Data Reveals the American Dream Is Alive and Well—in Canada
Raj Chetty speaks at the Frontiers convention in Pittsburgh, Oct. 13, 2016.
If Donald Trump is to be believed, the so-called American dream—the one where you can start at the bottom of life’s proverbial ladder and wind up at the top—is dead. But take a closer look at the data: the story’s much more nuanced than that. Turns out that whether the American dream is dead or alive depends a whole lot on where you live.
For instance, the American dream is alive and well—in Canada.
Raj Chetty, an economist at Stanford University who studies economic mobility, described the American dream’s geography today at the White House Frontiers Conference, inspired by WIRED’s November issue guest-edited by Barack Obama. Chetty studies people’s movements up and down the economic pyramid and compares their trajectories to where they grew up. And in one way, he’s found that Trump is right. The United States is one of the toughest places to achieve economic mobility.
In the US, children born to parents in the bottom fifth of the economy have a 7.5 percent chance of reaching the top fifth as adults, Chetty said. In Canada, it’s nearly twice that. But what Trump and other American dream deniers get wrong is that this shift isn’t happening uniformly across the US. If you happen to live in parts of the Great Plains, for instance, you have a greater than 16 percent chance of reaching the top tier. In places like Atlanta, meanwhile, you’d only have a 4.5 percent shot, making it one of the country’s worst cities for economic mobility. It’s happening at a neighborhood level, too. Live in San Francisco and you have an 18.5 percent chance of advancing to the highest economic bracket; live in Oakland across the bay and that chance drops to 11.4 percent.
“Place matters,” Chetty said.
But why? Why do poor children in one town fare so differently than the poor child in the neighboring town?
One explanation Chetty sees in the data: racial integration. Atlanta, for instance, has one of the lowest rates of upward mobility and is also radically segregated. “Segregation seems to correlate strongly with differences in opportunity,” Chetty said. Educational opportunities and basic infrastructure also play a role.
Geography Isn’t Destiny
Despite his findings, Chetty does not believe that geography is destiny. Even for children who are born into poor neighborhoods with low levels of economic mobility, Chetty and his colleagues have found that something as simple as a move across town can drastically alter a child’s earning potential as an adult. In one long-term study of children who were born in the `80s, Chetty has found that a move to a better neighborhood by age 9 gave the child a 50 percent boost in earning potential. That little boost falls a little bit every year: by the time a person moves in their early 20s, they experience no boost at all.
It’s this type of data-driven understanding that Chetty says is crucial to designing education and housing policy in American cities. In the `90s, an experiment called Moving to Opportunity provided vouchers for public housing residents in Harlem to move to the north Bronx. Over time, Chetty says, children who were part of that move earned more as adults and were more likely to go to college.
Yes, it’s not possible to simply move everyone living in a low-income neighborhood. But Chetty argues that monitoring economic mobility data can help government target areas that are in most need of intervention. Want to help make America great again? Look at the data.
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