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Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment

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  • Sarah Miller
  • Cindy K. Soo

Abstract

This paper isolates the causal impact of neighborhood environment on credit outcomes of low-income borrowers by analyzing the participants of the Moving to Opportunity (MTO) experiment. MTO was a unique, large-scale experiment that offered families vouchers to move to better neighborhoods via randomized lottery. We find higher credit scores and use among those required to move to the lowest poverty areas as young children. For those who moved as adults, we find that better neighborhoods lead to a reduction of overdue debts and delinquencies, but only among those given unrestricted neighborhood choice.

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  • Sarah Miller & Cindy K. Soo, 2018. "Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment," NBER Working Papers 25023, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25023
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    6. Sarah Miller & Luojia Hu & Robert Kaestner & Bhashkar Mazumder & Ashley Wong, 2021. "The ACA Medicaid Expansion in Michigan and Financial Health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(2), pages 348-375, March.
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    Cited by:

    1. Sarah Miller & Laura R. Wherry & Diana Greene Foster, 2023. "The Economic Consequences of Being Denied an Abortion," American Economic Journal: Economic Policy, American Economic Association, vol. 15(1), pages 394-437, February.
    2. Paul Goldsmith-Pinkham & Maxim L. Pinkovskiy & Jacob Wallace, 2020. "The Great Equalizer: Medicare and the Geography of Consumer Financial Strain," Staff Reports 911, Federal Reserve Bank of New York.
    3. Paul Goldsmith-Pinkham & Maxim Pinkovskiy & Jacob Wallace, 2020. "Medicare and the Geography of Financial Health," Working Papers 2020-004, Human Capital and Economic Opportunity Working Group.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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