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Beyond Treatment Effects: Estimating the Relationship Between Neighborhood Poverty and Individual Outcomes in the MTO Experiment

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Author Info
Liebman, Jeffrey (Harvard U)
Katz, Lawrence (Harvard U)
Kling, Jeffrey (Princeton U)

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Abstract

Several important social science literatures hinge on the functional relationship between neighborhood characteristics and individual outcomes. Although there have been numerous non-experimental estimates of these relationships, there are serious concerns about their reliability because individuals self-select into neighborhoods. This paper uses data from HUD’s Moving to Opportunity (MTO) randomized housing voucher experiment to estimate the relationship between neighborhood poverty and individual outcomes using experimental variation. In addition, it assesses the reliability of non-experimental estimates by comparing them to experimental estimates. We find that our method for using experimental variation to estimate the relationship between neighborhood poverty and individual outcomes – instrumenting for neighborhood poverty with site-by-treatment group interactions – produces precise estimates in models in which poverty enters linearly. Our estimates of nonlinear and threshold models are not precise enough to be conclusive, though many of our point estimates suggest little, if any, deviation from linearity. Our non-experimental estimates are inconsistent with our experimental estimates, suggesting that non-experimental estimates are not reliable. Moreover, the selection pattern that reconciles the experimental and non-experimental results is complex, suggesting that common assumptions about the direction of bias in non-experimental estimates may be incorrect.

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Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp04-036.

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Date of creation: Aug 2004
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Handle: RePEc:ecl:harjfk:rwp04-036

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Brian A. Jacob, 2004. "Public Housing, Housing Vouchers, and Student Achievement: Evidence from Public Housing Demolitions in Chicago," American Economic Review, American Economic Association, vol. 94(1), pages 233-258, March. [Downloadable!]
  2. King, Jeffrey & Liebman, Jeffrey & Katz, Lawrence & Sanbonmatsu, Lisa, 2004. "Moving to Opportunity and Tranquility: Neighborhood Effects on Adult Economic Self-Sufficiency and Health from a Randomized Housing Voucher Experiment," Working Paper Series rwp04-035, Harvard University, John F. Kennedy School of Government. [Downloadable!]
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  3. Kling, Jeffrey & Liebman, Jeffrey, 2004. "Experimental Analysis of Neighborhood Effects on Youth," Working Paper Series rwp04-034, Harvard University, John F. Kennedy School of Government. [Downloadable!]
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  4. Currie, Janet & Yelowitz, Aaron, 2000. "Are public housing projects good for kids?," Journal of Public Economics, Elsevier, vol. 75(1), pages 99-124, January. [Downloadable!] (restricted)
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  5. Brock, William A. & Durlauf, Steven N., 2001. "Interactions-based models," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 54, pages 3297-3380 Elsevier. [Downloadable!] (restricted)
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  6. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer. [Downloadable!] (restricted)
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  7. Narayan Sastry & Bonnie Ghosh-Dastidar & John Adams & Anne R. Pebley, 2003. "The Design of Multilevel Survey of Children, Families, and Communities: The Los Angeles Family and Neighborhood Survey," Working Papers 03-21, RAND Corporation Publications Department. [Downloadable!]
  8. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April. [Downloadable!] (restricted)
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  9. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August. [Downloadable!] (restricted)
  10. Brock, William A & Durlauf, Steven N, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Blackwell Publishing, vol. 68(2), pages 235-60, April.
  11. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February. [Downloadable!] (restricted)
  12. Edward L. Glaeser & Bruce I. Sacerdote & Jose A. Scheinkman, 2003. "The Social Multiplier," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 345-353, 04/05. [Downloadable!] (restricted)
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  13. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February. [Downloadable!] (restricted)
  14. Benabou, Roland, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 619-52, August. [Downloadable!] (restricted)
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  15. Galster, George, 2002. "An economic efficiency analysis of deconcentrating poverty populations," Journal of Housing Economics, Elsevier, vol. 11(4), pages 303-329, December. [Downloadable!] (restricted)
  16. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Blackwell Publishing, vol. 60(3), pages 531-42, July. [Downloadable!] (restricted)
  17. Philip Oreopoulos, 2003. "The Long-Run Consequences Of Living In A Poor Neighborhood," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1533-1575, November. [Downloadable!] (restricted)
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Cited by:
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  1. Claire Dujardin & Florence Goffette-Nagot, 2005. "Neighborhood effects, public housing and unemployment in France," Post-Print halshs-00180046_v1, HAL. [Downloadable!]
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  2. Goux, Dominique & Maurin, Eric, 2006. "Close Neighbours Matter: Neighbourhood Effects on Early Performance at School," CEPR Discussion Papers 5682, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz, 2005. "Experimental Analysis of Neighborhood Effects," NBER Working Papers 11577, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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