IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/11-34.html
   My bibliography  Save this paper

Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance

Author

Listed:
  • Susan Dynarski
  • Jonathan Gruber
  • Danielle Li

Abstract

The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. We exploit a unique and previously undocumented source of variation in private school tuition to estimate this key parameter. A majority of Catholic elementary schools offer discounts to families that enroll more than one child in the school in a given year. Catholic school tuition costs therefore depend upon the interaction of the number and spacing of a family�s children with the pricing policies of the local school. This within-neighborhood variation in tuition prices allows us to control for unobserved determinants of demand with a fine set of geographic fixed effects, while still identifying the price parameter. We use data from 3700 Catholic schools, matched to restricted Census data that identifies geography at the block level. We find that a standard deviation decrease in tuition prices increases the probability that a family will send its children to private school by one-half percentage point, which translates into an elasticity of Catholic school attendance with respect to tuition costs of -0.19. Our subgroup results suggest that a voucher program would disproportionately induce into private schools those who, along observable dimensions, are unlike those who currently attend private school.

Suggested Citation

  • Susan Dynarski & Jonathan Gruber & Danielle Li, 2011. "Cheaper by the Dozen: Using Sibling Discounts at Catholic Schools to Estimate the Price Elasticity of Private School Attendance," Working Papers 11-34, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:11-34
    as

    Download full text from publisher

    File URL: https://www2.census.gov/ces/wp/2011/CES-WP-11-34.pdf
    File Function: First version, 2011
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Downes, Thomas A & Greenstein, Shane M, 2002. "Entry into the Schooling Market: How Is the Behaviour of Private Suppliers Influenced by Public Sector Decisions?," Bulletin of Economic Research, Wiley Blackwell, vol. 54(4), pages 341-371, October.
    2. Gruber, Jonathan, 2004. "Pay or pray? The impact of charitable subsidies on religious attendance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2635-2655, December.
    3. Lankford, Hamilton & Wyckoff, James, 1992. "Primary and secondary school choice among public and religious alternatives," Economics of Education Review, Elsevier, vol. 11(4), pages 317-337, December.
    4. Figlio, David N. & Rouse, Cecilia Elena, 2006. "Do accountability and voucher threats improve low-performing schools?," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 239-255, January.
    5. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    6. Justine S. Hastings & Thomas J. Kane & Douglas O. Staiger, 2005. "Parental Preferences and School Competition: Evidence from a Public School Choice Program," NBER Working Papers 11805, National Bureau of Economic Research, Inc.
    7. Downes, Thomas A. & Zabel, Jeffrey E., 2002. "The impact of school characteristics on house prices: Chicago 1987-1991," Journal of Urban Economics, Elsevier, vol. 52(1), pages 1-25, July.
    8. Cecilia Elena Rouse, 1998. "Private School Vouchers and Student Achievement: An Evaluation of the Milwaukee Parental Choice Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 553-602.
    9. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "An Evaluation of Instrumental Variable Strategies for Estimating the Effects of Catholic Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 791-821.
    10. Neal, Derek, 1997. "The Effects of Catholic Secondary Schooling on Educational Achievement," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 98-123, January.
    11. Jonathan Gruber, 2004. "Pay or Pray? The Impact of Charitable Subsidies on Religious Attendance," NBER Working Papers 10374, National Bureau of Economic Research, Inc.
    12. William G. Howell & Patrick J. Wolf & David E. Campbell & Paul E. Peterson, 2002. "School vouchers and academic performance: results from three randomized field trials," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 191-217.
    13. Gruber Jonathan H, 2005. "Religious Market Structure, Religious Participation, and Outcomes: Is Religion Good for You?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-32, September.
    14. Dennis Epple & Richard Romano, 2008. "Educational Vouchers And Cream Skimming," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1395-1435, November.
    15. Lankford, Hamilton & Wyckoff, James, 2001. "Who Would Be Left Behind by Enhanced Private School Choice?," Journal of Urban Economics, Elsevier, vol. 50(2), pages 288-312, September.
    16. Stiglitz, J. E., 1974. "The demand for education in public and private school systems," Journal of Public Economics, Elsevier, vol. 3(4), pages 349-385, November.
    17. Derek Neal, 2002. "How Vouchers Could Change the Market for Education," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 25-44, Fall.
    18. Keeler, Andrew & Kriesel, Warren, 1994. "School Choice In Rural Georgia: An Empirical Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 526-534, December.
    19. Peltzman, Sam, 1973. "The Effect of Government Subsidies-in-Kind on Private Expenditures: The Case of Higher Education," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 1-27, Jan.-Feb..
    20. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    21. repec:mpr:mprres:3180 is not listed on IDEAS
    22. Thomas J. Kane & Stephanie K. Riegg & Douglas O. Staiger, 2006. "School Quality, Neighborhoods, and Housing Prices," American Law and Economics Review, American Law and Economics Association, vol. 8(2), pages 183-212.
    23. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-971, Nov./Dec..
    24. Thomas A. Downes & Shane M. Greenstein, 1996. "Understanding the Supply Decisions of Nonprofits: Modelling the Location of Private Schools," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 365-390, Summer.
    25. Buddin, Richard J. & Cordes, Joseph J. & Kirby, Sheila Nataraj, 1998. "School Choice in California: Who Chooses Private Schools?," Journal of Urban Economics, Elsevier, vol. 44(1), pages 110-134, July.
    26. Daniel P. Mayer & Paul E. Peterson & David E. Myers & Christina Clark Tuttle & William G. Howell, 2002. "School Choice in New York City After Three Years: An Evaluation of the School Choice Scholarships Program," Mathematica Policy Research Reports bd29adb569094778a5981be0e, Mathematica Policy Research.
    27. repec:mpr:mprres:3181 is not listed on IDEAS
    28. Figlio, David N. & Stone, Joe A., 2001. "Can Public Policy Affect Private School Cream Skimming?," Journal of Urban Economics, Elsevier, vol. 49(2), pages 240-266, March.
    29. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    30. Jonathan Gruber, 2005. "Religious Market Structure, Religious Participation, and Outcomes: Is Religion Good for You?," NBER Working Papers 11377, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Price elasticity of school attendance
      by Kevin Denny in Geary Behaviour Centre on 2009-11-01 14:18:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew A. Samwick, 2013. "Donating the Voucher: An Alternative Tax Treatment of Private School Enrollment," NBER Chapters, in: Tax Policy and the Economy, Volume 27, pages 125-160, National Bureau of Economic Research, Inc.
