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Study: Charter Schools Raise Nearby Home Values by Thousands of Dollars



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One of the most consistent results found in the education literature is that school choice leads to high levels of satisfaction among parents. Researchers normally measure parental satisfaction with simple surveys, but a new paper by Robert Shapiro and Kevin Hassett offers a more rigorous test: Are parents willing to pay a premium to live in an area with more school options?

The answer appears to be yes. Shapiro and Hassett found that building an additional charter school in a given New York City ZIP code is associated one year later with about a 4 percent increase in home prices in that area. The one-year lag is built into the model to account for potential reverse causation — i.e., neighborhood gentrification spurring demand for more charter schools.

Of course, we should be cautious about drawing strong conclusions before more studies address this question, using different locations and time periods. And I agree with the authors that their model, which treats the effect of new charter schools as linear — meaning that going from one charter to two has the same housing price effect as going from, say, five to six — may conceal some additional lessons, including whether the price effect is due to charter status per se rather than the nearness of the new school. These would be interesting issues to tackle in a follow-up study.

Putting a monetary value on charter schools, as Shapiro and Hassett have done, is a line of research that school-choice advocates should embrace and build upon. It’s especially useful when confronting the argument that taxpayer money is being “wasted” on private vouchers and charter schools because they achieve no better test results than the public system.

In my view, quibbling about the benefits of school choice found in evaluations of the programs isn’t the right defense of them. The better response is to de-emphasize test scores and instead cite studies of what parents want. Parents have heterogeneous preferences for the types of schools their children attend, and only extensive school choice is likely to satisfy them. Based on Shapiro and Hassett’s work, it appears that parents will pay a premium to live in an area that gives them that choice.



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