Transcript for Driving Upward Economic Mobility — with Professor Raj Chetty | The Prof G Pod with Scott Galloway

I'm in Cambridge, Massachusetts here at Harvard University. Good, back, back for school. Yes, semester just started last week.

I was visiting Europe, visiting Oxford for a few weeks, giving some lectures, and putting out a new research paper on college admissions.

Yeah, so what we did in the study is linked data from a bunch of different sources, college admissions records from many different colleges to tax records to SAT and ACT data. And basically, we asked two questions. First, who gets into the most selective private colleges in America, the Ivy League institutions, for example? And second, what are the consequences of attending those colleges? Does it change your life? If you attend one of these colleges and basically the answers are one, kids from higher income families seem to get into these colleges at much higher rates than kids from middle-class families with comparable credentials. And second, it does make a big difference if you attend these colleges in terms of your chances of reaching the upper tail of society, becoming a CEO, becoming a leader, defined in various ways. And so the punchline Scott, I think, is at the moment, these colleges might be perhaps inadvertently amplifying the persistence of privilege at the top in society by admitting kids from particularly off-limin backgrounds at higher rates, and channeling them to positions at the top in the next generation.

Yeah, so two questions there. Let me start with the first one on the 77 stat, which you're quoting that actually comes from one of our earlier papers. And that is right with that statistic is you're about 77 times more likely to attend than 77 times.

If you come from the top 1% relative to family on the bottom 20% of the income distribution, for example. But Scott, I would say that does not in and of itself mean it's all sort of the fault of the higher education system because the way I look at it. There's a pipeline starting at birth. There may be even before, you know, thinking about prenatal factors all the way to college application to college attendance. There's a pipeline of disparities that kids from different backgrounds face. And so that 77 factors kind of the end result. of a system where kids from lower income families are growing up in different neighborhoods going to often less well resource schools exposed to different types of role models or lots of different factors we can unpack there. And then finally, what we're saying in this most recent study. is even if you take two kids with the exact same SAT score. So they're kind of in the same place at the end of high school. Even then, perhaps surprisingly, you're like twice or two and a half times more likely to be attending an Ivy League College if you're from a top one percent family, relative to a middle class family. So the point is, all of these different factors compound to get to that 77. I don't know if I would point fingers solely at the higher education system. I think it is a contributor, but there are many other things that also contribute to these vast disparities. You also asked about race and class, and I think that's right, that class is becoming more and more important in America. We're seeing a wider and wider divergence in outcomes between kids from low and high income families. And I think that's again through a confluence of different factors, some of which might be related to higher education, some of which are related to growing segregation, perhaps changes in social capital and so on.

I think I broadly agree with that. I mean, I think everything you said is right. The American dream is fading only 50% of kids are doing better than their parents did in terms of their earnings today. If you look at the middle of the last century, that number was like 90% many things have changed. I mean, there are many potential solutions one can think of in the context of higher education. I think giving more kids access to college and high quality colleges in particular absolutely does make a difference. I think contrary to some prevailing narratives, there's pretty clear evidence that if you attend college in particular, if you attend a good college, it can be transformative in terms of your trajectory. And so, you know, that basically raises the question, why don't we expand the number of seats in high quality higher education? One way to do that may be to take the existing colleges that seem to produce good outcomes and expand them. I'm not running a college, so I can't speak to all the trade-offs, but you know, I think people at these universities, but are you despite that endowment? They face financial pressures in terms of supporting research, supporting other things. I certainly may agree from a social point of view, finding a way to expand these institutions could be quite valuable. But you're going beyond your suggestion, Scott of expanding Harvard. You know, another way to look at it is, why don't we have twice as many Harvard or Yale's or Princeton's? It doesn't just have to be the fixed existing set of institutions. So I think whatever approach we take, be it through expanding and create state institutions like University of California, Berkeley or University of Michigan versus some of these selective private colleges, I think that certainly is part of the solution.

