Executive Summary

“Economic Connectedness” is the relationship between individuals of high and low socioeconomic status (or SES). Economic Connectedness is proven to foster upward mobility in low SES individuals, and is driven by two factors: friending bias, or the tendency to only friend those of similar SES, and exposure, the diversity in SES of people around you. Both of these factors can be controlled by policy that aims to increase economic connectedness and adapt itself to the communities it is impacting. This policy brief aims to recognize places where such policy can be implemented and what it would consist of.

Overview

Upward mobility, or the increase in socioeconomic status, is predicted by multiple factors. Some of the most commonly assumed factors for economic mobility include race, place of birth, and bodily ability. While all these considerations are certainly important, recent studies define the new champion, economic connectedness.

The article “Social Capital I: measurements and associations with economic mobility” published in August 2022 defines the concept of “economic connectedness,” or the relationships between individuals of differing SES (socio-economic status) as a powerful predictor of upward mobility. Its sequel study, “Social Capital II: determinants of economic connectedness” define the two factors that make up economic connectedness: friending bias, or the tendency for people of different SES’s to not befriend one another, and exposure, or the diversity of SES in the area.

The above figure compares a map of the United States measured in upward mobility and economic connectedness. It shows a distinct correlation between the two factors and solidifies economic connectedness’s relevance. 

This brief aims to use economic connectedness as a poverty solution to foster upward mobility across the low SES individuals. It will recommend actionable, regionally adaptable policy solutions whenever possible. 

Pointed Summary

• Economic connectedness is a powerful predictor of upward mobility, comprised of friending bias and exposure
• Policy can steer levels of both factors in the direction to increase economic connectedness
• Previous government-funded poverty solutions vary in success and do not target all needy individuals
• Policy based on economic connectedness is universal and regionally adaptable
• Economic connectedness may not be a panacea for poverty alleviation, but can be a step towards fostering upward mobility

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Relevance

Upward mobility and increased social capital have the power to uplift lower-SES individuals, and can be used as a poverty solution as well. Poverty has been defined by the United Nations as the #1 sustainable development goal to reach by 2030. Especially over the Covid-19 pandemic, the global poverty rate increased, setting poverty progress back three years on average, but 8-9 years in developing countries.

This is likely due to workers being laid off or having to take extra time off. The working poverty rate also in turn has declined over the COVID-19 pandemic, establishing COVID as a major setback.

Thus, poverty solutions are of the utmost importance now to get poverty progress back on track. Especially in the face of rising inflation rates, many families are becoming economically unstable.

unstable.

Inflation increases the cost of living and thus intensifies the issue of poverty. It decreases purchasing power as the cost of goods rises. Not only does it push more individuals into poverty, but it also limits the possibilities for those already suffering to get out. The issue worsens food insecurity and malnourishment, which are closely linked to poverty. As inflation increases, so will its devastating related issues.

  ffective poverty solutions are necessary and relevant now, especially post-COVID, in order to reach sustainable development goals.

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Current Stances

Stances on policy solutions for poverty in America tend to be polarized based on demographics and nuanced perspectives towards the issue at hand. The anti-poverty organization Circles USA explains that “​​a majority of Whites believed that government programs create dependency and encourage people to stay poor. People in poverty believe that government programs fail primarily because not enough money has been put into them. More affluent people than working-class people believe that government programs are badly designed.” However, the majority of recently registered voters support the SNAP food stamps program, according to research by the Johns Hopkins Center for a Livable Future. The article reads: “Among survey respondents, almost two-thirds (61 percent) said that they were opposed to reducing funding for SNAP, more commonly known as Food Stamps. Among those opposed, over 73 percent said that they were ‘strongly opposed’ to cuts.” 

As for the public’s stances on economic connectedness, there is a general consensus that the research has great policy implications and should be integrated into policy.

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Tried Policy

In the face of the COVID-19 pandemic, the United Nations have initiated the UN Framework for the immediate socio-economic response to COVID-19. Their plan aims to first protect the health crisis occurring and protect people through basic services and job protection. They would facilitate fiscal and financial stimulus and invest in community and social response.

