The American Enterprise Institute has published a report titled “The American Dream in 2020: How to Strengthen It”. It is definitely a good read. The report focuses on ways to leverage public policy to create increased economic opportunity. It shares a wide range of ideas, but focuses on local level policies and community initiatives. In my opinion, this publication is a particularly important read for elected officials and economic development professionals.
The AEI Report offers a good example of how to leverage public policy in place making. Another great example is the federal Opportunity Zones program. This initiative provides federal grants to encourage job creation and attract private investment in impoverished areas. This program has been negatively impacted by the COVID-19 pandemic, but investors remain optimistic as the economy continues to recover.
As a reminder, the three broad primary levers for place making are public policy, public programs and infrastructure investment. All three can be used to better enable residents to achieve their American Dream if evaluated through that lens.
The limitation of the AEI Report is it focuses on upward mobility and treats it as synonymous with the American Dream. This is of course an over simplification and unintentionally misleading. Just as neither an education nor a house with a white picket fence are synonymous with the American Dream, neither is upward mobility.
Xavier University has studied the American Dream in depth and developed the first (and only) statistically validated description of what the Dream actually is. Let’s take a quick look at their findings.
First, the American Dream is actually a compilation of individual dreams. Your dream isn’t necessarily the same as my dream. And that is okay because the American Dream is a reflection of what we uniquely want from life.
Second, the American Dream is multidimensional. It cannot be characterized as just one thing. In fact, the Xavier University researchers found the American Dream is comprised of 35 dimensions including: a) economic factors such as home ownership, financial security and job characteristics; b) personal well-being factors such as family and friends, leisure and happiness; c) societal factors such as trust in government, justice, civic participation; d) diversity factors; and e) physical environment. Consequently, the Dream is holistic in nature. If you take a moment to contemplate that learning, it makes perfect sense. How could an education without a job, a house with an unaffordable mortgage, or money without friends ever be seen as the American Dream? You see why these over simplistic definitions fail?
Xavier University did an ANOVA analysis of the 35 dimension data. The analysis found the following demographic categories have statistically significant effects on the degree to which people felt they were achieving their American Dream (listed in order of highest significance to lowest significance):
- Salary (higher salaries, higher ADCI scores).
- Homeowner (homeowners have higher scores than renters).
- Employment (employed people have higher ADCI scores; there is no difference between part-time or full-time employment).
- Marital Status (people who are married or living with a partner have the highest scores, and those who are separated have the lowest scores).
- Education (more education, higher ADCI scores).
But, even though these four dimensions had statistically significant effects, they had a low effect size. Meaning, all of the above effects only account for about 3 percent of the total variation in the degree to which people felt they were achieving their Dream. That means even though we can say a higher salary is associated with a higher perception of achieving your Dream, it doesn’t make that big of a difference. This finding strongly reinforces the multi-dimensional nature of the American Dream. It can’t simply be described as upward mobility.
Third, while almost everybody’s American Dream can be statistically described by the 35 dimensions, the importance we individually assign to any single dimension varies. The reality is our personal relationship with the Dream changes over time. What you dreamed about while single and in school can be very different than what you dream about as a parent or grandparent. Our individual American Dream evolves based on our unique circumstances.
If everybody has a personal version of their American Dream, then what good is an aggregate description? Great question! An aggregate description can help 1) elected officials and economic development professionals develop place making strategies aimed at better enabling their constituents to achieve their American Dream; and 2) individuals make better life choices that can improve the odds of realizing their personal version of the American Dream.
The fundamental questions I will leave you with are 1) what are the barriers to achieving my American Dream [use the 35 dimensions as a guide to identify them], and 2) how can I overcome those barriers?
The action step I encourage you to take is to apply what you learn by answering those questions when voting. Only elect local, state and national politicians you feel will help better enable you to achieve your American Dream. By taking that approach to voting you increase the probability of achieving your American Dream.
I hope you take the time to read the AEI Report and to reflect on what the American Dream means to you.