Blacks and Hispanics with mid-to-high socioeconomic status often choose to live in neighborhoods that are below their means.
Or, as the study from researchers at the Federal Reserve Bank of Cleveland put it, have a lower socioeconomic status than they can afford.
Why?
Because they value the neighborhood’s cultural assets and proximity to relatives. Some would say they’re trading way better quantitatively better schools, lower crime rates, higher home values and more—all advantages that could compromise their children’s future earning potential and success.
This conundrum inspired NJCC board member Lyneir Richardson, an entrepreneur and professor currently on sabbatical from Rutgers Business School as a Brookings Metro Senior Fellow, and Brookings Metro Fellow Tracy Hadden Loh to do a deep dive on the topic, and the results are fascinating—and telling.
First, through basic math they found that 54% of residents in low-income census tracks have moderate or higher incomes, a finding that begged an even more compelling question:
Why aren’t investors maximizing the true economic potential of these neighborhoods with increased and appropriate real estate and business investments?
Richardson and Hadden’s conclusions are not only surprising but give us viable new paradigms for sustainable development.