Yeah, so I think the two reactions to that when it's got, first, certainly I think there's a role for more vocational programs or targeted job training programs and not kind of a traditional for your liberal arts type of education, but the targeted program that meets you where you are gives you the skills needed to get a great job and be happy as you say at the end of the day. That seems like the goal not just making more money than your parents did. Once I've given you one concrete data point on that, we have recently been studying a program called Year Up, which is a sectoral job training program. One of a few very exciting new job training programs that are showing very positive results in randomized trials, but they basically take kids from disadvantaged backgrounds who didn't go down the traditional college pathway that you just described that many of aspire to. And what they do is take these kids and pair them with a firm, could be a firm like Bank of America or another big finance or tech firm that's looking to hire folks. And they have a one year apprenticeship training mentoring program. where they give these kids the skills needed to get those jobs and also give them some additional social skills, social support, mentoring me to kind of succeed in that kind of work environment. And what they show is in randomized trials, you know, these programs increase earnings by 30 or 40%. in a sustained way, showing that there is a great role in a great need for the sort of training, totally independent of the higher education system. I would also note that while in certain circles, I think our sort of bubble, the people living in affluent cities, certainly the culture is focused on things like getting into Dartmouth, as you said, and getting a job at Google. But there are many other circles where, you know, for better or worse, that is I think not what is in the air. There are unfortunately neighborhoods where that's not even remotely an aspiration. You don't know anyone who's got to Dartmouth much less than anyone who's gone to props even any for your college. And so I think for those kids, the issue is, again, perhaps a cultural one or one related to social capital to use the term, where if you're not connected to anyone who is on that sort of track that can lead to success, be it through college or be it through other means, You just don't even think about doing that yourself. And that then leads to very different choices, you know, kids who are dropping out, dropping out of high school, maybe don't have to sort of support me to get any sort of job, sometimes high rates of incarceration. So I do think there's a whole other set of issues independent from kind of the ambition wheel that you're describing, which lead to a different equal of a brand that also needs to be addressed.

So what we did here is another big data sort of study, trying to understand the levers that influence economic mobility and opportunity. And the big data here came from Facebook. So we set up a collaboration with the Facebook core data science team to analyze how your friendships and who you're connected to might be related to your opportunities for upper mobility. And in that show, the simple finding from that paper is if I were to show you a map of economic mobility in the United States, where kids have the best chances of rising up in the income distribution, conditionally growing up in a low income family. And then I want to show you a map from Facebook data, a different map of where low income and high income people are friends with each other. Those two maps look practically identical. That is, if you grow up in a place where low income people are interacting more. you are much more likely to rise up in the income distribution yourself and achieve the American degree. So why is that? We don't know exactly why, but I think there are many plausible mechanisms, some which we have some evidence for. One goes back to what I was saying earlier about what shapes your aspirations and what sort of the culture of a community is shaped by who people are interacting with and other structural factors. So in particular, A lot of your friends had parents who were scientists or successful entrepreneurs or went to college. You might think about those kinds of possibilities yourself and might go down that path. If you've never met anyone who did that, that just may not be something you consider. In some other work, we've looked at who becomes an inventor in America by linking the universe of patent records to tax data and following people over time. And the fact you get out of that, Scott is if kids grow up in an area where there's a lot of innovation happening, they're more likely to become inventors themselves. But it's actually even much more specific than that. If a girl grows up in an area with a lot of female inventors in a given field, say, like in semiconductors, she is much more likely to have a patent in semiconductors herself when she's an adult 25 years later. But if she grows up in an area with more men who are in matters in that same field, it has no impact at all on her probability of becoming an inventor. And so those kinds of results where we see these very specific impacts by gender, by race, by class related to this Facebook data on friendships and really makes us think that who you're interacting with, the social capital you have is a key driver of upward mobility and opportunity.

