We make our neighborhoods. In an obvious way, we as residential developers and property owners invest the resources to build, maintain, and modify dwellings and their supportive infrastructure. In a more subtle way, we make our neighborhoods by our occupancy. Collectively, we and our neighbors tautologically constitute the socioeconomic, demographic, and racial-ethnic profile of residents in our neighborhoods. Finally, we make our neighborhoods through the panoply of local social interactions in which we engage and the organizations we develop with our neighbors, both formally and informally, one-on-one and in groups.
Once we occupy them, neighborhoods start to make us. They influence our physical and mental health by shaping our exposures to pollutants and violence and our accessibility to health care services. They influence our attitudes, especially our satisfaction with the quality of our residential lives. They influence the information we receive about the world and how we interpret, evaluate, and respond to it. Therefore, they influence the expectations that drive the pattern of our investments in neighborhoods, and the mobility behaviors that determine when we move and which neighborhood we will move to next. They influence the major life decisions that shape our future prospects: behaviors related to education, fertility, work, and legal and illegal activities.
This book has aimed to enhance our understanding of these mutually causal roles in which we and our neighborhoods are intertwined. At the most basic level, market-guided flows of financial and human resources into and out of neighborhoods make them. We can best comprehend these flows by a systemic approach focusing on the operation of the metropolitan housing market. Though economic drivers play a prominent role in this formulation, they are not exclusive. Social psychological aspects related to how decision makers gather and process information and form expectations are crucial to understanding neighborhood-altering flows of people and money more fully. Moreover, economic and social forces jointly explain why so many nonlinear and threshold effects characterize many individual behaviors that are related to these flows of resources. Finally, these resource flows tend to produce neighborhoods that are segregated both economically and racially, with numerous interlocking patterns of mutual causation being manifested.
During any particular period, a neighborhood will possess a set of physical, demographic, socioeconomic, social-interactive, geographic, and institutional characteristics. These characteristics can influence the children, youths, and adults who reside there through numerous mechanisms. Variations in geographic context across multiple scales (neighborhood, jurisdiction, metropolitan region)—the “spatial opportunity structure”—affect the socioeconomic outcomes that individuals can achieve by altering the payoffs that will be gained from the attributes that individuals possess during any given period, and by influencing the bundle of attributes that individuals will acquire (both passively and actively) during their lifetimes. The statistical evidence is convincing that these context effects are substantial, leading inexorably to the conclusion that neighborhoods provide a key structural link in generating and perpetuating social inequality in America.
Our market-dominated system for determining the flows of human and financial resources across neighborhoods has produced a systematic bias toward too little investment in housing in certain places and too much segregation by race and economic standing, both of which are socially inefficient and inequitable. Inefficiencies arise primarily due to the presence of externalities, strategic gaming, and self-fulfilling prophecies. Inequities arise because disadvantaged residents disproportionately endure inferior neighborhoods in many domains. The forces that maintain this inefficient and inequitable neighborhood system link together in a mutually reinforcing system of cumulative causation that serves to perpetuate race and class disparities in America.
If there ever were a classic illustration of pernicious market failure, it is here. Our system has produced a pattern of neighborhoods that is both wasteful and unjust. There thus are ample grounds to intervene aggressively with “neighborhood-supportive” policies that will overcome these inefficiencies and inequities through strategically targeted interventions that work toward making a set of neighborhoods that represent higher-quality, more economically and racially diverse places. In particular, we should institute programs within three domains—neighborhood reinvestment, economic diversity, and racial diversity—that have proven their effectiveness while emphasizing voluntary but incentivized changes in behavior in the context of choosing among enhanced options. Though these programs require resources, none represents infeasible expansions of the public sector, and several may be effectively self-funding in practice.
Understanding how we make our neighborhoods and how they make us in turn forces us to ask a critical normative question. Do our human-made neighborhoods make all of us equally? Sadly, the answer is a resounding “no.” Savage inequalities embedded in our neighborhoods, most critically manifested as low-quality environments segregated by economic and racial status, expose the fiction in our cherished notion of “equal opportunity in America.” We must intervene strategically in the market-driven processes that govern the flow of resources across metropolitan space, if we as a society want to affirm our better selves and restore “equal opportunity” to its rightful place as a hallowed premise instead of a hollow promise.