IDEAS home Printed from https://ideas.repec.org/a/eee/juecon/v91y2016icp104-121.html
   My bibliography  Save this article

Does the market value value-added? Evidence from housing prices after a public release of school and teacher value-added

Author

Listed:
  • Imberman, Scott A.
  • Lovenheim, Michael F.

Abstract

Value-added data have become an increasingly common evaluation tool for schools and teachers. Many school districts have begun to adopt these methods and have released results publicly. In this paper, we use the unique public release of value-added data in Los Angeles to identify how this measure of school quality is capitalized into housing prices. Via difference-in-differences, we find no evidence of a response to either school or teacher value-added rank, even though school-zone boundary fixed-effects estimates indicate that test score levels are capitalized into home prices. Given ample evidence that this information was new to residents, widely dispersed, and easily available, our results suggest that people did not significantly value it on the margin. This has implications for the effectiveness of providing value-added information as a tool to help parents choose schools.

Suggested Citation

  • Imberman, Scott A. & Lovenheim, Michael F., 2016. "Does the market value value-added? Evidence from housing prices after a public release of school and teacher value-added," Journal of Urban Economics, Elsevier, vol. 91(C), pages 104-121.
    • Handle: RePEc:eee:juecon:v:91:y:2016:i:c:p:104-121
    DOI: 10.1016/j.jue.2015.06.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0094119015000352
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jue.2015.06.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, March.
    2. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 4, number 4, June.
    3. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(2), pages 577-599.
    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. 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.
    6. David Brasington & Donald R. Haurin, 2006. "Educational Outcomes and House Values: A Test of the value added Approach," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 245-268, May.
    7. 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, President and Fellows of Harvard College, vol. 125(1), pages 215-261.
    8. David M. Brasington, 1999. "Which Measures of School Quality Does the Housing Market Value?," Journal of Real Estate Research, American Real Estate Society, vol. 18(3), pages 395-414.
    9. Cassandra M. Guarino & Mark D. Reckase & Jeffrey M. Woolrdige, 2014. "Can Value-Added Measures of Teacher Performance Be Trusted?," Education Finance and Policy, MIT Press, vol. 10(1), pages 117-156, November.
    10. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers I: Evaluating Bias in Teacher Value-Added Estimates," American Economic Review, American Economic Association, vol. 104(9), pages 2593-2632, September.
    11. 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.
    12. Fack, Gabrielle & Grenet, Julien, 2010. "When do better schools raise housing prices? Evidence from Paris public and private schools," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 59-77, February.
    13. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    14. 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.
    15. Raj Chetty & John N. Friedman & Jonah E. Rockoff, 2014. "Measuring the Impacts of Teachers II: Teacher Value-Added and Student Outcomes in Adulthood," American Economic Review, American Economic Association, vol. 104(9), pages 2633-2679, September.
    16. Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 175-214.
    17. David N. Figlio & Maurice E. Lucas, 2004. "What's in a Grade? School Report Cards and the Housing Market," American Economic Review, American Economic Association, vol. 94(3), pages 591-604, June.
    18. Buddin, Richard, 2010. "How effective are Los Angeles elementary teachers and schools?," MPRA Paper 27366, University Library of Munich, Germany.
    19. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuities," Journal of Urban Economics, Elsevier, vol. 75(C), pages 15-28.
    20. Brian A. Jacob & Lars Lefgren, 2007. "What Do Parents Value in Education? An Empirical Investigation of Parents' Revealed Preferences for Teachers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1603-1637.
    21. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.
    22. 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.
    23. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuity," LSE Research Online Documents on Economics 45246, London School of Economics and Political Science, LSE Library.
    24. 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.
    25. 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, vol. 84(265), pages 193-206, June.
    26. Julie Berry Cullen & Brian A Jacob & Steven Levitt, 2006. "The Effect of School Choice on Participants: Evidence from Randomized Lotteries," Econometrica, Econometric Society, vol. 74(5), pages 1191-1230, September.
    27. Justine S. Hastings & Jeffrey M. Weinstein, 2008. "Information, School Choice, and Academic Achievement: Evidence from Two Experiments," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1373-1414.
    28. Thomas J. Kane & Stephanie K. Riegg & Douglas O. Staiger, 2006. "School Quality, Neighborhoods, and Housing Prices," American Law and Economics Review, Oxford University Press, vol. 8(2), pages 183-212.
