EIGHT / The Effects of Neighborhoods on Individual Socioeconomic Outcomes

This chapter considers the degree to which the processes of neighborhood change and the outcomes they yield are socially desirable. It investigates whether the primarily market-driven processes that neighborhoods undergo as they transition between states, and the population and housing stock characteristics that neighborhoods exhibit at any moment are the best we can hope for from a society-wide perspective. Based on a theoretical analysis and review of the evidence, the chapter advances three propositions of inefficiency, inequity, and unequal opportunity. Private, market-oriented decision-makers governing resource flows among neighborhoods usually arrive at an inefficient allocation due to externalities, strategic gaming, and self-fulfilling prophecies, systematically producing too-little investment in housing and too much segregation by race and economic standing. Lower socioeconomic status, black and Hispanic households and property owners typically bear a disproportionate share of the financial and social costs associated with segregation, under-investment and neighborhood transition processes, while reaping comparatively little of their social benefits. Because neighborhood context powerfully affects children, youth, and adults—yet neighborhood contexts are very unequal across economic and racial groups—space becomes a way of perpetuating unequal opportunities for social advancement.