So I think you get the nail of that. I mean, sometimes social science research at the end of the day, we find the data something that's very intuitive and we might have guessed from introspection. And I think this is a case like that. I think the question, as you say, is exactly how do you create more of this cross-class interaction? So we have to think about that in a second of this pair of studies we released in the journal Nature last year. where we ask what are the determinants of this cross-class connectedness and I break it into two different things. One is just exposure, who is coming in the doors of a given institution where people may, friends, you know, it could be high schools, could be colleges, could be churches, could be many different places where people meet, just how integrated are these places by class. If you are living in a completely segregated environment where high and low-income people, written poor people, go to different churches to different schools, then obviously you're not gonna have a lot of cross-class connection. And so you can think about tools like changing school district boundaries, possibly providing housing vouchers, you know, many different things that would lead people to mix more physically. But what we show in this work is that's actually not enough. There's a second phenomenon that we term friending bias, which is that even if two kids are in the same school, they still might not be friends with each other, right? You still might have clicks where people are separated along class lines, along racial lines, and so forth. And so that raises a second set of potential solutions, which is how do we reduce this friending bias and create more cross-dust interaction, even when people are in a given building. And that could be about thinking about things like tracking in classrooms. It could be about architectural design. Are we having cafeterias and other common places where people have different backgrounds are meeting? It could be about recreational activities. So one of the interesting patterns we find Scott is people are much more likely to make friends that cut across class lines in recreational groups like in the context of sports and in the context of religious groups in churches and synagogues and so on. Where, you know, maybe one explanation is if you feel like you've got something in common with someone else, a team that you're rooting for, playing on a shared faith, that allows you to bridge the divide in a way that doesn't occur in other settings. And so I think it's very important to think about that ladder aspect of friending bias. We've spent a lot of policy attention on just exposure and reducing segregation, but much less on the ladder. And I think that's equally important.

Yeah, absolutely. And Richard Reeves, of course, who you mentioned earlier has been very focused on these issues and drawing on some of the data. We've put out on how upward mobility varies by gender and by race. So one pattern you find Scott that I think speaks to this is there are big differences in economic mobility between black and white Americans, but it turns out the interact very sharply with gender. So if you take up black, boy and a white boy, or starting out in a family at the exact same income level, let's say, family making 30 or $40,000 a year. The white boy is much more likely on average to rise up in the income distribution to the middle class or beyond, than black boys at the exact same income level are. If you look at black girls and white girls in the exact same comparison, you actually find very similar options for black women and white women in terms of their rates of upper mobility. So there's something very specific in terms of the challenges black men are facing that is limiting upper mobility, perhaps for black Americans more generally. So that's one example where gender seems to matter profoundly. And then more generally we find in other settings, that for all groups, boys tend to do better in neighborhoods where men are employed at higher rates or they're more fathers present in the neighborhood. And this matters much less for girls. And that's consistent with the growing body of evidence that the presence of male role models is really critical, particularly for young boys. And so if you think about how the U.S. economy is evolved over the past 50 years, white men and men more generally who might have held high-paying manufacturing jobs, now have much lower employment rates in many places than they did previously. And if you think about what the intergenerational impacts of that are going to be in the next generation, if you think about who boys look up to or what kind of career aspirations they're thinking about, I think there's some real concerns there, which are the kinds of issues that Richard Griebs and others have been hitting on.

Yeah, so Scott, let me take that in two steps. So first, I think it's not literally about just role models in your own family. One thing I want to emphasize is what you find as highly predictive is what's going on in your community and not just your own parents, marital status and so give you one. of fact that I think captures that well, suppose you take two kids, both of whom have, say, single parents. And one of the kids is growing up in a community with more two parent families, more fathers present basically. Then another, you find that the kid who's growing up in a community where they're more fathers present perhaps because they're lower rates of incarceration or other factors that have led to higher employment rates that are for men, That kid has much better outcomes on average even though the moral status of their own parents is the same in that comparison of those two kids. So it's the community level factors that are highly predictive here. It's not just about literally having a role model in your own family. And so given that, The we were thinking about solutions in our research group has kind of been three tracks. One, if I know that there's a neighbor about a couple miles down the road in any city where you see better outcomes for kids. And this is actually data that we've put out publicly in something called the Opportunity Atlas where you can look up neighborhood by neighborhood, how well kids have done historically, kids growing up in low income families, different races and ethnicities and so forth. And what you find is often You will find a place just two miles down the street where you have much better outcomes for kids of comparable backgrounds. And so one solution you might think of is, well, if a lot of kids are growing up in these very diseminent neighborhoods where they lack role models, they may also lack other things like high quality schooling, access to higher education, so forth. What if we just help them move to these neighborhoods, perhaps through housing voucher programs or other methods that could give them access to these better opportunities? So that's one way to look at it. We've done some work in that space and at at least some limited scale, you know, we spent billions of dollars on affordable housing programs in the US. I feel like at some scale, that can be part of the solution. A second approach is to try to take these places that currently have very limited opportunities, very low rates of employment, very concentrated poverty, and try to transform those places by making strategic place-based investments. And then finally, would be touched upon earlier as access to higher education after the G.T. and the key touch point for most kids is not the neighborhood in which they're growing up. but rather the institution of higher education that they might attend. And I think as we talked about, beginning of this conversation, there are various things we might do in that space. So my own view is, yes, this role model social capital phenomenon is critical. But the way we address that, I think involves addressing a bunch of structural factors that may ultimately lead to greater social capital and greater availability of role models and change the course of kids' lives.

