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Raj Chetty on inequality, social mobility and breaking the cycle of poverty

April 7, 2016

As the topic of income inequality reverberates across America, Raj Chetty’s research is helping ground the political rhetoric.

Chetty’s work puts inequality and social mobility under a microscope and traces their roots and consequences. And he is making an impact in the worlds of academia, economics and policy.

His studies have been cited in President Obama’s State of the Union address. He’s been an economic advisor to the Congressional Budget Office. Presidential hopeful Hillary Clinton consulted with him, and so did Jeb Bush. Now he is working with federal housing authorities to design interventions that will use housing-assistance vouchers to increase the opportunities for people to live in better neighborhoods.

Good neighborhoods often mean good schools. And both are needed to break the cycle of poverty, Chetty says.

Chetty’s landmark studies have included detailed analyses of upward mobility throughout the United States. They not only pinpointed variations in educational and earnings outcomes for kids from different cities, they also illuminated regional differences.

In one study analyzing a government relocation experiment, Chetty and Harvard economists uncovered a significant distinction missed by others: the earlier a child moves out of a high-poverty neighborhood, the greater the prospect of climbing the income ladder.

Chetty, a senior fellow at Stanford’s Institute for Economic Policy Research, takes innovative approaches on economic expeditions. Some are part archeological mission, part pathology. Others – reflecting a new shift in applied economics — are more akin to clinical medical trials, where economic theory meets reality.

This modern twist — combined with technological advances and access to vast amounts of data — excites Chetty.

“I’d like to see if the great energy that is found in the tech sector and focused on making applications can be channeled toward social questions,” he says. “Can we get the excellent undergrads at Stanford and the broader community to apply some of the same tools and methods to tackling problems like poverty and inequality?”

Chetty’s trajectory in public economics ramped quickly.

Chetty got his Ph.D. from Harvard at age 23. He was a professor at the University of California, Berkeley, then a national fellow at Stanford’s Hoover Institution before returning at age 27 to Harvard as one of the university’s youngest tenured professors. At 33, he was awarded a MacArthur Fellowship and won the John Bates Clark medal, deemed the second highest honor next to a Nobel Prize in economics. He arrived at Stanford about three years later, in late 2015, as an economics professor.

Inspiration came at a young age.

In the dense city of New Delhi, India, where Chetty spent his early childhood, the contrast between the wealthy and poor is stark. Chetty realized he had opportunities — his father was an economic advisor in India and his mother, a physician — while other children were deprived of them.

“I saw people who were very affluent and then the people right next door who were in extreme poverty. Then I saw that given the right opportunity, many people could be more successful,” Chetty says. “Those experiences — and seeing in a direct way how lives integrated together — motivated me to see how you can fix those problems.”

Chetty firmly believes hard-nosed economics could help shape policies — based not on assumptions but empirical evidence.

“Social science really should be a science. Either something creates more jobs or it doesn’t,” he says. “That’s not to say there won’t be political debates on these matters, but we should be able to take a totally scientific approach.”