in many places than they did previously. And if you think about what the intergenerational impacts of that are going to be in the next generation, if you think about who boys look up to or what kind of career aspirations they're thinking about, I think there's some real concerns there, which are the kinds of issues that Richard Greaves and others have been hitting on.

34:25Yeah, when I read your data, the things that really popped out of me, and it's good news because you can start to think about or at least brainstorm around solutions, was one that it strikes me that while boys are physically stronger, they're emotionally and mentally weaker. That the outcomes of a single parent household are somewhat similar versus dual parent households for girls, but they're dramatically different for boys. And then you go to the next observation and reference this and then we should talk about solutions. And that is the single point of failure or when boys come off the tracks is when they lose a male role model.

35:0570 % of the incarcerated didn't have a male role model. And you talk about an absence, and Richard talks about this, an absence of men in our elementary and secondary school system. and how many men in certain neighborhoods have been incarcerated, you have entire cohorts of men in communities that are never exposed to a male role model. It strikes me that that is literally the single point of failure or the most identifiable. One, is it as dramatic as it looks as the data is or is it as simple as that? And two, moving to solutions, is it giving people more money because economic stress results in divorce?

35:47I think people look at your data and it just strikes their gut as interesting, but not intuitive, but you feel like that just makes so much sense when you read it. And then the question would be, okay, professor, given that we have the largest economy in the world, given that we have solved a lot of problems with government investment and intervention or changing incentives, how do we create a society where not nearly as many boys are losing some sort of male role model? Yeah. So Scott, let me take that in two steps. So first, I think it's not literally about just role models in your own family.

36:21One thing I want to emphasize is what you find is highly predictive is what's going on in your community and not just your own parents' marital status. And so I'll give you one fact that I think captures that well. Suppose you take two kids, both of whom have, say, single parents, and one of the kids is growing up in a community with more two-parent families, more fathers present, basically, than another, you find that the kid who's growing up in a community where there are more fathers present, perhaps because there are lower rates of incarceration or other factors that have led to higher employment rates there for men, that kid has much better outcomes on average, even though the marital status of their own parents is the same in that comparison of those two kids.

37:02So it's the community-level factors that are highly predictive here. It's not just about literally having a role model in your own family. And so given that, the way we're thinking about solutions in our research group is kind of in three tracks. One, if I know that there's a neighborhood a couple miles down the road in any city where you see better outcomes for kids. And this is actually data that we've put out publicly in something called the Opportunity Atlas, where you can look up neighborhood by neighborhood how well kids have done historically. kids growing up in low-income families of different races and ethnicities and so forth.

37:39And what you find is often you will find a place just two miles down the street where you have much better outcomes for kids of comparable backgrounds. And so one solution you might think of is, well, if a lot of kids are growing up in these very disadvantaged neighborhoods where they lack role models, they may also lack other things like high-quality schooling, access to higher education, and so forth, What if we just help them move to these neighborhoods, perhaps through housing voucher programs or other methods that could give them access to these better opportunities? So that's one way to look at it.

38:10We've done some work in that space and at least some limited scale. You know, we spend billions of dollars on affordable housing programs in the U.S. I feel like at some scale that that can be part of the solution. A second approach is to try to take these places that currently have very limited opportunities, very low rates of employment, very concentrated poverty, and try to transform those places by making strategic place-based investments. And then finally, what we touched upon earlier is access to higher education. After age 18, the key touch point for most kids is not the neighborhood in which they're growing up, but rather the institution of higher education that they might attend.

38:48And I think, as we talked about at the beginning of this conversation, there are various things we might do in that space. So my own view is, yes, this role model social capital phenomenon is critical, but the way we address that, I think, involves addressing a bunch of structural factors that may ultimately lead to greater social capital and greater availability of role models and change the course of kids' lives. I think anytime you move to solutions, you need role models or benchmarks. And one finding in your study that I found especially interesting, it reminded me of the song, the Sinatra song, If You Can Make It Here, You Can Make It Anywhere.

