Do Better Schools Matter? Parental Valuation of Elementary Education

TLDR

Understanding the value of better schools is essential for evaluating many school reforms. The study aims to estimate parents’ willingness to pay for improved school quality by using house price differences. By comparing houses on district boundaries that differ only in elementary school attended, the study isolates the effect of school quality on house prices. Parents value a 5% rise in test scores at about a 2.5% premium in house prices, a result that holds across sensitivity tests.

Abstract

The evaluation of numerous school reforms requires an understanding of the value of better schools. Given the difficulty of calculating the relationship between school quality and student outcomes, I turn to another method and use house prices to infer the value parents place on school quality. I look within school districts at houses located on attendance district boundaries; houses then differ only by the elementary school the child attends. I thereby effectively remove the variation in neighborhoods, taxes, and school spending. I find that parents are willing to pay 2.5 percent more for a 5 percent increase in test scores. This finding is robust to a number of sensitivity checks.