    2. Pedro Carneiro & Jishnu Das & Hugo Reis, 2024. "The Value of Private Schools: Evidence from Pakistan," The Review of Economics and Statistics, MIT Press, vol. 106(5), pages 1301-1318, September.
    3. Marianne Simonsen & Lars Skipper & Niels Skipper, 2016. "Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(2), pages 320-337, March.
    4. Tue Gørgens & Chris Ryan & Guochang Zhao, 2020. "Private School Usage in Australia 1975–2010: Evidence from the Household Expenditure Surveys," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 53(2), pages 198-213, June.
    5. Michael Dinerstein & Troy D. Smith, 2021. "Quantifying the Supply Response of Private Schools to Public Policies," American Economic Review, American Economic Association, vol. 111(10), pages 3376-3417, October.
    6. Figlio, David & Hart, Cassandra M.D. & Metzger, Molly, 2010. "Who uses a means-tested scholarship, and what do they choose?," Economics of Education Review, Elsevier, vol. 29(2), pages 301-317, April.
    7. Michela Tincani, 2014. "School Vouchers and the Joint Sorting of Students and Teachers," Working Papers 2014-012, Human Capital and Economic Opportunity Working Group.
    8. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    9. Hungerman, Daniel M. & Rinz, Kevin, 2016. "Where does voucher funding go? How large-scale subsidy programs affect private-school revenue, enrollment, and prices," Journal of Public Economics, Elsevier, vol. 136(C), pages 62-85.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arthuer Bauer et Rohen d'AIGLEPIERRE, 2017. "Explaining the Development of Private Education: the Effect of Public Expenditure on Education," Working Paper 237926bf-0d6f-4396-b47e-9, Agence française de développement.
    2. Danny Cohen-Zada & William Sander, 2006. "Private School Choice: The Effects Of Religion And Religiosity," Working Papers 0601, Ben-Gurion University of the Negev, Department of Economics.
    3. Cohen-Zada, Danny & Sander, William, 2008. "Religion, religiosity and private school choice: Implications for estimating the effectiveness of private schools," Journal of Urban Economics, Elsevier, vol. 64(1), pages 85-100, July.
    4. Dehejia, Rajeev & DeLeire, Thomas & Luttmer, Erzo F.P., 2007. "Insuring consumption and happiness through religious organizations," Journal of Public Economics, Elsevier, vol. 91(1-2), pages 259-279, February.
    5. Lai, Fang & Sadoulet, Elisabeth & de Janvry, Alain, 2009. "The adverse effects of parents' school selection errors on academic achievement: Evidence from the Beijing open enrollment program," Economics of Education Review, Elsevier, vol. 28(4), pages 485-496, August.
    6. Jean-Michel Plassard & Nhu Tran Thi Thanh, 2009. "Liberté de choix des élèves et concurrence des établissements : un survey de l'analyse du pilotage des systèmes éducatifs par les quasi-marchés," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 99-130.
    7. Brunner, Eric J. & Imazeki, Jennifer, 2008. "Tiebout choice and universal school vouchers," Journal of Urban Economics, Elsevier, vol. 63(1), pages 253-279, January.
    8. Cohen-Zada, Danny & Justman, Moshe, 2005. "The religious factor in private education," Journal of Urban Economics, Elsevier, vol. 57(3), pages 391-418, May.
    9. Marianne P. Bitler & Thurston Domina & Emily K. Penner & Hilary W. Hoynes, 2013. "Distributional Effects of a School Voucher Program: Evidence from New York City," NBER Working Papers 19271, National Bureau of Economic Research, Inc.
    10. Cohen-Zada, Danny, 2006. "Preserving religious identity through education: Economic analysis and evidence from the US," Journal of Urban Economics, Elsevier, vol. 60(3), pages 372-398, November.
    11. Song, Yang, 2019. "Sorting, school performance and quality: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 238-261.
    12. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    13. Ludger Wößmann, 2006. "Bildungspolitische Lehren aus den internationalen Schülertests: Wettbewerb, Autonomie und externe Leistungsüberprüfung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(3), pages 417-444, August.
    14. S. Brock Blomberg & Thomas DeLeire & Gregory D. Hess, 2006. "The (After) Life-Cycle Theory of Religious Contributions," CESifo Working Paper Series 1854, CESifo.
    15. Rajeev Dehejia & Thomas DeLeire & Erzo F. P. Luttmer & Josh Mitchell, 2007. "The Role of Religious and Social Organizations in the Lives of Disadvantaged Youth," NBER Chapters, in: The Problems of Disadvantaged Youth: An Economic Perspective, pages 237-274, National Bureau of Economic Research, Inc.
    16. Joshua Angrist & Eric Bettinger & Erik Bloom & Elizabeth King & Michael Kremer, 2002. "Vouchers for Private Schooling in Colombia: Evidence from a Randomized Natural Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1535-1558, December.
    17. McKendrick, Andrew & Walker, Ian, 2020. "The Role of Faith and Faith Schooling in Educational, Economic, and Faith Outcomes," IZA Discussion Papers 13192, Institute of Labor Economics (IZA).
    18. Sriya Iyer, 2016. "The New Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 395-441, June.
    19. Goldhaber, Dan D. & Brewer, Dominic J. & Eide, Eric R. & Rees, Daniel I., 1999. "Testing for sample selection in the Milwaukee school choice experiment," Economics of Education Review, Elsevier, vol. 18(2), pages 259-267, April.
    20. Meghir, Costas & Rivkin, Steven, 2011. "Econometric Methods for Research in Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 1, pages 1-87, Elsevier.

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:11-34. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.