Alan Blinder is the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University. In the 1990s, he served in President Clinton's Council of Economic Advisers and then as Vice Chairman of the Board of Governors of the Federal Reserve System. Currently a Visiting Scholar at the Russell Sage Foundation, Dr. Blinder is writing a historical analysis of the 2007-08 financial crisis and the Great Recession.

Q: What is your overall assessment of what economists know about the financial sector? Which area needs more research? Did economics, as Larry Summers recently said, fail to keep with the fact that "asset prices show large volatility that don’t always reflect fundamentals"?

A: I don’t think Summers is right. Many of us had viewed asset prices as excessively volatile for a long, long time—dating back at least to Bob Shiller’s famous papers of 30 years ago.

Jens Ludwig, an economist at the University of Chicago, studies social policy, particularly in the areas of urban poverty, education, crime, and housing policy. A former RSF Visiting Scholar, Ludwig was the project director for a final assessment of the Moving to Opportunity for Fair Housing Demonstration Program, which was partly funded by the Russell Sage Foundation.

Q: When the interim results of the MTO program were released a few years ago, many social scientists and journalists were surprised by the modest nature of its impact. Some reporters even argued the data proved neighborhood effects don’t matter all that much. Do you think such a pessimistic outlook is warranted?

A: Some social scientists have reacted to the MTO results as providing evidence that "neighborhood effects don't matter much." A different reaction people have had to the MTO findings is to focus on the fact that the difference in average neighborhood environments for families assigned to the mobility treatment groups and the control group have been converging over time, and have dismissed the value of the MTO experiment as not being very informative because the demonstration involved a "weak treatment." I think that both of these sorts of reactions miss some of the key lessons that come out of MTO.

More from Jens Ludwig
• RSF Review: Does Head Start Work?
• RSF Review: RSF-Funded Study: Moving to Low-Poverty Neighborhoods Improves Women's Health
• Report: Moving to Opportunity Final Impacts Evaluation

First, it is certainly possible that moving families from very disadvantaged inner-city neighborhoods into neighborhoods that were much more affluent than the destination areas into which most MTO treatment group families moved—very affluent places like, say, the Gold Coast in Chicago, or the Upper East Side in New York City—could have more pronounced impacts on family outcomes than what we saw in MTO. But MTO is about as intensive a housing policy intervention as one could imagine in the current American political climate—in fact, MTO is probably much more intensive than anything any elected official would ever consider really doing. So what we've learned from MTO is that the range of neighborhood conditions that could be modified by feasible social policies doesn't necessarily have dramatic impacts on every outcome we care about, at least for the sort of very disadvantaged household of the type that enrolled in MTO.

The Journal of Marketing Research released a special issue in November that provides new insights on how to improve consumers' financial decisions. The issue, funded by the Russell Sage and Alfred P. Sloan Foundations, features 14 articles by leading scholars from a range of disciplines, including finance, psychology, marketing and behavioral science.

RSF and Consumer Finance
• Online Forum: Ideas for the Consumer Finance Protection Bureau
• Behavioral Economics and Consumer Finance Working Group
• Featured RSF Author: Sendhil Mullainathan
• RSF Book: Do Emotions Help or Hurt Decision Making?

"There are so many academic disciplines that have something to say about consumer financial decision making," said John G. Lynch Jr., the issue’s editor-in-chief. "The objective here was to ask all these people from different fields to be a part of the conversation."

In the wake of the financial crisis, many have expressed concerns about the delivery of consumer financial services and the structure of current regulations. Recent research has also provided abundant evidence of systemic errors in the ways consumers handle their finances.

"Consumers are often poorly informed and susceptible to making serious errors that have great personal and societal consequences," Lynch writes in the issue’s introduction.

Related RSF Resources
• Ken Jameson: Utah's Ambivalent Policy Toward Integrating Immigrants
• An Interview with Hirokazu Yoshikawa: Immigrants Raising Children
• Krista M. Perreira: Southern Immigrant Academic and Civic Adaptation: Latino Youth in North Carolina
• Book: New Faces in New Places: The Changing Geography of American Immigration
• Book: New Destinations: Mexican Immigration in the United States

Prolonging the unauthorized status of illegal immigrants in the United States limits the education of their children, many of who are U.S. citizens, a new RSF-funded report has found. As nearly half of the children of Mexican immigrants in the United States -- nearly 4 million children -- have an unauthorized parent, the report's authors warn that not providing pathways for legalization could create a new underclass.

The study, part of RSF's U.S. 2010 Census project, addresses a controversial issue at the heart of the country's immigration debate: should we offer pathways to legalization for unauthorized immigrants currently in the United States? In analyzing the question, the report, entitled "Unauthorized Immigrant Parents: Do Their Migration Histories Limit their Children's Education," seeks to understand how much legalization matters and how unauthorized status affects children's educational attainment. Here are some of the report's major findings: