ARI SHAPIRO, HOST:
The American dream is supposed to go like this - with the right effort, a person or family can climb from the bottom of the economic ladder to the top. Study after study shows that's getting harder to do. So Karen Duffin from our Planet Money podcast went looking for government programs that might help change that.
KAREN DUFFIN, BYLINE: Once upon a time, in a cubicle not so far away, sat a government bureaucrat in his government-issued chair.
MARK SHRODER: I was new to HUD. This was, like, my first couple months of HUD.
DUFFIN: This is Mark Shroder, and HUD is the Department of Housing and Urban Development. Shroder was an economist there in 1991, when HUD was trying to test a theory - could they improve a family's odds of climbing the economic ladder just by moving them to a better neighborhood? It would be a big social experiment, and they would call it Moving to Opportunity.
SHRODER: Almost everything about Moving to Opportunity has been a surprise, not only to me but to practically everybody else.
DUFFIN: Here's how the experiment worked - HUD chose thousands of families who lived in public housing in five big cities.
SHRODER: Baltimore, Boston, Chicago, Los Angeles and New York.
DUFFIN: They split the families into three groups, by lottery, and one of these groups was required to move out of public housing into, specifically, a low-poverty neighborhood. The government would help them cover rent in that new neighborhood by way of what's known as a Section 8 voucher. So this should be a better neighborhood, hopefully more opportunity. But not everyone saw it that way.
SHRODER: There were some people who were praying, literally praying, they would be in the regular voucher group.
DUFFIN: Was that disappointing?
SHRODER: That wasn't that surprising.
DUFFIN: Historically, families who'd gotten Section 8 vouchers were not using them to move to lower-poverty areas for a lot of complex reasons, both personal and systemic. But thousands of families did sign up, and for four years, they moved. HUD gathered data on them, and then in 2008, HUD tallied the data.
SHRODER: We did not find any impacts on earnings or children's test scores.
DUFFIN: HUD's theory was wrong. The moves had basically no economic or educational impact. And this was a landmark study, so researchers took the findings and moved their hopes, dollars and programs elsewhere - basically stopped looking at housing as a way to fix the American dream. But then about six years later, another economist was studying upward mobility.
NATHAN HENDREN: My name is Nathan Hendren. I am a professor of economics at Harvard.
DUFFIN: Hendren and a few of his research pals were combing through income tax data when they spotted a pattern that surprised them.
HENDREN: We started to see these exposure effect patterns; that the longer a child spent in a neighborhood with higher rates of upward mobility, the higher their outcomes were in adulthood.
DUFFIN: But that contradicted what that big HUD study found. As they dug deeper, they realized HUD had stopped looking at the data too soon. The younger kids who moved to opportunity just hadn't started getting jobs by then.
HENDREN: Back in 2008, you wouldn't have seen it. There just weren't enough young children into the labor market where you'd really be able to say, ah, looks like there's an effect here.
DUFFIN: But for kids who moved before they turned 13...
HENDREN: The children were 4 percentage points more likely to go to college, had about 30% higher earnings.
DUFFIN: And bonus - these kids will likely pay more in income tax over time, so the program should essentially pay for itself.
HENDREN: You could kind of feel that we had something that was going to change the way people thought about equality of opportunity in the United States.
DUFFIN: Hendren and his colleagues decided to not just release data but to turn it into an actual program. They're currently working with cities to basically reboot the original HUD program, starting in Seattle. Congress also just passed a bipartisan law to run programs like this. And the researchers hope that, over time, they can take what they learned from the families that moved to opportunity and move that opportunity back into the neighborhoods they left behind.
Karen Duffin, NPR News.
(SOUNDBITE OF THE SHINS' "THE FEAR") Transcript provided by NPR, Copyright NPR.