Episode 5

Is Your Neighborhood Your Destiny?

Transcript

Speaker1: Welcome to the Q Talks podcast from Loyola University's Quinlan School of Business. This season, we'll be exploring issues surrounding the impact of wealth inequality, its ramifications for business, and any ethical arguments or other anomalies that are a result of the inequality that currently permeates American society. Join us as we unpack important issues present in our country and our world.

Rick Sindt: Welcome to Q-talks. Today we are joined by Assistant Professor of economics Joel Hahn where we are going to talk about wealth inequality and neighborhoods and the impact where you live has on social economic mobility. Thank you for joining us today, Joel.

Joel Han: Thank you. Glad to be here.

Rick Sindt: Great. I think the best place to start is to define a few terms for our audience because how things are measured in the way they're measured in your research and in the research about neighborhoods is not quite what we're used to. So let's discuss a few factors that are measured. So when thinking about inequality, what is measured to determine if a neighborhood is better or worse than another?

Joel Han: When thinking about what makes a neighborhood better or worse, there is actually no one standard measure that's accepted within quantitative studies of social science. It's common practice to use whatever data is available and based on what is available to figure out the best measure of neighborhood advantage. I know this podcast is about wealth inequality. Unfortunately, wealth is actually seldom measured or seldom well measured in the data. People are reluctant to report their net worth and they may not even know the value of their net worth. So when it comes to measuring neighborhood advantage, researchers often use several indicators. These include the average income of the household, the average education level of the households in the neighborhood, you might use average value of the house because the house is such a big factor in households net worth, and you could throw in a few other things, including home ownership level of employment, or even the number of single parent families. On top of all this, sometimes researchers will combine multiple indicators to get a more holistic picture of neighborhood advantage. So they will add up different indicators and create what we call a composite score of neighborhood advantage.

Rick Sindt: What are some of the geographical measurements that are used in this? In preparing for this episode I remember reading about things like census tracts and commuting zones.

Joel Han: Right. So looking at the big picture, when you want to study what's going on in a neighborhood, you face the fundamental measurement problem. How do you actually define what a neighborhood is in order to measure the neighborhood conditions in that neighborhood? One of the most common ways researchers define the neighborhood is using the term census tract. Census tract is a small geographic area that was defined by the Census Bureau for the purposes of taking the census. Now this offers researchers several advantages. All the census tracts have already been mapped out by the Census Bureau. So we know exactly where the census tract boundaries lie. This also gives researchers a wealth of information because they can take information from the census and use that to describe what the neighborhood looks like. On the other hand, if I asked you which census tract you live in out of the approximately 900 census tracts in Chicago, I don't think you'd be able to give me an answer, and I can't give you an answer either. So when we're looking at this research, I would like you to think of census tracks as an approximation. They may not exactly match what you live in and experience as your neighborhood.

Rick Sindt: So a census tract doesn't line up with, say, like what we think of as Lakeview or Austin or Belmont Cragin. How are they defined? Is it a number of people? Is it like square miles?

Joel Han: I think the exact process for defining a census tract is pretty complicated and I can't really speak to that here. I would say an average census tract in Chicago could actually range from a couple of blocks in a very dense neighborhood to something on the level of square miles further out. Within Chicago, the neighborhoods that we can name like Belmont and Lakeview actually correspond pretty closely to a definition called community areas. This is a definition of neighborhoods that's based on how we name neighborhoods. I guess this is something that just came up, so I'm trying to think about how to phrase them.

Rick Sindt: Yeah. No, this is good. It seems like the definition of neighborhood is just hard. It's like something you know what it is, but when you're asked to define it, it's really hard to define sort of like we all know what culture is but if we were asked to define a culture like how would you go about doing that?

Joel Han: You have to do some kind of approximation. You have to take a stab at it. Otherwise you're not going to be able to measure what's in the neighborhood. So now that I'm thinking about it, here's where the census tract is one way of defining a neighborhood, and it's one that has been used for a long time because of the availability of census tract information. But with the proliferation of big data, there is research on developing alternative definitions of the neighborhood based on people's experiences and their behavior. So you could look at travel patterns to define the neighborhood as where you shop, where you tend to check in which establishments you tend to patronize, and these are increasingly being used in the research world.

