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A unified framework for measuring preferences for schools and neighborhoods

dc.contributor.author Bayer, Patrick
dc.contributor.author Ferreira, F
dc.contributor.author McMillan, Robert
dc.date.accessioned 2010-03-09T15:41:22Z
dc.date.issued 2007-10-23
dc.identifier.issn 0022-3808
dc.identifier.uri https://hdl.handle.net/10161/2014
dc.description.abstract 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.
dc.format.mimetype application/pdf
dc.language.iso en_US
dc.relation.ispartof Journal of Political Economy
dc.relation.isversionof 10.1086/522381
dc.title A unified framework for measuring preferences for schools and neighborhoods
dc.type Journal article
pubs.begin-page 588
pubs.end-page 638
pubs.issue 4
pubs.organisational-group Duke
pubs.organisational-group Duke Population Research Center
pubs.organisational-group Duke Population Research Institute
pubs.organisational-group Economics
pubs.organisational-group Sanford School of Public Policy
pubs.organisational-group Trinity College of Arts & Sciences
pubs.publication-status Published
pubs.volume 115


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