GOOD SCHOOLS AND HOUSE PRICES

 

Plenty of evidence that good schools affect local house prices

Paying for  primary education through housing is still a cheaper option than paying for private education.

Comment

We all know that if there is a good school in an area  that the house prices rise in that area , often significantly.The influence of school quality on house prices also feeds back into school admissions – the so-called ‘selection by mortgage’ of the richest and brightest children into the best schools. (with its corollary- the most disadvantaged pupils tend to end up in the worst schools). Rather smug middle class parents can  then say they support state schools.

This process ,according to Stephen Gibbons of CEP,   serves to reinforce school segregation and inequalities in performance and achievement, and reduces social mobility across the generations. (the latter, remember,  a  key government priority).

Once we know that the quality of state schools raises house prices, (which we do- ‘A link between better schools and higher house prices is one of the most stable empirical regularities worldwide’-CEP) an obvious question is how these costs compare with the costs of a private education.  Is it better to pay a premium on your house price or to  fork out fees for your childs  primary education -ie which  option has a better return?

Research evidence from  Gibbons of CEP shows that paying for state education in England through housing is still a cheaper option than paying for private education. But the gap is not as big as you might think.  Gibbons says ‘Our calculations imply that getting a child into a state primary that delivers in the top 10% of achievement (assuming you could find such a school) would set you back about £26,000 at 2006 prices. That’s about £3,000 a year if you decided to pay that amount off over the seven years of primary schooling on a 5% mortgage interest rate (Gibbons et al, 2012). By comparison, seven years of private schooling at the time would have cost an average of £3,800 per term or nearly £80,000. So, state primary schools still look like a good deal for parents.’

If there is a moral issue here, which is a moot point , I dont believe for  a second that those parents who invest in property to secure a good education for their child  are in a better position, morally, than those who  pay fees (which is more transparent after all) as  both  seek to secure the same outcome, through investment .

Note

According to Stephen Gibbons, based on his research, parents ‟ judgement of school quality is dominated by school average test scores, over  and above other school characteristics. This is true for parents from different  backgrounds and with children of all abilities.” So  parents really dont spend too much time  working out whether the school has a happy learning environment , promotes  well -being or is a community hub. . Small wonder then that teachers worry so much about test scores and  are encouraged to teach to the test.

Other Sources on this issue:

Sandra Black (1999) ‘Do Better Schools Matter? Parental Valuation of Elementary Education’, Quarterly Journal of Economics 114: 578-99. Sandra Black and Stephen Machin (2010) ‘Housing Valuations of School Performance’, in Handbook of the Economics of Education, Volume 3 edited by Eric Hanushek, Stephen Machin and Ludger Woessmann, North Holland. Gabrielle Fack and Julien Grenet (2010)

‘When Do Better Schools Raise Housing Prices? Evidence from Paris Public and Private Schools’, Journal of Public Economics 94(1-2): 59-77 (earlier version available here:

http://cee.lse.ac.uk/ceedps/ceedp119.pdf).

Stephen Gibbons and Stephen Machin (2003) ‘Valuing English Primary Schools’, Journal of Urban Economics 53: 197-219 (earlier version available here:

http://cee.lse.ac.uk/ceedps/ceedp15.pdf)

Steve Gibbons is research director of the Spatial Economics Research Centre (SERC), a reader in economic geography at LSE and a research associate in CEP’s education and skills programme.

http://cep.lse.ac.uk/pubs/download/cp374.pdf

 

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