This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

A Unified Framework for Measuring Preferences for Schools and Neighborhoods

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Patrick Bayer
Fernando Ferreira
Robert McMillan

Additional information is available for the following registered author(s):

Abstract

This paper develops a comprehensive framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous model of residential choice to address the endogeneity of school and neighborhood attributes. The model is estimated using restricted-access Census data from a large metropolitan area, yielding a number of new results. First, households are willing to pay less than one percent more in house prices – substantially lower than previous estimates – when the average performance of the local school increases by five percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood race and housing prices is due entirely to the fact that blacks live in unobservably lower quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors: in particular, we find that households prefer to selfsegregate on the basis of both race and education.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://webserver01.ces.census.gov/index.php/ces/1.00/cespapers?down_key=101800
File Format: application/pdf
File Function: First version, 2007
Download Restriction: no

Publisher Info
Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 07-27.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 51 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:cen:wpaper:07-27

Contact details of provider:
Web page: http://www.ces.census.gov

For technical questions regarding this item, or to correct its listing, contact: (Sang V. Nguyen).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416. [Downloadable!] (restricted)
  2. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2004. "Tiebout Sorting, Social Multipliers and the Demand for School Quality," NBER Working Papers 10871, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Epple, Dennis & Filimon, Radu & Romer, Thomas, 1993. "Existence of voting and housing equilibrium in a system of communities with property taxes," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 585-610, November. [Downloadable!] (restricted)
  4. Thomas. J. Nechyba, 1997. "Existence of equilibrium and stratification in local and hierarchical Tiebout economies with property taxes and voting," Economic Theory, Springer, vol. 10(2), pages 277-304. [Downloadable!] (restricted)
    Other versions:
  5. Quigley, John M., 1985. "Consumer choice of dwelling, neighborhood and public services," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 41-63, February. [Downloadable!] (restricted)
  6. Patrick Bajari & Matthew E. Kahn, 2005. "Estimating Housing Demand With an Application to Explaining Racial Segregation in Cities," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 20-33, January. [Downloadable!] (restricted)
    Other versions:
  7. Raquel Fernandez & Richard Rogerson, 2003. "Equity and Resources: An Analysis of Education Finance Systems," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 858-897, August. [Downloadable!] (restricted)
    Other versions:
  8. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb.. [Downloadable!] (restricted)
  9. Cropper, Maureen L, et al, 1993. "Valuing Product Attributes Using Single Market Data: A Comparison of Hedonic and Discrete Choice Approaches," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 225-32, May. [Downloadable!] (restricted)
  10. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December. [Downloadable!] (restricted)
  11. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March. [Downloadable!] (restricted)
  12. Barrow, Lisa, 2002. "School choice through relocation: evidence from the Washington, D.C. area," Journal of Public Economics, Elsevier, vol. 86(2), pages 155-189, November. [Downloadable!] (restricted)
    Other versions:
  13. Nechyba, Thomas J, 1999. " School Finance Induced Migration and Stratification Patterns: The Impact of Private School Vouchers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 5-50. [Downloadable!] (restricted)
  14. Nechyba, Thomas J. & Strauss, Robert P., 1998. "Community choice and local public services: A discrete choice approach," Regional Science and Urban Economics, Elsevier, vol. 28(1), pages 51-73, January. [Downloadable!] (restricted)
    Other versions:
  15. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S60-S109, February. [Downloadable!] (restricted)
    Other versions:
  16. David M. Cutler & Edward L. Glaeser & Jacob L. Vigdor, 1999. "The Rise and Decline of the American Ghetto," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 455-506, June. [Downloadable!] (restricted)
    Other versions:
  17. Jesse M. Rothstein, 2006. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Incentive Effects of Competition among Jurisdictions," American Economic Review, American Economic Association, vol. 96(4), pages 1333-1350, September.
