Introduction to Heterogeneity Series: Understanding Causes and Implications of Various Inequalities
Economic analysis is often geared toward understanding the average effects of a given policy or program. Likewise, economic policies frequently target the average person or firm. While averages are undoubtedly useful reference points for researchers and policymakers, they don’t tell the whole story: it is vital to understand how the effects of economic trends and government policies vary across geographic, demographic, and socioeconomic boundaries. It is also important to assess the underlying causes of the various inequalities we observe around us, whether they are related to income, health, or any other set of indicators. Starting today, we are running a series of six blog posts (apart from this introductory post), each of which focuses on an interesting case of heterogeneity in the United States.
The map below shows geographic patterns of race, income, and life expectancy in the contiguous United States. Despite clear concentrations, there are visually stark differences across locations by race, income, and health. These patterns don’t only reflect geographic variations, of course; the data may very well reflect differences in outcomes and policy effects by race, income, and neighborhood.
This series of blog posts seeks to document these types of inequalities and analyze their underlying causes. Here is a brief look at each post in the series:
1. “Some Places Are Much More Unequal than Others” (October 7)
2. “Job Ladders and Careers” (October 8)
3. “Who Borrows for College—and Who Repays?” (October 9)
4. “Is Free College the Answer to Student Debt Woes? Studying the Heterogenous Impacts of Merit Aid Programs” (October 10)
5. “Does U.S. Health Inequality Reflect Income Inequality—or Something Else?” (October 15)
6. “Optimists and Pessimists in the Housing Market” (October 16)
Overall, this series underscores the importance of understanding the differential impacts of policy across different groups and neighborhoods, with heterogeneity seen in almost any indicator one can think of in the United States. It is equally important to understand the underlying causes of these inequalities in economic outcomes, beliefs, and other indicators. The posts in this series address both of these challenges. Examining heterogeneous distributions of income, health outcomes, economic beliefs, and debt incidence gives us a much more thorough understanding of policy and practice than a mere investigation of average effects would ever yield. Policies based on insights from such heterogeneity analysis promise to reach disparate sections of our society more effectively than policies targeted at the average person.
How to cite this post:
Rajashri Chakrabarti and William Nober, “Introduction to Heterogeneity Series: Understanding Causes and Implications of Various Inequalities,” Federal Reserve Bank of New York Liberty Street Economics, October 7, 2019, https://libertystreeteconomics.newyorkfed.org/2019/10/introduction-to-heterogeneity-series-understanding-causes-and-implications-of-various-inequalities.html.
Additional heterogeneity posts on Liberty Street Economics.
Heterogeneity: A Multi-Part Research Series
Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.