1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Main Methodological Challenges of Quantifying Effects of Neighborhood:3 Simultaneity: Neighd choiceTenure choice Mobility Behavioral Outcomes George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007

10. How Overcome Challenge of Endogeneity? RESPONSE: Instrumental Variables (IVs) George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007

11. Main Methodological Challenges of Quantifying Effects of Neighborhood: 4 Selection: CHALLENGE: Behavior it = a + b[Observed it ] +c[Unobserved it ] + d[Neighborhd it ] + e [Neighborhood] Unobserved Behavior George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007

12. 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

13. 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

14. How Overcome Challenge of Selection? RESPONSE 3: Natural-experiment, quasi- random 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

15. 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

16. 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

17. 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

18. Promising Future Directions 3: Evidence on Threshold Effects in US George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007

19. 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

20. CONCLUSION: Overcoming Methodological Challenges Defining Neighborhood: various scales Measuring Neighborhood Characteristics: factor analysis, proxy variables Endogeneity: Instrumental Variables Selection: Econometric fixes; random- assignment experiments; natural experiments George Galster, Wayne State University, Detroit, USA; presentation at Humboldt University, 2007

21. 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

22. 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