  18. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February. [Downloadable!] (restricted)
  19. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "An Equilibrium Model of Sorting in an Urban Housing Market," NBER Working Papers 10865, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  20. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February. [Downloadable!] (restricted)
  21. Heckman, James J. & Matzkin, Rosa & Nesheim, Lars, 2003. "Simulation and Estimation of Hedonic Models," IZA Discussion Papers 843, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  22. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March. [Downloadable!] (restricted)
  23. Benabou, Roland, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 619-52, August. [Downloadable!] (restricted)
    Other versions:
  24. Steve Berry & Oliver B. Linton & Ariel Pakes, 2004. "Limit Theorems for Estimating the Parameters of Differentiated Product Demand Systems," Review of Economic Studies, Blackwell Publishing, vol. 71, pages 613-654, 07. [Downloadable!] (restricted)
    Other versions:
  25. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation Of Elementary Education," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 577-599, May. [Downloadable!] (restricted)
    Other versions:
  26. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July. [Downloadable!] (restricted)
  27. Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Abbigail Chiodo & Rubén Hernández-Murillo & Michael T. Owyang, 2005. "Nonlinear hedonics and the search for school district quality," Working Papers 2003-039, Federal Reserve Bank of St. Louis. [Downloadable!]
    Other versions:
  2. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2004. "Tiebout Sorting, Social Multipliers and the Demand for School Quality," NBER Working Papers 10871, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "An Equilibrium Model of Sorting in an Urban Housing Market," NBER Working Papers 10865, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Yannis M. Ioannides & Giulio Zanella, 2008. "Searching for the Best Neighborhood: Mobility and Social Interactions," Department of Economics University of Siena 533, Department of Economics, University of Siena. [Downloadable!]
  5. Jon H. Fiva & Lars J. Kirkebøen, 2008. "Does the Housing Market React to New Information on School Quality?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  6. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "Residential Segregation in General Equilibrium," Working Papers 885, Economic Growth Center, Yale University. [Downloadable!]
    Other versions:
  7. Jesse Rothstein, 2004. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Effects of Inter-district Competition," NBER Working Papers 10666, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. François Ortalo-Magné & Sven Rady, 2005. "Heterogeneity within Communities: A Stochastic Model with Tenure Choice," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  9. David Card & Alexandre Mas & Jesse Rothstein, 2007. "Tipping and the Dynamics of Segregation," NBER Working Papers 13052, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. John B. Horowitz & Stanley R. Keil & Lee C. Spector, 2007. "Do Charter Schools Affect Property Values?," Working Papers 200707, Ball State University, Department of Economics, revised Nov 2007. [Downloadable!]
  11. Theodore M. Crone, 2006. "Capitalization of the quality of local public schools: what do home buyers value?," Working Papers 06-15, Federal Reserve Bank of Philadelphia. [Downloadable!]
  12. Albert Saiz & Susan Wachter, 2006. "Immigration and the Neighborhood," IZA Discussion Papers 2503, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  13. Eric J. Brunner & Jennifer Imazeki, 2006. "Tiebout Choice and the Voucher," Working papers 2006-10, University of Connecticut, Department of Economics. [Downloadable!]
  14. Patacchini, Eleonora & Zenou, Yves, 2008. "Ethnic Networks and Employment Outcomes," IZA Discussion Papers 3331, Institute for the Study of Labor (IZA). [Downloadable!]
  15. Patrick Bayer & Robert McMillan, 2005. "Racial Sorting and Neighborhood Quality," NBER Working Papers 11813, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Eric J. Brunner & Jon Sonstelie, 2006. "California's School Finance Reform: An Experiment in Fiscal Federalism," Working papers 2006-09, University of Connecticut, Department of Economics. [Downloadable!]
  17. Patrick Bayer & Robert McMillan, 2005. "Choice and Competition in Local Education Markets," NBER Working Papers 11802, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Statistics
Access and download statistics

Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".

This page was last updated on 2008-7-20.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.