Raj Chetty: Key Themes and Academic Works

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Raj Chetty: Academic Works (Part 1)

A summary of Raj Chetty's academic works on upward mobility and economic opportunity, published between August 2019 and December 2017, is provided below.

Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice — August 2019

  • The fact that low-income families in the US usually live in neighborhoods that offer little opportunities to improve their income, causes persistent poverty throughout generations. This happens as a result of barriers that prevent these families to move to other neighborhoods that could provide them with more opportunities.
  • Researchers conducted tests that consisted in providing services to reduce those barriers, like customized search assistance, landlord engagement, and short-term financial assistance. After performing these tests in Seattle and King County, results were seen in which 54% in treatment groups "moved to high-upward-mobility areas." Researchers found that the growing economic segregation can be addressed through small changes in public policies, such as "redesigning rental assistance programs."

Do Tax Cuts Produce More Einsteins? The Impacts of Financial Incentives vs. Exposure to Innovation on the Supply of Inventors — January 2019

  • This research shows how financial incentives, such as tax incentives and development grants, can affect individuals’ impulse to innovate. After using de-identified data from 1.2 million inventors (from 1996 to 2012), researchers found that the top 1% of inventors collect over 22% of total inventors' income.
  • Even though lower income tax rates can increase the number of inventors, their impact on the number of innovations is small. This means that financial incentives are unlikely to increase innovation.
  • They also found that it is more effective that individuals are exposed to innovation since their childhood. Researchers concluded that a better assessment of the impacts of financial incentives and the consideration of alternative policies are required to increase innovation.

The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility — October 2018

  • In order to find which neighborhoods in the US offer children the best possibilities to improve their income levels, researchers developed an interactive mapping tool named Opportunity Atlas. This tool locates the neighborhoods in which bad outcomes, such as poverty, normally appear. It uses anonymous data from 20 million Americans in their mid-30s and estimate their average earnings, incarceration rates, paternal income levels, etc.
  • The tool is currently used to collect data and provide assistance to people that need to move to high-opportunity areas. Atlas can also be used to understand why similar neighborhoods can produce different outcomes for children and to improve programs that help children enhance their opportunities.

Race and Economic Opportunity in the United States: An Intergenerational Perspective — March 2018

  • This study aimed to find racial and ethnic disparities in income in the US population. The researchers used de-identified longitudinal data from 1989 to 2015. Among their findings are that disparities vary substantially across racial groups, that differences in family characteristics (marital status, education, and wealth) do not explain that much the black-white income gap conditional on parent income, and that the black-white gap also appears among boys who grow up in the same neighborhood.
  • They also found that differences in intergenerational mobility are a cause of racial disparities as black and American Indian children have “substantially lower rates of upward mobility and higher rates of downward mobility” than white children. In the other hand, Hispanics have “relatively high rates” of upward mobility and are advancing in the income distribution.
  • Even though closing the gap may appear difficult, signs such as the fact that black children are not stuck at the same income levels as their parents, indicate that the problem can be solved. Finally, this research suggests that efforts such as mentoring programs for black boys, reducing racial bias among whites, and facilitating social interaction across racial groups, may be more effective in reducing the black-white gap.

Who Becomes an Inventor in America? The Importance of Exposure to Innovation — December 2017

  • A study was made to “characterize the factors that determine who becomes an inventor” in the US. Researchers used de-identified data from 1.2 million inventors to track their lives from birth to adulthood. They found that children’s chances of becoming inventors depend on several characteristics, such as race, gender, and parents’ socioeconomic class.
  • Other findings suggest that there are many "lost Einsteins" in the US who, had they been exposed to innovation in childhood, would have had been successful inventors. These individuals are mostly women, minorities, and children from low-income families. Researchers conclude that policies that increase exposure to innovation, such as mentoring by current inventors or internship programs at local companies, have the capacity to "increase quality-weighted aggregate innovation."

Mobility Report Cards: The Role of Colleges in Intergenerational Mobility — December 2017

  • This research aimed to characterize the income distributions of parents and children at US colleges. Researchers used data from over 30 million college students from 1999 to 2013.
  • Through this study, they discovered that access to colleges depends on parent income, that children from low and high-income families have similar earnings depending on the college they attend, that “rates of upward mobility differ substantially across colleges,” and that students from low-income families “fell sharply at colleges with the highest rates of bottom-to-top-quintile mobility.”
  • This research helped identify lessons that could solve these issues, such as broadening the access to high-mobility-rate colleges. In conclusion, researchers advise making other efforts, such as changing admissions criteria at selective colleges, provide greater funding for colleges that generate good outcomes, or targeting “promising low-income students before they apply to college.”

