Research / BFI Working PaperFeb 16, 2021

Evaluating Contradictory Experimental and Non-Experimental Estimates of Neighborhood Effects on Economic Outcomes for Adults

David J. Harding, Lisa Sanbonmatsu, Greg J. Duncan, Lisa A. Gennetian, Lawrence F. Katz, Ronald C. Kessler, Jeffrey R. Kling, Matthew Sciandra, Jens Ludwig

Although non-experimental studies find robust neighborhood effects on adults, such findings have been challenged by results from the Moving to Opportunity (MTO) residential mobility experiment. Using a within-study comparison design, this paper compares experimental and non-experimental estimates from MTO and a parallel analysis of the Panel Study of Income Dynamics (PSID). Striking similarities were found between non-experimental estimates based on MTO and PSID. No clear evidence was found that different estimates are related to duration of adult exposure to disadvantaged neighborhoods, non-linear effects of neighborhood conditions, magnitude of the change in neighborhood context, frequency of moves, treatment effect heterogeneity, or measurement, although uncertainty bands around our estimates were sometimes large. One other possibility is that MTO-induced moves might have been unusually disruptive, but results are inconsistent for that hypothesis. Taken together, the findings suggest that selection bias might account for evidence of neighborhood effects on adult economic outcomes in non-experimental studies.