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Does the Market Value Value-Added? Evidence from Housing Prices After a Public Release of School and Teacher Value-Added

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  • Scott A. Imberman
  • Michael F. Lovenheim

Abstract

Value-added data are an increasingly common evaluation tool for schools and teachers. Many school districts have adopted these methods and released the results publicly. In this paper, we study the release of value-added data in Los Angeles by the Los Angeles Times newspaper to identify how measured value-added is capitalized into housing prices. This analysis is the first in the school valuation literature to examine property value responses to a value-added information shock, which is of interest as this measure is less correlated with demographics than typical school quality measures. Unique to this setting as well is the release of both school and teacher-level value-added data, which allows us to examine how property values respond to both types of information. Using a difference-in-differences methodology surrounding the release, we find that neither school nor teacher value-added scores are capitalized into home prices. Our results suggest that, despite the contentiousness following these data releases, homeowners do not consider value-added models as currently constructed to be a relevant school quality measure on the margin.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19157.

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Date of creation: Jun 2013
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Handle: RePEc:nbr:nberwo:19157

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  1. Gabrielle Fack & Julien Grenet, 2010. "When do Better Schools Raise Housing Prices? Evidence from Paris Public and Private Schools," CEE Discussion Papers, Centre for the Economics of Education, LSE 0119, Centre for the Economics of Education, LSE.
  2. Ian Davidoff & Andrew Leigh, 2008. "How Much do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 84(265), pages 193-206, 06.
  3. Dills Angela K., 2004. "Do Parents Value Changes in Test Scores? High Stakes Testing in Texas," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-34, August.
  4. Buddin, Richard, 2011. "Measuring teacher and school effectiveness at improving student achievement in Los Angeles elementary schools," MPRA Paper 31963, University Library of Munich, Germany.
  5. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2011. "The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood," NBER Working Papers 17699, National Bureau of Economic Research, Inc.
  6. Jon H. Fiva & Lars J. Kirkebøen, 2011. "Information Shocks and the Dynamics of the Housing Market," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 113(3), pages 525-552, 09.
  7. Brian A. Jacob & Lars Lefgren, 2005. "What Do Parents Value in Education? An Empirical Investigation of Parents' Revealed Preferences for Teachers," NBER Working Papers 11494, National Bureau of Economic Research, Inc.
  8. Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(1), pages 175-214, February.
  9. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation Of Elementary Education," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(2), pages 577-599, May.
  10. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2010. "The Value of School Facility Investments: Evidence from a Dynamic Regression Discontinuity Design," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(1), pages 215-261, February.
  11. Stephen Gibbons & Stephen Machin & Olmo Silva, 2012. "Valuing School Quality Using Boundary Discontinuities," CEE Discussion Papers, Centre for the Economics of Education, LSE 0132, Centre for the Economics of Education, LSE.
  12. Guarino, Cassandra & Reckase, Mark D. & Wooldridge, Jeffrey M., 2012. "Can Value-Added Measures of Teacher Performance Be Trusted?," IZA Discussion Papers 6602, Institute for the Study of Labor (IZA).
  13. Buddin, Richard, 2010. "How effective are Los Angeles elementary teachers and schools?," MPRA Paper 27366, University Library of Munich, Germany.
  14. Downes, Thomas A. & Zabel, Jeffrey E., 2002. "The impact of school characteristics on house prices: Chicago 1987-1991," Journal of Urban Economics, Elsevier, vol. 52(1), pages 1-25, July.
  15. Thomas J. Kane & Douglas O. Staiger, 2008. "Estimating Teacher Impacts on Student Achievement: An Experimental Evaluation," NBER Working Papers 14607, National Bureau of Economic Research, Inc.
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