Additionally, the controversial Build Back Better act aims to reduce the number of people living in poverty by improving quality of life and providing better opportunities for low-income individuals.

Government welfare programs including food stamps (now known as SNAP), Temporary Assistance for Needy Families (TANF), and the Medicaid and Children’s Health Insurance Program (CHIP) exist as a way for families in the United States to receive financial support. According to the Center on Budget and Policy Priorities, the SNAP program is linked to poverty reduction, better physical and mental health, reduced health care costs, and an overall better quality of living. The CHIP program shows similar positive benefits for children living in poverty.

The other major government program, TANF, however, is proven to be mildly helpful but not a huge success. Only 23 of every 100 families below the federally established poverty line receive TANF assistance, and those who do receive benefits that are insufficient to alleviate their poverty.

Many programs do have one flaw, however, in that they use a “poverty line” to determine qualifications for eligibility that are not always accurate. According to the Center for American Progress, “The calculation doesn’t take into account housing, transportation, child care, or medical costs.” It additionally does not take location into account, which is problematic because costs of living vary across the country. 

Many people in poverty are homeless, so federal housing programs are paramount in poverty solutions. According to the Coalition for the Homeless, “research and experience have overwhelmingly shown that investments in permanent housing are extraordinarily effective in reducing homelessness — as well as being cost-effective.” These programs give permanent housing to those in need and are more affordable long-term than temporary shelter, especially leveraged with the economic costs of poverty.

Government welfare services for poverty have varying levels of success, but those determined by the poverty line do not reach nearly enough families in need.

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Policy Problem

Stakeholders

The most prevalent stakeholder in the issue of poverty is people in poverty. They obviously have the most to gain and lose from poverty policy and should be kept at the forefront of poverty solutions.

The government, as the provider of funds for poverty alleviation policy and main administrator has a stake in the issue of poverty. Poverty is also economically harmful, as it decreases productivity and reduces GDP. It is thus in the government’s best interest to eradicate poverty, not just because of the humanitarianism behind it.

Many non-profit organizations dedicated to poverty alleviation have a stake in the issue. The international anti-poverty organization Oxfam, for example, advocates for economic empowerment, gender equality, climate legislation, and other root causes of poverty. Additionally, they take donations to fund the Global Emergency Fund, which allows for rapid response to threatening circumstances. These organizations invest time and money into the issue of poverty reduction and are a major stakeholder in its outcome.

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Risks of Indifference

As previously established, poverty takes away from economic productivity. Hunger and homelessness are also economically taxing, whereas social reform and policy solutions have been known to stimulate the economy.

Poverty additionally has numerous health deficits, including heart disease, cancer, mental illness, and infant mortality.

Poverty is a massive global issue. According to the United Nations report on Poverty, “The overwhelming majority of people living on less than $1.90 a day live in Southern Asia and sub-Saharan Africa and they account for about 70 per cent of the global total of extremely poor people.” The same report estimates that “By 2030, 167 million children will live in extreme poverty if the world doesn’t take action to improve health and education.”

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Nonpartisan Reasoning

 Poverty alleviation policy must have expansive reach, be easy to maintain, and adapt to regional differences in cost of living. It should avoid defining poverty by the “poverty line” and should reach as many Americans as possible. It would ideally allow one’s family to have long-term support once out of a program to maintain a better lifestyle. It must also be able to withstand emergency scenarios such as the Covid-19 pandemic.

Economic connectedness is a solution to poverty that impacts all, costs less than government welfare programs, and can be adapted to different regions. Its two factors, exposure, and friending bias, can be regulated in areas as needed. The solution provides tools for those in poverty to cultivate the tools necessary to foster upward mobility, creating no government dependency, as many criticize in government welfare programs. It is thus an excellent research-based tool for upward mobility.

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Policy Options

Integrating economic connectedness into poverty solutions is clearly a viable bipartisan solution. It can be integrated into many public spaces, most notably, schools and workplaces. 

One policy option that can increase the amount of exposure and class diversity in school settings is affirmative action. Affirmative action aims to desegregate schools and promote diversity which can increase exposure in an institution.