Rick Sindt: So now that we have some context, I'm curious about what trends scholars like yourself have been observing over the past years, the past decades, however long it is, that you track patterns.

Joel Han: Yeah. So I don't think it's surprising to say that we see big differences between the best neighborhoods in a city and the worst neighborhoods in a city. I looked up some statistics on this, looking at the city of Chicago just over ten years ago. Household income in the bottom 10% of neighborhoods was around 37,000 per year in the top 10% of Chicago neighborhoods. Household income was. Something like 180,000. So that's an increase or that's an income level that is 5 to 6 times higher in the best neighborhoods in Chicago compared to--we talked about the different ways you can measure whether a neighborhood is advantaged or disadvantaged. And this would matter a little bit when you want to categorize which neighborhoods are in the top ten versus the bottom ten. Practically, it matters only a little because the best neighborhoods in terms of average income also tend to be the neighborhoods with the highest average education level. So in the middle, things might be a little bit more mixed. But if you want to just compare the extremes, it doesn't really matter how you're measuring the advantage.

Rick Sindt: So my question is, in a previous episode, we talked with Eve Geroulis in the marketing department and Margaret Mueller, who's the president of the Chicago Executives Club, about we touched on how we're seeing a k-shaped recovery happen with the current pandemic. I'm wondering as we look at neighborhoods, is the same thing playing out over the course of years, like are less advantaged neighborhoods, getting more and more less advantaged and the advantaged neighborhoods gaining more and more advantage?

Joel Han: In short, that's very much what we see in relative neighborhood advantage over the last 20 to 30 years. To give you an example, some of the figures I pulled up, let's think about the period from 1990 to 2010. Within this period, let's think about the income gap between the bottom 10% of poorest neighborhoods in a city and the top 10% richest neighborhoods in a city. This gap has been widening within this 20 year period. This gap has been widening for a large majority of the cities in the U.S. Zooming in on Chicago from 1990 to 2010, the average household income rose by $2,000 in the poorest neighborhoods, and it rose by $20,000 in the top ten richest neighborhoods. But here's where you see the gaps widening. For Chicago's case, it's not exactly k-shaped because the bottom 10% was actually rising in average income. Nevertheless, I think what's at least striking here is that the gap is widening.

Rick Sindt: What role does gentrification play in all of this?

Joel Han: So here's my answer at the neighborhood level. I would say that when we're thinking about the very richest neighborhoods and the very poorest neighborhoods, these are not likely to be the ones that are affected by gentrification. I think the research has shown that the best neighborhoods and the worst neighborhoods are actually pretty locked in. Again over the same period from 1990 to 2010. If you were a really good neighborhood, stayed a good neighborhood at the end of this period, and if you really bad neighborhood, you tended to stay near the bottom. I think where gentrification plays a role is towards the middle of this distribution of neighborhoods where you have a neighborhood that is initially not doing so well, but it's not among the worst and gentrification pushes it up maybe towards an average or an above-average neighborhood. At the extremes, I don't think you would see a neighborhood going from worst to the best in a city like Chicago. Maybe another thing I can say also is that they're just thinking about things at the neighborhood level. If a neighborhood goes from the worst to average or even the best, it doesn't mean that the people who lived in the neighborhood when it was bad are going to reap the benefits of a good neighborhood. And it's a really complicated issue that I don't think I can get into here, but I think it's something to be aware of.

Rick Sindt: Something that struck me with the research he shared with me as we were preparing was that advantaged neighborhoods and zones with larger populations are much better off than advantaged neighborhoods in less populated zones. To me, I kind of see that as maybe like an urban-rural difference. But perhaps I'm wrong and you can prove me wrong. But I'm also wondering, does this trend trickle down to neighborhoods that are not considered advantaged? Are the not advantaged neighborhoods in more populated areas better off than the not advantaged neighborhoods in less populated areas?