39:23And he was talking about New York. Wasn't he really talking about Toronto? You highlight that Canada has more mobility, income mobility than the U.S. Are they a role model for types of solutions and what are they doing differently that's working? So it is true that other countries, Canada to some extent, especially some Scandinavian countries, if you look at relative rates of mobility or chances of rising from the bottom 20 % to, say, the middle class or beyond, are higher in a number of those countries. However, first of all, I think there are big differences across these countries in terms of their demographics, in terms of their institutions.

39:58I actually think the more interesting role models in that context, the more interesting point of comparison is that there are many places within America, and in fact, within New York, where you have higher rates of economic mobility, than you do in Canada or in Scandinavia. You don't need to look to those other countries, in fact. You know, if you're growing up in Iowa, for example, as a low-income kid, your odds of rising from the bottom to the middle class or to the top 20 % of the income distribution look better than in any other country in the world in much of rural Iowa. Look at certain parts of New York City and Queens, for example, many parts of Queens, your odds of upward mobility look terrific.

40:37But at the same time, if you look at other parts of Brooklyn, They look worse than any country for which we currently have data. So it's a much more local phenomenon, Scott, than asking, you know, what's going on in this country versus that country. And to me, it comes back to these factors like who are you connected to? What is the quality of schools in your particular area? What's the degree of segregation? Some of these other countries that have more centralized systems do better on average. But we don't need to look outside the United States, actually, to find role models. You can look two miles down the road.

41:13You write a lot about income mobility. What about, do you spend any time thinking about just mobility in general? It strikes me that over the last 10 years, there's been an explosion in stories where cities become competitors. We're fascinated by this league or this race of San Francisco's doing poorly. Austin's doing incredibly well. Everyone's moving to Texas and they're leaving New York and California. Have you looked at some of the competition between regions and gleaned any observations around actual mobility? You mean geographic mobility, basically? Yeah. Other than sunshine and low taxes, why are people moving?

41:53Yeah. Well, so the first fact there, which emerges from other scholars' research, is that actually rates of mobility, contrary to maybe some of those stories at the high end of the income distribution, levels of mobility for lower income Americans in particular have fallen substantially in recent decades. And I think that might actually be part of the source of some of the stagnation that we're seeing where people are not basically moving to opportunity in the way that they were before. Now, when you hear about some of these cities succeeding, what I think is striking in our data is that doesn't always mean that the people who are living in those places are benefiting.

42:28So let me give you an example. Take Charlotte, North Carolina. Charlotte is kind of the engine of jobs in the southeast in the United States. It's one of the most rapidly growing cities in America over the past 20, 30 years. If you just drive around the city, it would be totally obvious that it's much richer today than it was 30 years ago. But here's a surprising fact that would be less obvious to you, I think, which is if you look at rates of upward mobility for kids growing up in low and middle income families in Charlotte itself, Charlotte actually ranks 50th out of the 50 largest American cities in terms of rates of upward mobility for the kids who grow up there.

43:04So, again, how is that possible arithmetically? How could Charlotte be getting so much richer? It seems like the place you want to be. Yet, if you grow up in Charlotte, it's actually not the place you want to be. So, you know, the way that adds up is Charlotte basically is importing talent. Lots of people move to Charlotte to get those high paying jobs at firms like Bank of America, which is headquartered in Charlotte. But what we're seeing in our longitudinal data, where we're following millions of kids over time using anonymized tax records, is that that doesn't directly translate to benefits for the kids who grow up there.

43:38Because those kids are cut off from these opportunities. They're not getting those jobs because of all the factors that we've been talking about. They're not living in the neighborhoods that have the right networks, schools, access to higher education, and so on. And so what that shows you, Scott, is we hear a lot in the media this discussion of this city is doing well, that city is doing well, you should move here and there. But it's totally disconnected in many times from the experience of people who are actually growing up in these places. And we need to take a deliberate approach to cultivating the human capital of people growing up in these vibrant cities to really harness the talent there.

