Is the American Dream Alive and Well?
Raj Chetty, an economist at Harvard University, has built a significant part of his research career studying the early factors that allow for economic mobility later in life. Looking at factors such as kindergarten teachers, neighborhoods, and race, Chetty and his colleagues have found economic mobility in today’s day and age strongly depends on one’s environment in their early life, specifically 12 years or younger.
Starting in March 2011, he and other colleagues from Harvard University, UC Berkeley, and Northwestern University published a study titled, “How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project STAR.” In an interview with Shankar Vedantam of NPR’s Hidden Brain, Chetty revealed that early work in Project STAR looked at the immediate outcomes of kindergarten teachers based on quantifiable aspects like test scores. He said in Project STAR, although they found better teachers led to better test scores at the end of the school year, these gains ultimately faded away. He refers to this as the “Fade Out Effect,” which shows that though better teachers have an immediate effect on the students, eventually the outcomes disappeared and the effect of higher quality teachers was comparable to that of lower quality teachers. However, when looking at this work, Chetty found the studies just didn’t look far enough. In his March 2011 study, he looked at the long term effects of kindergarten classrooms on students and took the big data approach: He linked the school district records for low-income students to their income tax records many years later. Essentially, he asked, “How do the student’s earnings vary depending on which kindergarten classrooms they were assigned to?” which allowed him to look past menial outcomes like test scores to outcomes we actually value in society, like jobs, earning, and college opportunities. What he found was striking. Despite the initial fade out pattern seen in Project STAR, the gains from higher quality kindergarten teachers reemerged in adulthood, showing that children who received better teachers and smaller classrooms did significantly better as adults, manifesting in measurable improvements in earnings of thousands of dollars per year. Chetty said though kindergarten classrooms are only one factor among hundreds that influence one’s later economic success, it can make a significant difference. He estimates the worth of having a better kindergarten teacher rests around $300,000 in how much more the students in the class would earn over their lifetime.
The question now comes to, what makes a great kindergarten teacher? Chetty reveals it’s not credentials or the college the teacher studied at; rather, the qualities of a great kindergarten teacher is found in how the teacher interacts with the students. It’s not about one’s ability to explain concepts; it’s more nebulous than that. Rather, quality teaching focuses on how well you can handle the classroom as a whole, keep your students focused, and inspire the people you’re teaching. Chetty calls this “noncognitive” or “soft” skills, or the skills that allow you to get along with others and determine how disciplined and focused you are. In his study, Chetty asked teachers to rate 8th grade students based on 28 measures of soft skills and found that the students with better kindergarten classrooms scored higher on noncognitive dimensions. Furthermore, he found these noncognitive measures were more predictive of later economic success than traditional, cognitive measures like standardized tests. From this, Chetty and his colleagues were able to conclude that early classrooms matter not because of the “fade out” outcomes, but because they instill broader sets of skills that have big payoffs and are largely valued in today’s labor market.
Moving past his 2011 study, Chetty did two follow up studies in 2017, the first of which was titled, “Mobility Report Cards: The Role of Colleges in Intergenerational Mobility,” and the second of which was titled, “The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects.” In both of these studies, particularly in the latter one, he tackled the idea of the American Dream, which has been called the “heart and soul of America.” Former President Barack Obama described it as, “The idea that if you’re willing to work hard, it doesn’t matter who you are or where you come from or what you look like.” Chetty looks at the factors that have stilled economic mobility in the last 50 years and why fewer people today aren’t doing better than their parents did. Though he found when studying the traditional rags to riches story, only 7% of people were able to leap from the bottom 5% to the top 5%, Chetty reveals it’s far more nuanced than that. The “American Dream” really depends on both the state and the neighborhood one grows up in. He found it is far easier to live the American Dream in places like rural Iowa, the Great Plains, or cities like Salt Lake City or San Francisco where the odds of rising from the bottom 5% to the top 5% rest more around 14-15%, doubling the national average. However, in places like Charlotte, North Carolina; Atlanta, Georgia; the southeastern United States; and the industrial Midwest, as in cities like Detroit and Cleveland, the odds were below 5%, resting more around 3.5-4%. Chetty stipulates we should no longer be calling it the “American Dream” because it’s more complicated than that. Really, we should call it the “Iowa Dream” or the “California Dream.”
Furthermore, within cities, these same discrepancies apply. Chetty looked at Los Angeles, specifically the difference between two neighborhoods--Compton and Watts--as an example. He describes Compton and Watts as “tough areas” with high rates of crime and poverty. However, when looking at outcomes of people living in Watts compared to the outcomes of people living in Compton, they were radically different. The average earnings in Watts is only $7,000 per year and the 2010 census found that black men have a 45% chance of being incarcerated. In contrast, the rates of incarceration for black men in Compton are only 6%. Chetty asks why there are so many discrepancies between these two socioeconomically similar neighborhoods that exist only a few miles apart. While he doesn’t know the concrete reason yet, Chetty was able to name a few factors determined by economists and sociologists. He found segregation, a smaller middle class, exposure to single-parent households, low social capital, and lower quality school systems all contribute to this.
These factors aren’t surprising, but the bulk of Chetty’s research came in dissecting proposed solutions to these problems. In the 1990s, the U.S. government implemented an experiment called “Moving to Opportunity” that moved families from poorer sections of Chicago, Boston, Los Angeles, New York, and Baltimore to middle class, affluent suburbs to study the economic impact. However, the program yielded underwhelming effects. Though there were improvements in health, there was no real detectable economic impact in areas like employment rates and earnings. However, like in his initial study, Chetty went back and looked for the long term effects found in young kids who participated in the Moving to Opportunity program. By studying the data and the tax records from the program, Chetty found that though older children in their teenage years and adults didn’t yield substantial effects, there were significant gains in relatively young children--12 years or younger--who participated in the program. He saw a 30% increase in earnings and college attendance and a 25% reduction of teenage pregnancy. Chetty calls this the Dosage Effect--every extra year in a better neighborhood affects long term success, but the effects will only accumulate into a substantial change if it is implemented at a young enough age.
Chetty’s research has called into question the very fabric of American society by shedding doubt on the American Dream. Despite the many factors that contribute to one’s later economic success, Raj Chetty has found that at least some of it is out of our control: kindergarten classrooms, neighborhoods, race, gender, the list goes on. As we continue to uncover the reality of economic mobility in modern day America, the responsibility falls on our shoulders in deciding how we want to proceed as a nation and a people. So, is the American Dream alive and well? It’s up to us to decide.