The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates — December 2017

  • In this study, researchers aimed to estimate the causal effect that each US county has in children’s incomes in adulthood. They did this by analyzing families who move across counties with their children. They used the data to quantify how places can be important for intergenerational mobility, develop forecasts of the causal effect of growing up in each county, and identify the areas that produce better outcomes.
  • It was discovered, among other findings, that a better county increases income in adulthood by 0.5% and that counties with less poverty and lower crime rates tend to produce better outcomes for children in poor families. Researchers concluded that before doing any policy changes, it is best to estimate causal effects at narrower geographies and to understand "why some places produce better outcomes than others."

The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects — December 2017

  • This research aimed to understand how US neighborhoods in which children grow up “shape their earnings, college attendance rates, and fertility and marriage patterns.” They analyzed data from over 7 million families that move across counties.
  • The study found, among other facts, that the outcomes of children living with families who move to a better neighborhood improve according to the amount of time they spend in that area, at a rate of around “4% per year of exposure.” Those outcomes also depend on the age of the child.
  • These results can be a motivator to improve efforts such as helping families move to higher-opportunity areas. These investments would mean identifying the causal effect of each neighborhood and understanding why some areas produce better outcomes than others.
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Raj Chetty: Academic Works (Part 2)

Some of Raj Chetty's academic works on upward mobility and economic opportunity that were published between December 2011 and December 2016 include "The Fading American Dream: Trends in Absolute Income Mobility Since 1940", "Childhood Environment and Gender Gaps in Adulthood", and "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment."

"The Fading American Dream: Trends in Absolute Income Mobility Since 1940" - December 2016

  • The ideal American dream is for children to live with a higher standard of living when compared to their parents, and this was calculated by the estimated rates of absolute income mobility between 1940-1980. Absolute income mobility is calculated by collating the household incomes of children at the age of 30 with household incomes of their parents at the same age, adjusting for inflation.
  • A notable fall in absolute mobility is observed for children born in 1940 (90%) compared to those born in 1980 (50%) across all 50 states, particularly in Michigan and Illinois. The reasons for this decrease include lower GDP growth rates and greater disparity in the distribution of growth.
  • To increase absolute mobility, GDP must be distributed across broad income groups, which could increase absolute mobility to 80%. The American dream can be revived with broad income distribution and high rates of absolute mobility.


"Childhood Environment and Gender Gaps in Adulthood" - January 2016

  • This research shows how childhood environments impact gender gaps in adulthood. The impact is measured by using population tax records of children in the 1980s. Young males with low parental incomes are less likely to work than their female counterparts and witness the gender gap in college attendance, earnings, and employment rates.
  • Additionally, gender gaps differ across commuting zones and counties where boys with low parental income and single-parent families experienced their childhood. Moreover, spatial variation also influences gender gaps, as boys from poor families and minority areas are less likely to work than females since they are prone to getting involved in crimes rather than employment.
  • The research concludes that childhood disadvantages significantly influence the gender gaps in adulthood.


"The Effects of Exposure to Better Neighborhoods on Children: New evidence from the Moving to Opportunity Experiment" - May 2015

  • The U.S. Department of Housing and Urban Development conducted an experiment called "the Moving to Opportunity (MTO) (1994-1998)" where 4,600 families were divided into three groups. One group was offered a subsidized housing voucher with an opportunity to move to a neighborhood with low poverty rates, while another was offered a standard housing voucher with no other opportunities. The final group was retained in public housing.
  • Prior research to the MTO experiment stated that moving to lower-poverty areas greatly improved the physical and mental health of adults, with no significant change in earnings.
  • Re-analysis of MTO by Chetty and Hendren in 2015, using quasi-experimental methods, found that children moving to lower-poverty areas leads to higher earnings in adulthood. The younger the children are, the more financially successful they will be, with better neighborhoods across all experimental sites, including boys, girls, Hispanics, Whites, and Blacks.
  • This study claimed that children aged 8 who moved to lower-poverty areas are likely to generate lifetime earnings of $302,000. This re-analysis of MTO concluded that moving disadvantaged families to mixed-income communities benefits them across generations.


"Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood" - September 2014

  • This research shows how value-added teachers influence students' outcomes with respect to education, salaries, and early parenthood. Schools from Washington D.C. to Los Angeles implemented the value-added procedure to evaluate teachers, and using the tax records of over one million children, studied the impact of value-added teachers on student outcomes.
  • Using cross-sectional comparisons across classrooms and quasi-experimental design, the long-term impacts of teacher quality is determined. It is observed that teachers’ impact on test scores fade out rapidly in subsequent grades due to the change in teachers, and the long-term impact is greater for females compared to males.
  • This study also revealed that high-quality teachers are retained with high salaries, and replacement with low-VA teachers is determined as a cost effective strategy by increasing the quality of low-VA teachers as compared to paying bonuses to high-VA educators.
  • By evaluating various parameters such as students' neighborhood quality, retirement savings, college attendance, college quality, earnings, total income, etc., it is derived that students that learned from high-VA teachers are more likely to attain a college degree, earn higher salaries, and are less likely to be involved in teenage births.
  • It is also concluded that replacing a low-VA educator with an average one increases children's earnings by $250,000 per classroom.


"Measuring the Impacts of Teachers I: Evaluating Bias in Teacher-Value Added Estimates" - September 2014

  • This evaluation shows the examination of "Bias in Teacher Value-Added Estimates" across schools in the United States using the tax records for over one million children. The study of the degree of bias in VA-teachers is proceeded with two different administrative databases.
  • The first database involves test scores and teacher assignments for grades 3-8 for 2.5 million students across the United States from 1989-2009, and the second is based on forecast bias and unbias data using quasi-experimental design.
  • It concluded that value-added measures for teachers can help authorities to identify which teachers have the capacity to improve the test scores of students. However, it also suggested that VA is not a parameter to conclude the quality of a teacher "as test scores are not the ultimate outcome of interest."
  • This study states that VA models used to estimate teacher's VA, which is a control for a student’s prior test scores, exhibit minimal bias in extrapolating teachers’ impacts on student success.


"Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States" - June 2014

  • This research analyses intergenerational mobility in the United States using relative mobility and absolute upward mobility for 741 commuting zones. Relative mobility is measured from the difference between estimated economic outcomes of low-income and high-income families. Absolute upward mobility is the estimated economic outcome of children from families earning $30,000.
  • It is observed that there is a broad variation across various areas. Salt Lake City and San Jose (12.9%) have high mobility, while Atlanta (4.5%) and Milwaukee (4.5%) have low rates of mobility when compared with high relative mobility countries, such as Denmark.
  • There is also an increase in children's income in association with their parent's income, while the quality of the K-12 school is associated with mobility and higher test scores. Meanwhile, lower dropout rates are connected to upward mobility.
  • It is concluded that children of married parents have higher rates of upward mobility, even if they live in communities with minimal single parents.
  • Community involvement and strength of social networks are linked with mobility.


"Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility" - January 2014

  • This research shows the trends in intergenerational mobility in the U.S. by evaluating administrative earnings records. This study is based on the intergenerational mobility of children born in the U.S. between 1971 and 1993.
  • Factors such as the correlation between parent and child income percentile and the probability that a child reaches the top 5th of the income distribution compared with parents’ income are used to measure the mobility of children born between 1971 and 1986. For age cohorts after 1986, the correlation between parent income and children’s college attendance rates are measured.
  • It is revealed that there is no significant change in children's chances of moving up in income distribution from 1970 to the present. However, the "birth lottery" of children plays a crucial role in their earnings.


"How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star" - December 2011

  • This involved data from Project STAR and indicates how kindergarten classes affect children's earnings. For this study, 11,500 kindergarten to third grade students were randomly selected in Tennessee from 1985 to 1989.
  • It is revealed that above-average kindergarten teachers can increase the total earnings of children to $320,000 compared to below-average kindergarten teachers.
  • Also, earnings, home ownership, and retirement savings at the age of 27 are connected to high kindergarten test scores.
  • It is estimated that for every one percentile point increase in kindergarten test scores, the students’ annual adult earnings increase by $130, or almost 1% of the earnings between the ages of 25 and 27.
  • Kindergarten teachers with more years of teaching experience are more effective in increasing both kindergarten test scores and earnings at the age of 27.
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Profile: Professor Raj Chetty

Nadarajan Chetty is 40 years old and was born in New Delhi, India. He is a professor at Harvard University, specializing in the field of public economics. Chetty is one of the youngest tenured faculty in the history of Harvard's economics department. Some of the awards and honors he has received in 2019 include the A.SK Social Science Award, Andrew Carnegie Fellowship, and Fellow, American Academy of Political and Social Science. Chetty was listed as one of the top young economists in the world by The Economist and The New York Times in 2008.

