An efficiency case for equity-based school priorities

Many school districts operate “school choice" or “open enrollment" programs that give parents a choice of school. The popular schools in these districts are often oversubscribed, so districts must decide which applicants receive priority at these schools. Typically, districts give priority to students who live close to these schools or allocate by random lottery. However, to provide more equitable access to popular schools and to reduce school segregation, some districts prioritize students based on socio-economic status (e.g., favoring students from less-affluent neighborhoods). This paper shows that, despite their effects on transportation costs, these equity-based priorities can increase efficiency in the sense of raising aggregate welfare. They do this by facilitating better matches of students to schools.