QUANTIFYING THE EFFECT OF
NEIGHBORHOOD ON HUMAN BEHAVIORS:
ALTERNATIVE APPROACHES,
FUTURE DIRECTIONS
George Galster
Hilberry Professor of Urban Affairs
Wayne State University
Detroit, USA
presentation at Humboldt University
Berlin, Germany
March, 2007
OVERVIEW: QUESTIONS ADDRESSED
• What Are the Main Methodological
Challenges of Quantifying Effects of
Neighborhood on Human Behaviors?
• How Can We Overcome These
Methodological Challenges?
• What Are Promising Future Directions?
George Galster, Wayne State University, Detroit, USA; presentation at HumboldtUniversity, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood
• Defining “Neighborhood”
• Measuring Neighborhood Characteristics
• Endogeneity
• Selection
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood: 1
Defining “Neighborhood”:
CHALLENGES:
What is the appropriate scale?
Does appropriate scale vary by causal
mechanism of neighborhood effect
presumed?
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of Defining
Neighborhood?
RESPONSE: Operationalize neighborhood
at different administrative district scales
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood:2
Measuring Neighborhood Characteristics:
CHALLENGE:
Lack of direct measures of appropriate
causal mechanisms;
Correlated characteristics
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of
Measuring Neighborhood Character?
RESPONSE: factor analysis; proxy variables
(Sampson et al.)
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood: 3
Endogeneity:
CHALLENGE:
“Reflection Problem” in cross-sectional
samples (Manski);
Simultaneity of Choosing Home Own/Rent
Status, Mobility Status, Neighborhood
Characteristics
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood:3
Simultaneity:
Neigh’d choice
Tenure choice
Mobility
Behavioral Outcomes
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of
Endogeneity?
RESPONSE: Instrumental Variables (IVs)
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Main Methodological Challenges of
Quantifying Effects of Neighborhood: 4
Selection: CHALLENGE:
Behaviorit = a + b[Observedit]
+c[Unobservedit] + d[Neighborh’dit] + e
[Neighborhood]
Unobserved
Behavior
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of Selection?
RESPONSE 1: Econometric adjustments to
non-experimental panel datasets:
• Modeling Selection Explicitly
• Differencing
• Fixed Effects
• Sibling Comparisons
• Instrumental Variables
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of Selection?
RESPONSE 2: Experimental, random
assignment datasets:
Moving To Opportunity (MTO):
• 1994 in 5 U.S. metros; 4,700 households
• Public housing / rent vouchers no aid /
vouchers with aid but must locate in <10%
poverty area for one year
• Compare groups over time
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
How Overcome Challenge of Selection?
RESPONSE 3: Natural-experiment, quasirandom assignment panel datasets:
• PHA desegregation: Gautreaux
(Rosenbaum et al.), Yonkers (Briggs et al.)
• Social housing allocation: Denver-USA
(Galster); Canada (Oreopolis)
• Immigrant re-settlement (Sweden: Edin,
Fredricksson, Aslund;)
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Promising Future Directions: 1
(1) Exploit Longitudinal Social Register Data
(Andersson [SWE]; Musterd [NETH])
- Allows GIS-specified, individual-centered
“neighborhoods” to be defined and their
characteristics measured precisely and
comprehensively
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Promising Future Directions: 2
(2) Exploit natural experiments
- Overcomes endogeneity and selection
challenges without econometric fixes of
questionable power
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Promising Future Directions: 3
(3) Non-linear (threshold) effects must be considered.
In U.S., negative externalities not occur until:
% poor in neighborhood >
approx. 10%-15%
CRUCIAL POLICY IMPLICATIONS
(Galster, 1998, 2002, 2007)
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
Promising Future Directions 3:
Evidence on Threshold Effects in US
Summary of Observed Relationships Between
Neighborhood Poverty Rates and Individual Behavioral Outcomes in U.S.
“bad” behaviors*
C
A
D
l
cia
So osts
C
E
F
higher
.1
0
lower
.2
.3
.4
.5
.6
Proportion Poor in Neighborhood
F´
E´
l
cia its
So nef
Be
D´
C´
“good” behaviors**
A´
Source: U.S. statistical studies reviewed in Galster (2002)
* crime, school leaving, duration of poverty as young adult
** hours of work, income, wages
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
CONCLUSION: Challenges of
Quantifying Effects of Neighborhood
• Defining “Neighborhood”
• Measuring Neighborhood Characteristics
• Endogeneity
• Selection
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
CONCLUSION: Overcoming
Methodological Challenges
• Defining “Neighborhood”: various scales
• Measuring Neighborhood Characteristics:
factor analysis, proxy variables
• Endogeneity: Instrumental Variables
• Selection: Econometric fixes; randomassignment experiments; natural
experiments
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
CONCLUSION:
Promising New Directions
• Exploit longitudinal social register datasets
• Exploit natural experiments
• Probe for non-linear neighborhood /
behavioral outcome relationships
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007
THANK YOU; QUESTIONS?
REFERENCES
Galster, G. (2001). On the Nature of Neighborhood, Urban Studies 38(12), 2111-2124.
Galster, G. (2002). An Economic Efficiency Analysis of Deconcentrating Poverty Populations. Journal of Housing Economics
11, 303-329.
Galster, G. (2003) Investigating Behavioral Impacts of Poor Neighborhoods: Towards New Data and Analytic Strategies.
Housing Studies 18(3), 893-914.
Galster, G. (2005). Neighborhood Mix, Social Opportunities, and the Policy Challenges of an Increasingly Diverse
Amsterdam. Amsterdam, Netherlands: University of Amsterdam, Dept. of Geography, Planning, and International
Development Studies; available at:
http://www.fmg.uva.nl/amidst/object.cfm/objectid=7C149E7C-EC9F-4C2E-91DB7485C0839425
Galster, G. (2007) Neighbourhood social mix as a goal of housing policy: A theoretical analysis. European Journal of
Housing Policy 7(1), pp. 19-43.
Galster, G. (forthcoming). Should Policy Strive for Social Mix in Neighborhoods? A Review of the European Evidence Base.
Housing Studies.
Galster, G., Andersson, R., Musterd, S., & Kauppinen, T. (forthcoming). The Effect of Neighborhood Income Distribution on
Individuals’ Income Prospects. Journal of Urban Economics.
Galster, G., Cutsinger, J. & Malega, R. (2006). “The Social Costs of Concentrated Poverty: Externalities to Neighboring
Households and Property Owners and the Dynamics of Decline,” paper presented at “The Future of Rental Housing”
conference, Joint Center for Housing Studies, Harvard University, Nov. 14.
Galster, G. Marcotte, D., Mandell, M. Wolman, H. & Augustine, N. (forthcoming). Effects of Childhood Poverty on Young Adult
Fertility, Education, and Incomes. Housing Studies
Galster, G., Quercia, R. & Cortes, A. (2000). Identifying Neighborhood Thresholds: An Empirical Exploration, Housing Policy
Debate 11(3), 701-732.
Galster, G., Tatian, P., Santiago, A., Pettit, K. & Smith, R. (2003). Why NOT in My Back Yard? The Neighborhood Impacts of
Assisted Housing. New Brunswick, NJ: Rutgers University / Center for Urban Policy Research Press.
Galster, G., & Zobel, A. (1998). Will dispersed housing programmes reduce social problems in the US? Housing Studies,
13(5), 605-622.
George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007