Moving on Up

James Heckman and Sadegh Eshaghnia have launched a broadside in the WSJ against the Chetty-Hendren paper The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects. It’s a little odd to see this in the WSJ but since the Chetty-Hendren paper has been widely reported in the media, I suppose this is fair game. Recall the basic upshot of Chetty-Hendren is that neighborhoods matter and in particular

…the outcomes of children whose families move to a better neighborhood—as measured by the outcomes of children already living there—improve linearly in proportion to the amount of time they spend growing up in that area, at a rate of approximately 4% per year of exposure.

I am not going to referee this dispute but I did enjoy the audacity of one placebo test run by Eshaghnia. Eshaghnia runs the same statistical models as Chetty-Hendren but substitutes birth length (“the distance between a newborn’s head and heels”) instead of adult earnings and college attendance rates. Now, obviously, moving cannot affect birth length! Yet, Eshaghnia finds, in essence*, that children of parents who move to taller neighborhoods have taller children, in parallel with CH who find that children of parents who move to higher income neighborhoods have higher income children. Moreover, the covariance is stronger the earlier parents move. Since birth length is correlated with cognitive abilities and other later life outcomes this is highly suggestive that CH are not finding (pure) causal effects.

* I have simplified slightly for intuition. Technically, Eshaghnia shows that children’s birth‑length ranks align with the destination–origin permanent‑resident birth‑length difference, and that alignment is ≈0.044 stronger for each year earlier the move.

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