A unified framework for measuring preferences for schools and neighborhoods
Repository Usage Stats
This paper develops a framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous residential choice model, addressing the endogeneity of school and neighborhood characteristics. 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 1 percent more in house prices - substantially lower than previous estimates - when the average performance of the local school increases by 5 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 percent black 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, with households preferring to self-segregate on the basis of both race and education. © 2007 by The University of Chicago. All rights reserved.
Published Version (Please cite this version)10.1086/522381
Publication InfoBayer, P; Ferreira, F; & McMillan, R (2007). A unified framework for measuring preferences for schools and neighborhoods. Journal of Political Economy, 115(4). pp. 588-638. 10.1086/522381. Retrieved from https://hdl.handle.net/10161/2014.
This is constructed from limited available data and may be imprecise. To cite this article, please review & use the official citation provided by the journal.
More InfoShow full item record
Gilhuly Family Distinguished Professor in Economics
Bayer's research focuses on wide range of subjects including racial inequality and segregation, social interactions, housing markets, education, and criminal justice. His most recent work has been published in the Quarterly Journal of Economics, American Economic Review, Econometrica, and the Review of Financial Studies. He is currently working on projects that examine jury representation and its consequences, the intergenerational consequences of residential and school segregation, neighborhood