When Social Capital Moves in Next Door: The Best Evidence on Gentrification
Nathan Mayo
Vice President of Operations & Programs
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Scientific research is a valuable resource for learning about charitable programs’ best practices. Often, a well-designed study does a better job of confirming or disproving our assumptions than anecdotal observations or deliberate outcomes measurement. In that vein, this synopsis addresses the findings of a 2019 study entitled, The Effects of Gentrification on the Well-Being and Opportunity of Original Resident Adults and Children.
What question does this research answer?
“What is the effect of gentrification on the original residents of a neighborhood?”
Gentrification is generally understood as the in-migration of higher-income residents to a previously working-class neighborhood (though this study uses education level instead of income). Those seeking to serve the poor usually considered it a problem, on the grounds that it fractures existing communities and drives the displaced to a worse situation. Even the term is slightly derogatory as it facetiously refers to a neighborhood being taken over by “the gentry.” Previous evidence suggests that in-migration increases the average cost of rent and that many original residents end up leaving.
However, previous studies only identified effects on the neighborhood as a whole, which obscures important findings on how individuals fare. This study used millions of data points to track individuals over time and compare their outcomes to people in similar neighborhoods who did not experience gentrification.
The findings offer a surprising vindication of gentrification as a natural tool for community development. Anyone in neighborhood-centric ministry needs to be aware of these stunning results.
Study Design
Data Source: U.S. Census long form and the American Community Survey
Sample Size: 3 million individuals across the 100 largest metropolitan areas in the U.S.
Type of Study:
This study is closest to a “natural experiment,” meaning researchers observe the apparent effect of an intervention while using some external event to simulate random assignment into treatment and control groups. This makes the study as close to a scientific laboratory experiment as can be achieved in the real world.
For example, if you want to determine whether higher levels of education cause higher incomes, a traditional experiment would take a group of similar high schoolers and assign some of them to go to college, while the remainder do not. Then we could measure differences in their lifetime earnings and determine the value of education.
Because such a study is impracticable, an alternative would be to compare people who gain entrance into a college by a single point on a standardized test versus those who are ineligible by a single point and do not attend. Since people with similar scores are very similar, this would allow researchers to simulate an experiment and potentially prove a college education causes higher income.
In the case of the 2019 gentrification study, researchers designated the natural control group as similar neighborhoods, some of which gentrified over the course of the study and some that did not. They then treated the people in non-gentifying working class neighborhoods as a comparison group, which gave a good sense of what resident outcomes would look like if gentrification never happened.
Limitations: This wasn’t a pure natural experiment, since it’s possible some relevant characteristic differentiated the residents of gentrifying neighborhoods from similar non-gentrifying ones. However, there is no obvious logical reason why they should be dissimilar and researchers did their best to mitigate that potential flaw with an exhaustive set of statistical techniques.
That said, while the study focused on economic harms, it can’t account for unmeasured harms to holistic well-being (like the mental strain of being pressured to move to a new neighborhood). Still, economic harms (or lack thereof) are significant to note because most who oppose gentrification claim them as a key reason for their resistance.
Key Findings
1. Even in non-gentrifying neighborhoods, 70% of renting residents move out within a decade
One of the facts muddling previous analyses is that people routinely move out of non-gentrifying neighborhoods. Indeed, over the course of a decade 70% of renting residents move out of low-income neighborhoods where the income level of the community is stable over time. Homeowners move out at a lower rate of 40%.
In non-gentrifying neighborhoods, those residents were backfilled by other working-class people. In gentrifying neighborhoods, higher-income people replaced the natural emigrants. While the neighborhood composition changed, it would be incorrect to say most of those who left were “forced out” because they were leaving anyway. Note that this study focused on major cities, so this may not be true in rural areas.
2. Gentrification modestly increased outmigration but in many measurable ways movers end up no worse off
Certainly some low-income people leave as a result of gentrification; just not as many as you would expect. The research estimates that over a decade, gentrification forces out four to six percent of the original residents. Compared to the 70% of renters that would have left anyway, that is not dramatic.
The research also addressed what happened to those who left. On average, they ended up in similar non-gentrifying neighborhoods in the same city. Their rent, income, employment, and commute were otherwise unaffected. They would have incurred some moving expenses and perhaps some intangible costs such as being forced to move farther away from existing friends and family.
3. Less-educated residents who remain in gentrifying neighborhoods end up better off
Gentrification typically raises concerns about increased rent. Yet if a set of swanky apartments are built in your neighborhood, average rent may rise — but that doesn’t mean yours will. It turns out low-income renters do not see any increase in their rent due to gentrification. Instead, increases stay on course with equivalent non-gentrifying neighborhoods in their city.
There’s more good news. Less-educated homeowners see an average rise in property values of $55,000, of which $15,000 is due to gentrification.
And, neighborhood poverty decreases, which benefits adults’ physical and mental health as well as children’s lifetime education and earnings. While the majority of original residents don’t stick around long enough to see those benefits, the effects on those who do are so large that there is still a significant reduction in poverty exposure to the “average original resident.”
Practical Application
Community development leaders often find themselves in a quandary: helping a run-down neighborhood improve often means higher-income people move in and many original residents leave. It’s hard to know whether to celebrate the change or lament it.
While this study confirms their instincts that the community changes, it also affirms there are net beneficial outcomes that should be maximized. Thus, they should consider the following approach:
- Help as many original residents as possible stay, preferably by building paths to home ownership while home values are still rising.
- Bridge relationships between new high-income arrivals and original residents. Welcome new arrivals and integrate them into efforts to build strong community bonds. This natural opportunity to build social capital may also help some of the originals decide (or be able) to stick around.
- When possible, connect departing residents with resources to assist their transition to another community. But remember that nine out of ten would have left even if gentrification didn’t occur.
- Be ready to pack up shop. You may wake up one day and realize your calling has migrated across town. Don’t be so tied to a place that you can’t follow the need. Celebrate what’s happened — and move on.
Conclusion
The conventional wisdom on gentrification appears to be wrong. The best evidence shows it forces relatively few people to move, has a largely neutral impact on those who do, and brings large positive benefits to those who stay. It is a powerful force that community developers shouldn’t block but channel to do the most good for the greatest number of people.
Read the Study
