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The discussion between Jem and Scout is at the end of chapter 23. The outcome of the trial has left the children reflective on the character of people. Jem has been thinking of Boo, and has figured out why he is a recluse,“I think I’m beginning to understand why Boo Radley’s stayed shut up . . . it’s because he wants to stay inside.” The harsh prejudices that the trial have brought to life have given Jem the perspective that hiding away from the ugliness is Boo's defense mechanism.
This declaration comes right at the end of chapter 23. After talking with Scout, who Aunt Alexandra spent much of the chapter trying to impress upon what it means to be a Finch, Jem comes to the conclusion that Maycomb has a caste system where people are ranked not just by money but also by familiar history, race, color, education, and so on. When Scout tries to make sense of this she declares that there is just one kind of folks, and this just plain old folks. This prompts Jem to state that he knows why Boo stays inside. We can infer that Jem means Boo stays inside to avoid all of the classification and discrimination in Maycomb. He can avoid it all by just staying shut up in his house.
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