April 15, 2008, 7:02 pm

Hope Street Tool Seeks to Help People See Potential

Hope Street Group - a nonprofit organization whose goal is to create policies that enhance economic opportunity - is offering a new way to measure the road to prosperity.

Hope Street, organized in 2003, has created an online Economic Opportunity Index [2] that seeks to measure the extent to which Americans - by race and gender - have opportunities available to achieve the American dream, and seek to identify the factors most important to improving opportunity in the future.

The most important category is human capital development, which includes education levels, incarceration rates and the divorce rate. Macroeconomic growth and inflation are less potent in the index because they don't vary much across gender and race and therefore don't cause as much of a variation in economic opportunity.

The goal is to "get at some of the underlying factors that drive opportunity ... and create differences in opportunity between different groups of the population," said Andrew Tilton, the group's policy director and a senior economist at Goldman Sachs & Co. "If you can gain some confidence on what those implications are then I think policy applications flow more freely."

Economic opportunity is defined as "expected lifetime real income, given effort." This means it is the amount of economic resources individuals have available over the course of their lifetime as long as they choose to take advantage of those resources. The group chose to look at a lifetime span because, for example, "I could be a Ph.D. graduate student in engineering, and I might be barely scraping by financially but obviously my economic opportunity is very good," Tilton said.

Hope Street's model is different from existing economic indicators because it doesn't look at the economic outcomes, but rather the potential. "I'd like to think it's significantly more forward looking," Tilton said.

The online tool allows users to display opportunity by race and gender and to change the weight of categories to see how opportunity can change if there are changes in education or unemployment.

The nonprofit organization hopes that the index will be viewed as a "politically neutral" tool because a bipartisan working group helped to create it, said Monique Nadeau, the group's executive director.

"Ultimately what we want this to be is a focal point for debate on what drives opportunity," Tilton added.

Hope Street receives funding from the William and Flora Hewlett Foundation [3], which is dedicated to solving social and environmental problems, and the Omidyar Network [4], whose goal is to help create opportunities for people to improve their quality of life. Those donations funded the index along with thousands of hours of volunteer work from professionals like economists. -David Wessel