    29. Mizala, Alejandra & Urquiola, Miguel, 2013. "School markets: The impact of information approximating schools' effectiveness," Journal of Development Economics, Elsevier, vol. 103(C), pages 313-335.
    30. Black, Sandra E. & Machin, Stephen, 2011. "Housing Valuations of School Performance," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 10, pages 485-519, Elsevier.
    31. Jonah E. Rockoff, 2004. "The Impact of Individual Teachers on Student Achievement: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 94(2), pages 247-252, May.
    32. Peter Leopold S. Bergman & Matthew J. Hill, 2015. "The Effects of Making Performance Information Public: Evidence from Los Angeles Teachers and a Regression Discontinuity Design," CESifo Working Paper Series 5383, CESifo.
    33. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 3, number 3, June.
    34. Jon H. Fiva & Lars J. Kirkebøen, 2011. "Information Shocks and the Dynamics of the Housing Market," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(3), pages 525-552, September.
    35. Stephen Gibbons & Stephen Machin, 2006. "Paying for Primary Schools: Admission Constraints, School Popularity or Congestion?," Economic Journal, Royal Economic Society, vol. 116(510), pages 77-92, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lovenheim, Michael F. & Walsh, Patrick, 2018. "Does choice increase information? Evidence from online school search behavior," Economics of Education Review, Elsevier, vol. 62(C), pages 91-103.
    2. Chan, Jimmy & Fang, Xian & Wang, Zhi & Zai, Xianhua & Zhang, Qinghua, 2020. "Valuing primary schools in urban China," Journal of Urban Economics, Elsevier, vol. 115(C).
    3. Thompson, Paul N., 2016. "School district and housing price responses to fiscal stress labels: Evidence from Ohio," Journal of Urban Economics, Elsevier, vol. 94(C), pages 54-72.
    4. Agarwal, Sumit & Rengarajan, Satyanarain & Sing, Tien Foo & Yang, Yang, 2016. "School allocation rules and housing prices: A quasi-experiment with school relocation events in Singapore," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 42-56.
    5. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    6. Margaret Brehm & Scott A. Imberman & Michael Naretta, 2017. "Capitalization of Charter Schools into Residential Property Values," Education Finance and Policy, MIT Press, vol. 12(1), pages 1-27, Winter.
    7. Gibbons, Stephen & Machin, Stephen & Silva, Olmo, 2013. "Valuing school quality using boundary discontinuities," Journal of Urban Economics, Elsevier, vol. 75(C), pages 15-28.
    8. Oskari Harjunen & Mika Kortelainen & Tuukka Saarimaa, 2018. "Best Education Money Can Buy? Capitalization of School Quality in Finland," CESifo Economic Studies, CESifo Group, vol. 64(2), pages 150-175.
    9. Melser, Daniel & Moallemi, Morteza & Kim, Jun Sung, 2021. "Preferences for single-sex schools: Evidence from the housing market," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 710-726.
    10. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.
    11. Kang Mo Koo & Jerry Liang, 2021. "The Effect of Bilingual Education on Housing Price-a Case Study of Bilingual School Conversion," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 629-664, May.
    12. Depro, Brooks & Rouse, Kathryn, 2015. "The effect of multi-track year-round academic calendars on property values: Evidence from district imposed school calendar conversions," Economics of Education Review, Elsevier, vol. 49(C), pages 157-171.
    13. Firpo, Sergio & Ponczek, Vladimir & Possebom, Vítor Augusto, 2014. "Private Education Market, Information on Test Scores and Tuition Practices," IZA Discussion Papers 8476, Institute of Labor Economics (IZA).
    14. Hinnerich, Björn Tyrefors & Vlachos, Jonas, 2017. "The impact of upper-secondary voucher school attendance on student achievement. Swedish evidence using external and internal evaluations," Labour Economics, Elsevier, vol. 47(C), pages 1-14.
    15. Yi Huang & Sandy Dall’erba, 2021. "Does Proximity to School Still Matter Once Access to Your Preferred School Zone Has Already Been Secured?," The Journal of Real Estate Finance and Economics, Springer, vol. 62(4), pages 548-577, May.
    16. Pope, Nolan G., 2019. "The effect of teacher ratings on teacher performance," Journal of Public Economics, Elsevier, vol. 172(C), pages 84-110.
    17. Muñoz-Morales, Juan & Singh, Ruchi, 2023. "Do school shootings erode property values?," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    18. Fack, Gabrielle & Grenet, Julien, 2010. "When do better schools raise housing prices? Evidence from Paris public and private schools," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 59-77, February.
    19. Geoffrey K. Turnbull & Velma Zahirovic-Herbert & Minrong Zheng, 2018. "Uncertain School Quality and House Prices: Theory and Empirical Evidence," The Journal of Real Estate Finance and Economics, Springer, vol. 57(2), pages 167-191, August.
    20. Crocker H. Liu & Patrick S. Smith, 2023. "School quality as a catalyst for bidding wars and new housing development," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(4), pages 785-818, July.

    More about this item

    Keywords

    Value-added; Housing prices; School quality capitalization; Education;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:91:y:2016:i:c:p:104-121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622905 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.