Tracking the decline of social mobility in the U.S. — and how to reverse the trend

The American dream is fading for many in the country, but deep analyses of large data sets can point the way to how policymakers and institutions of higher education might act to change that trend, renowned Harvard economist Raj Chetty said during an appearance at Yale on Feb. 19.

In an hour-long presentation in Zhang Auditorium, Chetty used a series of maps and charts to reveal the dramatic decline in upward mobility in the U.S. (especially for kids in low-income families), the factors that are the strongest determinants of economic mobility, and how these findings can be used to guide policy changes that can improve mobility.

Chetty was on campus for the inaugural lecture in a new series hosted by Yale President Maurie McInnis, which will bring a leading expert to campus each semester to share ideas and inspire critical thought on some of today’s most complex topics, particularly as they relate to higher education.

When introducing Chetty, McInnis noted that she designed the series “to spark intellectual exchange on issues of importance to the nation, to higher education, and to Yale. Chetty’s scholarship, she said, “has not only transformed our understanding of intergenerational mobility but has also laid the base for evidence-based policies to accelerate it.”

Chetty, William A. Ackman Professor of Public Economics at Harvard, is also a founding director of Opportunity Insights, a non-partisan research team that uses data analysis to improve social mobility and promotes informed policy change. With colleagues at Opportunity Insights, he has shown that while more than 90% of children born in 1940 went on to earn more than their parents did — a cornerstone assumption of the American dream — children born in the middle of the 1980s only have a 50-50 chance of doing better than their parents. 

“It is this very trend that underlies a lot of the frustration that people around the U.S. are expressing, that this is no longer a country where it’s easy to get ahead, even through hard work,” Chetty said. 

Drilling down further into the data, he said, reveals that the neighborhood one grows up in is a major determinant of economic outcome. Neighborhoods with high mobility tend to have lower poverty rates, more stable family structures, better school quality, and greater social capital, meaning the strength of the community and social networks. 

Opportunity Insights is using these findings to promote policy changes to increase upward mobility at the local level. For example, the group ran a trial in the Seattle area to test strategies for helping low-income families receiving government-subsidized housing vouchers to move into rentals in high-opportunity areas, where their kids would be more likely to succeed.

While half of the families in the study served as a control group (they received vouchers and were told to go find housing wherever they wanted), the other half received additional social support, or “social capital intervention,” in the search for housing. That additional support made a major difference: In the control group, only 14% of families moved to high-opportunity areas, while that number jumped up to 54% in the group that received support. 

Providing that support wasn’t inexpensive, at about $2,500 a family, Chetty said. However, his team estimates that each kid who wound up in a high-opportunity area will likely go on to earn in their lifetime $200,000 more than the children in the control group.

“There’s a lot of talk about making government more efficient,” he said. “This is a case where we can gain tremendously in terms of efficiency by spending a little bit more money to make the program more impactful by providing this additional support service.” 

A recording of the full talk is available online.