Chetty Finds a lot of Meaningless Correlations

New lecture:

The Science of Economic Opportunity

Children’s chances of earning more than their parents have fallen from 90% to 50% over the past half century in America. How can we restore the American Dream of upward mobility for all children? In this talk, Raj Chetty, director of Opportunity Insights and professor of public economics at Harvard University, shows how big data from varied sources ranging from anonymized tax records to Facebook social network data is helping us uncover the science of economic opportunity. Among other topics, Chetty discusses how and why children’s chances of climbing the income ladder vary across neighborhoods, the drivers of racial disparities in economic mobility, and the role of social capital as a driver of upward mobility. He presents data on the state of economic opportunity in California in particular to provide a local context to these national patterns. Recorded on 10/25/2023.

This is highly regarded work, as if he is a shoo-in for a future Nobel Prize. (Ie, Bank of Sweden prize in Economics)

I am suspicious of his stuff. First, he and his team use datasets that no one else has, such as highly confidential IRS tax data. This means that other scholars cannot check their work.

His papers seems to be carefully cleansed of any objectionable conclusions. Worse, it appears that he had his conclusions before doing the research.

A lot of his papers seem to be reading causality conclusions into correlations. But correlation does not imply causation, and he never does any controlled experiments.

Drivers of economic mobility include innate IQ, innate behavioral traits, parental upbringing, schooling, wealth, etc. Chetty looks a lot at neighborhood characteristics that are almost certainly not causative. And he ignores factors like IQ that certainly are causative. I do not see any value in his work at all.

Suppose research told us that Black people live in Black neighborhoods, and those neighborhoods have lower economics opportunity. That would not tell us anything. But that isall Chetty's research is telling us.