Paying for Good Neighbours: Estimating the Value of an Implied Educated Community

Stephen Gibbons

Urban Studies, 2003, vol. 40, issue 4, 809-833

Abstract: By definition, spillovers across households in residential communities mean that people incur costs from living in neighbourhoods where a high proportion of households suffer deprivation, regardless of their own economic circumstances. To verify the existence of intracommunity spillovers, this paper shows that home-owners in England and Wales are prepared to pay a substantial premium to avoid educationally poor neighbourhoods. An increase of 1 per cent in the proportion of higher-educated residents in a community, relative to the regional mean, increases prices by 0.24 per cent. One interpretation of this educational elasticity is that it estimates the social benefits of education in the local community. A hedonic approach is used, paying careful attention to the endogeneity of neighbourhood characteristics in a property price model.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:40:y:2003:i:4:p:809-833

DOI: 10.1080/0042098032000065317

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