A hierarchical estimation of school quality capitalisation in house prices in Orange County, California

Sylvia Y He

Urban Studies, 2017, vol. 54, issue 14, 3337-3359

Abstract: Bidding for proximity to a good school can lead to a pattern of spatial distribution in which households with similar socio-economic status and willingness-to-pay for school quality cluster together. In this paper, we adopt a three-level hierarchical framework using residential house prices in Orange County, California, in 2001 and 2011, to estimate how much homebuyers pay for school quality. Our data show that, during this period, the Academic Performance Index (API) scores of elementary schools in Orange County increased by 16.4% yet converged while the house prices rose by 50.3%. The variation in house prices attributed to school district boundaries was at the same level in both years, but the variation in the API scores shrank. Using a hierarchical random effects model, our estimation results show that, on average, a 10% increase in the API raised the house prices by 1.9% in 2001 and by 3.4% in 2011. Ten years apart, a one standard deviation increase in school quality in the sample increased house prices by a surprisingly similar percentage: 2.7% in 2001, and 2.6% in 2011, respectively. Our findings also reveal that, in both years, there was a significant spatial heterogeneity of school premiums in house prices across school districts. This research provides a spatial understanding of the education capitalisation effects and sheds light on the effectiveness of urban education policy.

Keywords: capitalisation; hedonic analysis; hierarchical model; house prices; school quality; spatial heterogeneity; 资本化; ç‰¹å¾ åˆ†æž; 等级模型; 房价; å­¦æ ¡è´¨é‡; 空间异质性 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0042098016669473 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:54:y:2017:i:14:p:3337-3359

DOI: 10.1177/0042098016669473

Access Statistics for this article

More articles in Urban Studies from Urban Studies Journal Limited
Bibliographic data for series maintained by SAGE Publications ().