Kamala Harris Wants To Build An Opportunity Economy

The following is part of an op-ed in The New York Times by Harvard economics professor Raj Chetty:

At the start of her debate with Donald Trump, Kamala Harris spoke about building an “opportunity economy.” What does that mean, and how can we create one?. . .

An opportunity economy prioritizes equality of opportunity rather than equality of outcomes. In such an economy, we all have the chance to achieve our potential, even if some people ultimately end up earning more than others. Right now, opportunity is not equally distributed in America: People’s chances of achieving success vary widely depending upon their parents’ income, racial background and ZIP code.

While views about income redistribution using taxes are divided, equality of opportunity is a principle that appeals to Americans across the political spectrum. Most people agree that it’s unfair if your fate is determined by the family you happen to be born into or where you grow up. . . .

A successful opportunity economy is built around three core themes. First, start in childhood. Research has shown that the roots of opportunity start at birth. Children who grow up in thriving environments — with good health and nutrition, high-quality education and housing, stable families and positive social influences — are much better positioned to achieve success later in life.

Every extra year of exposure to a better environment during childhood improves outcomes later in life. By the time people start working, it is much harder to change trajectories. It’s like starting to exercise to improve your health after you retire — it can still help, but it’s more effective to start earlier.

Second, focus on communities, not individuals, as the unit of change. Children’s chances of rising out of poverty vary dramatically across places. In some parts of America — such as Boston and Brownsville, Tex. — opportunity is plentiful, with many children from low-income families rising to the middle class and beyond when they grow up. In others, including Atlanta and Philadelphia, children from low-income families tend to remain in poverty throughout their lives.

Economic mobility varies substantially even within cities. When children move to better neighborhoods, especially earlier in childhood, their outcomes improve significantly, even if their own parents’ financial status remains unchanged. Likewise, when conditions in a community improve — for example, if the fraction of parents working in an area increases — children do better, even if nothing changes in their own families.

This evidence calls for a place-based approach to improving economic opportunity that targets specific areas and subgroups that lack opportunity rather than attempting to support families uniformly across communities.

The third key to an opportunity economy is to build social capital. The strongest predictor of differences in economic mobility across neighborhoods is the degree to which low- and high-income people are connected to one another. In communities where low-income people have many high-income friends, people born into poverty are much more likely to rise up. Connections matter for job referrals, but they’re perhaps more important for guidance in navigating complex decisions like where to live, go to college or start a business. Moreover, people are inspired to follow the paths of those they are connected to, particularly those with similar backgrounds. For example, when girls grow up around more female scientists in their community, they are more likely to become scientists themselves. When they grow up around more male scientists, there is no impact.