Source: Federal Reserve Bank of San Francisco
Last week, I attended the Federal Reserve Community Affairs Research Conference on “The Changing Landscape of Community Development” where researchers from the Fed and Universities around the country shared their most recent findings on the challenges facing low-income communities and community development policy-makers. The conference covered a wide range of topics from foreclosures to farmers markets with eight discussion panels and keynote speeches by Columbia University professor and author of The End of Poverty, Jeffery Sachs and Chairman of the Board of Governors of the Federal Reserve, Ben Bernanke. The conference organizers put forth a challenge to have an open and honest conversation about what is and isn’t working in community development research and policy. Several key points emerged from the discussions (attributions to papers presented or comments are in parentheses).
First, problems in low-income communities are highly complex and impossible to isolate. Distresses across different areas in a person’s life are inseparable and intertwined with the distress of the surrounding community. For example, an area with a high proportion of foreclosures is more likely to experience violent crime. (Ellen, et. al.) Communities that experience violent crime are likely to have more health problems, in part, from the stress of worrying about their safety. (Cagney) Eliminating the burden of paying medical bills, perhaps by eliminating the need to incur the medical expenses in the first place, could reduce the bankruptcy rate by one-third. (Lindblad, et. al.)
Second, people and their decision-making processes are highly complex. The actual outcomes people experience don’t always match the outcomes expected by policymakers and researchers because people can weigh emotional factors over economic factors in the decision-making process. How people feel in times of financial trouble matter to how they perceive their situation and the decisions they make. Low-income homeowners, for example, who were in a similar financial situation as renters, were more likely to feel less stressed and more satisfied with their quality of life. (Manturuk, Riley & Ratcliffe) As long as they don’t experience some other adverse event like a mortgage delinquency, this sense of security may keep them from taking an action, like filing for bankruptcy, to address their financial situation, though such action may make more economic sense. (Lindblad, et. al.)
Third, low-touch policy solutions, like regulation of alternative financial services and the housing choice vouchers program, have some merit, but are not silver bullets to stabilizing low-income communities. (Bhutta; Avery; Joseph) High-touch policy solutions like individual financial counseling and wrap around school programs like the Harlem Children’s Zone, show promise, but what’s effective and why has yet to be determined. (Bernstein; Fyer & Dobie; Mayer, Tatian, et. al.; Collins & Schmeiser; Lyons, et. al.; Barron & Staten) Holistic, high-touch policy solutions are more likely the better solutions to help people who are struggling in low-income communities, but more emphasis needs to be placed on sharing best practices across practitioners in different communities. (Berstein; Bostic; Boyd; Caskey; Lyons; Sachs)
Finally, more data and research are needed to understand the complexities of low-income communities, especially to figure out what could help. Despite the promise of high-touch solutions, it is difficult to get empirical research demonstrations funded, because they are perceived to be too costly to be scalable and because the benefits are much more difficult to define and measure. Unfortunately, without large research demonstrations to help justify the efficacy and efficiency of high-touch policies, it will be impossible to generate the political inertia necessary to create high-touch programs for low-income communities. (Boyd; Collins; Lyons; Mayer; Schmeiser; Staten)
The conference left me with a strong prescription for how researchers and policymakers should move forward in their work to ensure lower-income American are included in mainstream society rather than falling to the fringes. The key is to stop limiting ourselves to data set analysis, models and policies that don’t take the complexities of the people served into account and incorporate more learning directly derived from the people in those communities. Researchers (and their funders) are encouraged to incorporate more qualitative studies and include behavioral questions that help illuminate why people do what they do in quantitative studies. Policymakers are encouraged to make room for more nuanced research and findings when creating interventions and to stop using a bipolar approach where policies are made either with extremely certain evidence from large-scale studies or no evidence at all.
Presentations from the conference and the related papers will be posted on the conference website. A few of the paper presentations really caught my attention: Personal Bankruptcy among Low-Income Homeowners (Lindblad, et. al.), Does Community Building Matter, or Are Schools Enough? Lessons from the Harlem Children’s Zone (Fryer & Dobbie), Mixed-Income Development: Emerging Challenges and Implications for Policy and Practice (Joseph), and Perception and Reality during the Financial Crises: Homeownership, Low-Income Households, and Financial Stress (Manturuk, et. al.). I look forward to reading them in depth when they are posted and hope others will also take time to consider them closely.