Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment

66 Pages Posted: 17 Sep 2018 Last revised: 16 May 2022

See all articles by Sarah Miller

Sarah Miller

University of Michigan at Ann Arbor

Cindy Soo

University of Michigan, Stephen M. Ross School of Business

Date Written: September 2018

Abstract

This paper isolates the causal impact of neighborhood environment on credit outcomes of low-income borrowers by analyzing the participants of the Moving to Opportunity (MTO) experiment. MTO was a unique, large-scale experiment that offered families vouchers to move to better neighborhoods via randomized lottery. We find higher credit scores and use among those required to move to the lowest poverty areas as young children. For those who moved as adults, we find that better neighborhoods lead to a reduction of overdue debts and delinquencies, but only among those given unrestricted neighborhood choice.

Suggested Citation

Miller, Sarah and Soo, Cindy, Do Neighborhoods Affect Credit Market Decisions of Low-Income Borrowers? Evidence from the Moving to Opportunity Experiment (September 2018). NBER Working Paper No. w25023, Available at SSRN: https://ssrn.com/abstract=3250540

Sarah Miller (Contact Author)

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

HOME PAGE: http://www-personal.umich.edu/~mille/

Cindy Soo

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street, Ross School of Business
University of Michigan
ANN ARBOR, MI MI 48104
United States

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