So it is true that other countries, Canada, some extent, especially some Scandinavian countries, if you look at relative rates of mobility or chance of rising from the bottom 20% to say the middle class or beyond, are higher in a number of those countries. However, First of all, I think they're big differences across these countries in terms of their demographics, in terms of their institutions. I actually think the more interesting role models in that context, the more interesting point of comparison is that there are many places within America. And in fact, within New York where you have higher rates of economic mobility than you do in Canada. or in Scandinavia, you don't need to look to those other countries in fact. You know, if you're growing up in Iowa, for example, as a low-income kid, your odds of rising from the bottom to the middle class are to the top 20% of the income distribution look better than in any other country in the world in much of rural Iowa. look at certain parts of New York City and Queens, for example, many parts of Queens. Your odds of upward mobility look terrific, but at the same time, if you look at other parts of Brooklyn, it looked worse than any country for which we currently have data. So it's a much more local phenomenon, Scott, than asking, you know, what's going on in this country versus that country? And to me, it comes back to these factors like who are you connected to? What is the quality of schools in your particular area? What's the degree of segregation? Some of these other countries that have more centralized systems do better on average, but we don't need to look outside the United States actually to find role models. You can look too mild down the road.

I mean, geographic mobility, basically.

Yeah, well, so the first fact there, which emerges from other scholars researchers that actually rates of mobility, contrary to maybe some of those stories at the high end of the income distribution levels of mobility for lower income Americans and particular have fallen substantially. in recent decades. And I think that might actually be part of the source of some of the stagnation that we're seeing where people are not basically moving to opportunity in the way that they were before. Now, when you hear about subsidies cities succeeding, what I think is striking in our data is that doesn't always mean that the people who are living in those places are benefiting. So let me give you an example. Take Charlotte, North Carolina. Charlotte is kind of the engine of jobs in the southeast in the United States. It's one of the most rapidly growing cities in America over the past 20, 30 years. If you just drive around the city, it would be totally obvious that it's much richer today than the boys 30 years ago. But here is a surprising fact that would be less obvious to you, I think, which is if you look at rates of upward mobility for kids growing up in low and middle income families in Charlotte, itself. Charlotte actually ranks 50th out of the 50 largest American cities in terms of rates of upward mobility for the kids who grow up there. So again, how is that possible arithmetic? How could Charlotte be getting so much richer? It seems like the place you want to be. Yeah, if you grow up in Charlotte, it's actually not the place you want to be. So, you know, the way that adds up is Charlotte basically is importing talent. Lots of people move to Charlotte to get those high paying drops at firms like Bank of America, which is headquartered in Charlotte. But what we're seeing in our bunch to null data, we're following millions of kids over time using anonymized tax records, is that that doesn't directly translate to benefits for the kids who grow up there because those kids are cut off from these opportunities. They're not getting those jobs because of all the factors that we've been talking about. They're not living in the neighborhoods that have the right networks, schools, access to higher education and so on. And so with that shows you Scott, we hear a lot in the media, this discussion of this city is doing well. That city is doing well. You should move here and there. But it's totally disconnected in many times from the experience of people who are actually growing up in these places. And we need to take into the liberal approach to cultivating the human capital of people growing up in these vibrant cities to really harness the calendar.

I think you want to surround yourself with people who are going to create opportunities for you and think hard about who you're connecting with. And I think especially in an era with the rapid technological change, you want to acquire a set of skills that are going to be versatile and have value No matter exactly what happens with AI, what happens with robots and so forth, something where you're able to think and use creativity to complement machines rather than repeat something that could be done by a machine and likely will be done by a machine going forward. And I think ultimately while focusing on some of these economic factors that we've been focused on, which I think correlates strongly with things like health and happiness, I think focusing if you're out that luxury on those goals directly on health and happiness above and beyond income itself, in my view, by finding something that you're passionate about working on, so that it feels less like a job to you on something you're truly interested in doing. I think that's one of the recipes for success and happiness in the longer one.

Thank you so much Scott. Thank you.