A Unified Framework for Measuring Preferences for Schools and Neighborhoods

Patrick Bayer, Fernando Ferreira and Robert McMillan

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper develops a comprehensive framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous model of residential choice to address the endogeneity of school and neighborhood attributes. 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 one percent more in house prices – substantially lower than previous estimates – when the average performance of the local school increases by five 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 race 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: in particular, we find that households prefer to selfsegregate on the basis of both race and education.

Pages: 51 pages
Date: 2007-10
References: Add references at CitEc
Citations: View citations in EconPapers (641)

Downloads: (external link)
https://www2.census.gov/ces/wp/2007/CES-WP-07-27.pdf First version, 2007 (application/pdf)

Related works:
Journal Article: A Unified Framework for Measuring Preferences for Schools and Neighborhoods (2007)
Working Paper: A Unified Framework for Measuring Preferences for Schools and Neighborhoods (2007)
Working Paper: A Unified Framework for Measuring Preferences for Schools and Neighborhoods (2003)
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:cen:wpaper:07-27

Access Statistics for this paper

More papers in Working Papers from U.S. Census Bureau, Center for Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dawn Anderson ().