Joel Han: The short answer is no. And in fact, it's the opposite. So going from small to big cities, what we've observed is that the most advantaged neighborhoods tend to get better and better as the city gets larger. If we're looking at the worst neighborhoods, though, going from a small city to a big city, the worst neighborhood in the city tends to get worse and worse or more and more disadvantage. We don't have a definitive answer as to why this might be the case. But one pattern that could contribute to this is that economists have observed increasing wage inequality by city size. So as a city, it tends to get bigger. There tends to be a bigger wage gap between the lowest earning workers and the highest earning. And if income contributes to the kind of house and the kind of neighborhood you can afford to live in, you can see how. Wage inequality could lead to neighborhood inequality.

Rick Sindt: Another piece of research you sent me that I found very interesting was the Opportunity app Atlas, which is a project that maps childhood routes of social mobility. I plan on putting the link to this and the episode description, because it is quite interactive and I'm wondering if you could share with us what the findings of this project were.

Joel Han: Yeah, of course. So the Opportunity Atlas is really ambitious and a really large project that, as you said, looks at how neighborhoods affect your chances of moving up the socioeconomic ladder. I think there are many interesting findings within this Opportunity Atlas project, but what the Opportunity Atlas shows us is how all these neighborhood differences we have measured actually matter when it comes to the impacts of the next generation. We find that families that look very similar in terms of their income, in terms of their race, in terms of a bunch of other indicators, if they only differ by the fact of living in different neighborhoods, maybe just a few miles apart, the life trajectories of their children could be very different. One child could have a much better chance of moving up the economic ladder than another child. Other patterns that have been uncovered by the Opportunity Atlas Project also show that moving from a less mobile neighborhood to a neighbor that promotes upward mobility has positive impacts on the child's life outcome in the way that you might expect.

Rick Sindt: So we started the conversation by talking about how difficult it is to find quantitative ways to measure neighborhoods, their quality, how to compare them and now into the conversation has come more qualitative things such as race, ethnicity, etc.. And I'm wondering to, for lack of a better term, to use the idiom does a rising tide lifts all boats? If I am a black family in a advantaged white neighborhood, am I going to reap the same benefits as the white family?

Joel Han: Yeah, great question. I think the research is showing us that neighborhoods matter, but we shouldn't. Take away from this the idea that only neighborhood matters. Within neighborhoods, we can still see big differences in the life courses of children by by race, even by relative advantage or disadvantage within that neighborhood. I think another thing that's relevant in thinking about the issue of race is just understanding the way race affects the neighborhoods that children grow up in. One thing that researchers have recently observed, a black family tends to live in a neighborhood that is much poorer than a white family would live in. Even if the black family and the white family have the same level of income and wealth. I think a lot more work needs to be done to explain exactly why this happens. But I bring this up just as another example of describing how race and neighborhood are interrelated and I guess and the problem is it's a complex one.

Rick Sindt: I think a great example of what you're describing to us is the Baldwin Hills neighborhood in Los Angeles. It's it's known as the Black Beverly Hills. But the implication of that is that black people don't get to live in Beverly Hills. Right. Even though their incomes and social status are the same as their white counterparts who live in actual Beverly Hills.

Joel Han: Right.

Rick Sindt: So if I'm a parent listening to this conversation and I'm living in a neighborhood that is not considered advantaged, I might think to myself, Wow, my family and I need to move somewhere else as soon as possible. How how do you respond to this sentiment? Do you think that's a good idea? Do you do you caution against it? What are your thoughts?

Joel Han: I would fall more at the cautious side. I think the importance of research in neighborhoods and inequality is to really speak to. Policy and specifically policy that addresses the systemic inequality that affects the next generation based on the neighborhood that they happen to, born in or happen to live in when they were growing up. While it is useful at a very high level perspective, I don't think this research should be taken as a guide on how to make individual choices. There is still a lot we don't know about. What makes a neighborhood good versus bad? One of the findings of the Opportunity Atlas project was that some neighborhoods tend to do a lot better in terms of promoting child mobility than other neighborhoods that were similarly priced. For A high level study like the Opportunity Atlas it's not really possible for the researchers look at every one of these neighborhoods and pick out exactly what makes this neighborhood special. However, I think a parent living in those cities might be able to identify something that was special about this neighborhood and base their choice of where to live on these on these special factors that were unobserved for researchers when they're just looking at a whole array of neighborhoods in the U.S..