EARLY LIFE AND EDUCATION

  • Raj Chetty was born on 4th August 1979, in New Delhi, India. His parents, Anbu and Veerappa Chetty, were both remarkable and quick-witted.
  • When Raj Chetty was born, Anbu was a pediatrics professor and Veerappa Chetty was an economics professor who had served as an adviser to Prime Minister Indira Gandhi. In 1988, when he was nine years old, his family migrated to the United States.
  • Chetty's primary education was done in the University School of Milwaukee where he was a valedictorian. In 2000, Chetty graduated from Harvard University and received his Bachelor of Arts.
  • When he was a sophomore in college, Raj Chetty brought forth that 'higher interest rates sometimes lead to higher investment'. As a result, he was highly encouraged by his doctoral advisor Martin Feldstein.
  • After successfully publishing his thesis titled 'Consumption commitments, risk preferences, and optimal unemployment insurance', Chetty received Ph.D. from Harvard in 2003.

CAREER

  • After completing his education, Chetty became an assistant professor at the University of California, Berkeley where he taught economics. In 2007, he became an associate professor with tenure at the University of California, Berkeley.
  • In 2008, Chetty took up the position of National Fellow at Hoover Institution, Stanford University. After a year, he was appointed as the professor of economics at the University of California, Berkeley.
  • In 2009, Chetty returned to Harvard where he was immediately awarded tenure at the age of 29. A few years down the road, he currently teaches economics, "assuming the title of Bloomberg Professor of Economics, at the institute and is also the director of the Lab for Economic Applications and Policy".
  • Some of his other professional responsibilities include Director, Opportunity Insights (with John Friedman and Nathaniel Hendren), Co-Director, Public Economics Program, NBER (with Amy Finkelstein), Faculty Research Fellow and Research Associate, National Bureau of Economic Research, and Advisory Editor, Journal of Public Economics.

HOBBIES/INTERESTS

  • Raj Chetty enjoys reading working papers of economists on topics such as health, education, and policy issues.
  • Listening to traditional Indian melodies and western music is one of the things he is fond of. He loves the pop band OneRepublic and the Indian musician A.R. Rahman. He also listens to Pandora, an internet radio station and 'the Piano Guys' on YouTube.
  • Chetty is committed to watching documentaries. His favorite documentary is 'Kumare' which follows "an Indian-American guy who transforms himself into a guru".
  • He is also passionate about surfing the website of his colleagues who blog about economics.
  • Additionally, Chetty loves his Bose noise-canceling headphones and vegan “charcuterie” at Gather, a restaurant in Berkeley.

PHILANTHROPIC INTERESTS

  • Some of the primary philanthropic interests of Raj Chetty includes social and economic problems, equality in opportunities, education, health, environment, and criminal justice.
  • His non-profit organization, Opportunity Insights harnesses the power of Big Data to find potential solutions to socioeconomic problems.
  • His chief focus currently is on providing opportunities to families by making them move to good neighborhoods which will eventually alter the child's future prospects.
  • His estimation on how growing up in each county in the US will change the career prospect of a child offered helpful insights.
  • Most recently, Raj Chetty's non-profit organization partnered with two local housing authorities in Seattle to manage an expansive housing search for families.
  • The organization is also taking measurements to come up with higher-education initiatives by partnering with local organizations.

ACADEMIC/RESEARCH GOALS

  • The themes prevalent in Raj Chetty's research and works include corporate taxation, education, income taxes on labor supply, intergenerational mobility, inequality, methods, risk preferences, social insurance, government policy, affordable housing, and taxation of individuals.
  • 'Mobility Report Cards: The Role of Colleges in Intergenerational Mobility' and 'Measuring the Impact of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood' are some of the researches of Chetty focusing on education.
  • 'The Opportunity Atlas: Mapping the Childhood Roots of Social Mobility' and 'Race and Economic Opportunity in the United States: An Intergenerational Perspective' are some of his works focusing on intergenerational mobility.
  • 'Do Tax Cuts Produce More Einsteins? The Impacts of Financial Incentives vs. Exposure to Innovation on the Supply of Inventors' and 'Optimal Taxation and Social Insurance with Endogenous Private Insurance' are some of the papers of Raj Chetty focusing on taxation of individuals.

REPUTATION

  • Raj Chetty is a world-renowned economist and is generally considered to be influential. He is also the most cited young economist in the world.
  • In 2008, he was listed as one of the top eight young economists in the world by The Economist and The New York Times.
  • Many of his research papers have appeared in The Atlantic, Vox, Our World in Data, and The New York Times.
  • "Chetty is also widely acknowledged for his ability to design more effective government policies". Additionally, he is a popular writer and has the privilege to publish his works on esteemed journals such as American Economic Review, Journal of Political Economy, and Quarterly Journal of Economics.

AWARDS AND HONORS RECEIVED

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