44:14What advice, when you look at your data, if you could maybe give a 25-year-old decent certification, went to some college or graduated from college, and is trying to position themselves well in terms of prosperity and happiness, what pieces of advice bubble up that you would have for young men and young women? I think you want to surround yourself with people who are going to create opportunities for you and think hard about who you're connecting with. And I think especially in an era with rapid technological change, you want to acquire a set of skills that are going to be versatile and have value no matter exactly what happens with AI, what happens with robots and so forth.

45:05Something where you're able to think and use creativity to complement machines rather than repeat something that could be done by a machine and likely will be done by a machine going forward. And I think ultimately, while focusing on some of these economic factors that we've been focused on, which I think correlates strongly with things like health and happiness, I think focusing, if you're at that luxury, on those goals directly on health and happiness above and beyond income itself, in my view, by finding something that you're passionate about working on so that it feels less like a job to you and something you're truly interested in doing.

45:47I think that's one of the recipes for success and happiness in the longer run. Raj Chetty is the William A. Ackman Professor of Economics at Harvard University and the Director of Opportunity Insights, which uses big data to study the science of economic opportunity. Professor Chetty's work has been widely cited in academia, media outlets, and policy discussions in the United States and beyond. He joins us from Cambridge Harvard University. Among many of his accolades, Professor Chetty was one of the youngest tenured professors in Harvard's history, awards and fellowships including a MacArthur Genius Fellowship.

46:22And Professor Chetty, I not only appreciate the work you do, but I appreciate the way you frame it such that it gets so much attention. We literally parrot your work almost every week here. It props you to your real source of inspiration, and you've had an enormous influence on our work, which we'd like to think is having an influence. So thank you for your good work. Thank you so much, Scott. Feelings mutual, and I appreciate it very much.

46:56positive happiness leaning into the 90 i struggle with anger and depression and one of the manifestations of that or the way i would describe it is that i tend to see the world as half full i tend to look at things through kind of i don't know gray or cloudy colored glasses and it really impacts my relationships and I have to modulate for it. And what do I mean by that? In any relationship, there's sort of a give and take. And in any relationship, you get the full person, whether you want to or not, and you get their positives and their negatives. And also you get the positive and negatives as it relates to your relationship, how you guys mix.

47:32I have had relationships with people that are good people, but we just, you know, one plus one equaled one and a half. We just, for whatever reason, brought out the worst in each other. And then other people, I thought, wow, we really do bring out the best in each other. And as I've gotten older, what I've realized is that if you want to create an upward spiral in your relationship with a spouse, a girlfriend, whoever it is, you want to really try and I think, or what's been helpful to me is I want to celebrate and lean into the things that are working and are wonderful, right? Oh my gosh, we've raised kids together and they're healthy and they seem to be like pretty good kids.

48:12and you've done so much work to figure this out and to not only to think that and acknowledge it, but to articulate it. And, you know, have you built some economic security together? Have both of you advanced professionally because of the partnership? Find all the places in that relationship where one plus one has equaled three. There's going to be places where one plus one equals one and a half, where you guys don't mix for whatever reason. and everyone has their flaws. But I find that at least if you struggle like me with anger and depression, you have a tendency to focus on the 10 % that isn't right as opposed to really leaning in to the 90 that is right, whatever it might be.

48:55But lean in, really lean into the partnership. Start that upward virtuous cycle. Try to see the glass is half full. Focus on the 90 % that works. Create that upward virtuous cycle. This episode was produced by Caroline Shager And Jennifer Sanchez is our associate producer And Drew Burrows is our technical director Thank you for listening to the Prop G Pod From the Vox Media Podcast Network We will catch you on Saturday for No Mercy No Malice As read by George Hahn And on Monday with our weekly market show

49:31I have my tea and cookies Alright, hold on

49:40So British. So British.

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