How Much Do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality

14 Pages Posted: 5 Jun 2008

See all articles by Ian Davidoff

Ian Davidoff

International Monetary Fund (IMF)

Andrew Leigh

Australian House of Representatives Parliament House; Centre for Applied Macroeconomic Analysis, ANU; IZA

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Abstract

This paper investigates the relationship between housing prices and the quality of public schools in the Australian Capital Territory. To disentangle the effects of schools and other neighbourhood characteristics on the value of residential properties, we compare sale prices of homes on either side of high school attendance boundaries. We find that a 5 percentage point increase in test scores (approximately 1 SD) is associated with a 3.5 per cent increase in house prices. Our result is in line with private school tuition costs, and accords with prior research from the UK and the USA. Estimating the effect of school quality on house prices provides a possible measure of the extent to which parents value better educational outcomes.

Suggested Citation

Davidoff, Ian and Leigh, Andrew, How Much Do Public Schools Really Cost? Estimating the Relationship between House Prices and School Quality. Economic Record, Vol. 84, Issue 265, pp. 193-206, June 2008, Available at SSRN: https://ssrn.com/abstract=1140884 or http://dx.doi.org/10.1111/j.1475-4932.2008.00462.x

Ian Davidoff (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Andrew Leigh

Australian House of Representatives Parliament House ( email )

Canberra, 2600
Australia

Centre for Applied Macroeconomic Analysis, ANU ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

IZA ( email )

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