Throughout the last decade, many states around the country have begun making public student test scores or other evaluative measures of school quality available to the general public. The most recent trends in state policies under consideration, already enacted in Florida and a n major component of George W. Bush's education platform, involve the assignment of letter grades to rate school quality. Because school quality is one of a group of local public goods purchased along with a house, one would anticipate that additional information about school quality would capitalize into real estate values. This paper takes the first look at the role that this type of added information plays in the capitalization of school quality measures. We use rich student test score and housing value data from a medium-sized Florida school district, one of the nation's 200 largest, to directly investigate this link. Using data on repeat sales of properties before and after the assignment of school letter grades, we find significant evidence that arbitrary distinctions embedded in school report cards lead to major housing price effects.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
8019.
Length: Date of creation: Nov 2000 Date of revision: Handle: RePEc:nbr:nberwo:8019
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Find related papers by JEL classification: I2 - Health, Education, and Welfare - - Education H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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