The Effects of Affordable Housing in Better Neighborhoods – An Actual Solution to Generational Poverty?

Nikki WallerDirector of Financial & Relational Development

With the number of social welfare systems available, one has to wonder – how do people still keep falling into poverty? 

At HOPE, we research this a lot. Does housing improve outcomes or does it simply serve as a band-aid? Luckily, we aren’t the only ones who ask this question.

In a study performed by Harvard Economist Raj Chetty called The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment we have the opportunity to see real results from subsidized housing. Chetty examined the social impact on children from low-income families who lived in high poverty, non-subsidized housing as they moved to a low-poverty, affordable, subsidized housing neighborhood utilizing what was called the Move to Opportunity (MTO) voucher. The results were astounding.

By their mid-twenties, individuals who moved when they were less than 13 years old had an annual income that was 31% higher than the control group. Children who were older than 13 when they moved saw less of a gap in income from the control group. This is consistent with other evidence that the duration of exposure to a better environment during childhood is a key determinant of long-term outcomes.

For the economy, this alone has an incredible impact. Not only will there be funds saved from social programs as children become adults, but individuals affected by this change pay an extra $394 on average per year in federal income taxes during their mid-twenties. The additional tax revenue from these individuals alone would more than offset the public housing vouchers they received as children. 

Not only do these children eventually become equal partners in society, but this study also found these children who utilized the MTO vouchers  were 32% more likely to go to college. Children who received the vouchers also showed higher averages in the quality of schools they attended as well increased attendance at those schools. 

Another huge outcome from the study was the eventual impact on the future families started by the children in the study. The MOT voucher did change the family circumstances of future births substantially. Most obviously, they changed the presence of the father at birth. Girls whose families used the Move To Opportunity (MTO) voucher when they were young were 26% less likely to become single mothers. 

All these changes had the same impact across age ranges – the older a child was when they moved to a lower poverty neighborhood, the less of a change in outcomes observed. This shows us how much our children’s environment impacts their future.  The study followed these children into adulthood and the establishment of their own families. Overall, those who grew up on the MTO voucher program were found to be living in better neighborhoods and in a more stable home environment for their children. 

This study leaves us wondering, could we, one day, say goodbye to generational poverty? We don’t know about you, but at HOPE we’d like to find out.