CREAT: Census Research Exploration and Analysis Tool

A Unified Framework for Measuring Preferences for Schools and Neighborhoods

October 2007

Working Paper Number:

CES-07-27

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.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
economist, black, metropolitan, discriminatory, segregation, educated, housing, residential, socioeconomic, neighborhood, home, amenity, schooling, residence, reside, neighbor, house, rent, residential segregation, renter, homeowner, income neighborhoods, school

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:
National Science Foundation, Ordinary Least Squares, National Bureau of Economic Research, Decennial Census, Chicago Census Research Data Center, Special Sworn Status, Regression Discontinuity Design

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