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

Jeffrey Liebman, Lawrence Katz and Jeffrey Kling
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Jeffrey Liebman: Harvard University and NBER

No 872, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

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.

Keywords: neighborhood effects; social experiments (search for similar items in EconPapers)
JEL-codes: N32 N33 N34 (search for similar items in EconPapers)
Date: 2004-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: Beyond Treatment Effects: Estimating the Relationship Between Neighborhood Poverty and Individual Outcomes in the MTO Experiment (2004)
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