Rick Sindt: Many states counties in the United States continue to tie property taxes to school funding and I'm wondering what your thoughts are on that as an economist.

Joel Han: I think a lot of what we've discussed here today points to increasing inequality in the property tax revenue that's gathered from the richest neighborhoods versus the poorest neighborhoods. When it comes to school funding, though, there is a really complex calculation that goes on in there where a government could potentially address some of the inequalities arising from different property tax revenue. Underlying all of this is also a question of how the school district boundaries are drawn. Whether they are very whether they are drawn very similar to neighborhood lines or they are drawn in a larger, more inclusive manner.

Rick Sindt: So to kind of draw us to a close, I'd like to take a minute to talk about Chicago specifically. It's where it's where we live, it's where Loyola is, and you have recommended the book, "The Great American City Chicago and the Enduring Neighborhood Effect" by Robert J. Sampson. Could you share with us some of your takeaways from this book and just in general, what you observe in the city of Chicago today?

Joel Han: So let's start with the book "Great American City". I think what I take away from this book is the importance of social ties and community that is in some ways under the hood when we think about inequality in neighborhood advantage. This book is all about the city of Chicago, and I think it makes for--well, at least for me, I think it makes for an interesting read. But I'm also doing some some research using using this this data so I could be I could be biased here. I think one thing that stood out when I looked at this book was how community measures of the strength of neighborhood ties about perceptions of decline and disorder actually seem to matter more than the actual observed conditions of the neighborhood. Suggesting that there is something about the communities and the organizations in that area that really drive what makes one neighborhood more advantaged than the other.

Rick Sindt: So just to make sure I'm understanding, is it sort of like the representation of Englewood precedes itself? Like we have we believe Inglewood to be a certain way because of its reputation and its past, when perhaps that might not be the state of the neighborhood today.

Joel Han: Yes, I think the word would be stigma which can generate a self-fulfilling prophecy. If the neighborhood is seen as one where there is little return to investment, there is going to be a little community investment and there's going to be few structures that encourage community investment in that in that area. So zooming in on neighborhoods, this might be an explanation for why we're seeing the best and the worst neighborhoods in the city be relatively locked in. If a neighborhood has a reputation of being a certain way, it attracts the corresponding level of investment in that neighborhood, thereby perpetuating this pattern.

Rick Sindt: So what do you see as as a scholar yourself? What are you paying attention to?

Joel Han: So I think I would like to maybe talk a little bit more about, I guess, just my general impression of the city of Chicago today. What I'm seeing is the disparate impact of COVID on different communities located in different neighborhoods in Chicago. I pulled up the Chicago COVID dashboard this morning and what I see is patterns in case rates and COVID positivity that are somewhat in line with the expected patterns of neighborhood advantage. The areas that have the highest rates of COVID tend to be the neighbourhoods that we would say were disadvantaged before COVID hit. And I think during a pandemic everyone's thinking about COVID. As a researcher into neighborhoods, I also think about how this pandemic is highlighting the existing disparities and patterns of relative advantage and disadvantage between neighborhoods in Chicago. Now in terms of my own research, what I found really interesting to study is how parents respond to changes in the quality or the relative advantage of a neighborhood. If a neighborhood starts to decline, what does a parent do? This parent might try to compensate by changing their own parenting behaviors or they could decide to pack up and move to a different neighborhood. I'm really interested in how parents make this decision. Which of these two choices they make and how do these choices affect the way neighborhoods throughout Chicago evolve?

Rick Sindt: Professor Han, it was a pleasure to have you on today. I think your responses were very thoughtful, and I appreciate you taking the time to join us.

Joel Han: Thank you for having me.

Speaker1: This has been an episode of the Q Talks podcast where we seek to marry the wisdom of the Quinlan community with the issues of today. Special thanks to our guests as well as Dean Kevin Stevens for his generous support of this podcast. Matt Shelley, our student producer for editing this episode, as well as Loyola School of Communication and WLUW for their continued collaboration. Before you leave, take a minute to support us by sharing with friends or rating and reviewing our episodes to help expand our reach. Thanks for listening. I hope you join us next time.