To decrease friending bias in an institution, research shows that proximity plays a key factor. Being in close proximity with those of different SES’s promotes interaction and relationships. A research article by PLOS One states, “Our findings demonstrate that a scalable light-touch intervention can affect face-to-face networks and foster diverse friendships in groups that already know each other, but they also highlight that transgressing boundaries, especially those defined by gender, remains an uphill battle.” The study found that people were still somewhat biased even if in close proximity to others, typically by gender or some other factor. However, proximity seems to have a net positive outcome.

Ways to increase proximity in school settings include strategic group placements, as exhibited by Berkeley High School. Berkeley High School split students up into diverse “hives” or groups within the school that would spend time with one another, potentially decreasing friending bias and nurturing closer cross-SES relationships.

To increase proximity and exposure in residential settings, housing mobility may be a viable option. Government subsidized housing is proven to be effective, so expanding that program first would be beneficial, as well as diversifying neighborhoods to include people of all SES. 

Social Capital II says that to increase economic connectedness in a space, the needs of all socioeconomic classes should be met in one place, fostering both exposure and proximity. The paper uses the example of lunchrooms: if paid lunch is available in one lunchroom and discounted/free lunch is offered in another, the institution is unintentionally segregating students. Thus, simple structural changes to ensure that options for all are consistently available can nurture economic connectedness.

    Additionally, the paper illuminates that creating programs designed to bridge the gap between socioeconomic classes (such as mentoring and internships) can help foster economic connectedness. Offering opportunities for people of different socioeconomic backgrounds to interact is key. A gym that strategically paired low-SES individuals with high-SES clients saw this drastic change. The founder, Jon Feinman, says, “Along the way, something unexpected happened. We had our paying clients – people paying our student trainers – visiting our students in jail when things went wrong. They were showing up in court to be a support. They started offering job opportunities to our students outside of the gym, and they paid for the children of our students to go to summer camp with their own children. The impact wasn’t and isn’t just on our students. It’s on our personal training clients.” Feinman’s program highlights the direct influence of economic connectedness on helping those in need, which can revolutionize poverty solutions.

   However, the first step to using any of these options as a poverty solution specifically is to ensure that people in poverty are receiving the benefits from it. Thus, these institutional policies might be best implemented in places like homeless shelters or food banks to reach those in need (see “Conclusions and Recommendations”). Or, previous steps need to be taken in order for those in poverty to be afforded the same opportunities as others (most notably a public education) to actually be impacted by economic connectedness programs.

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Conclusions and Recommendations

Economic connectedness is a powerful tool for upward mobility and can be adapted as a poverty solution using strategic implementation. All of the policy options presented in the previous section can foster economic mobility, however, to target the grueling issue of poverty, they must be initiated in special places for the most effective impact. For example, a program designed to foster cross-SES relationships and allow upward mobility should be implemented in a setting where it can reach those in poverty- for example, a shelter or food bank. Not all presented policy options have an adaptation to tackle an issue as big as poverty, for example, affirmative action. All of the presented solutions, however,  can increase diversity and impart upward mobility to deserving individuals.

The levels of friending bias and exposure by county, zip code, or school can be accessed at socialcapital.org. This website or other similar assessments should be utilized to determine what policy solutions are most effective in a given area. This brief finds that economic connectedness, if strategically implemented, is a powerful proven tool for upward mobility and is a useful poverty alleviation tool.

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Acknowledgement

The Institute for Youth in Policy wishes to acknowledge Gwen Singer, Sarah Zhang, Paul Kramer, Carlos Bindert and other contributors for developing and maintaining the Effective Discourse Department and associated Fellowship programming.

References

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2. Chetty, Raj, Matthew O. Jackson, Theresa Kuchler, Johannes Stroebel, Nathaniel Hendren, Robert B. Fluegge, Sara Gong, et al. “Social Capital II: Determinants of Economic Connectedness.” Nature 608, no. 7921 (2022): 122–34. https://doi.org/10.1038/s41586-022-04997-3. 
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