A Neighborhood Education

Apr 25, 2012 • Behavioral Economics, Demand, Supply, and Markets, Households, Thinking Economically • 188 Views    No Comments

By Mira Korber, guest blogger.

You probably know that where you live says quite a lot about the public education you receive. However, living in a geographical zone that touts quality schooling may cost more than you realize.

A new Brookings study shows a very large “price gap” relationship between expensive housing, low-cost housing, and education. For example, in the US’ most prominent 100 metropolitan areas, housing costs proved 2.4% greater than in other locations. (That’s $11k per year). Additionally, homes are clustered economically; when assessing high-income versus low-income housing, a disparity in standardized testing scores becomes evident.

Quoting the study directly: “Northeastern metro areas with relatively high levels of economic segregation exhibit the highest school test-score gaps between low-income students and other students.”

So, what does this mean for the cost of living near good public education? It actually may be cheaper to live in a low income neighborhood and send your kids to private school than moving to an expensive residential zone. Here are the numbers: in the NYC region, it costs $16k more per year to live near high-scoring schools than low-scoring ones. According to the NY Times, average private Catholic school tuition is $6k.

The Bottom Line? High-cost homes bring us to negative externalities (undesirable impacts on a third party due to a private transaction). Just as a factory near a once-clean stream contaminates the water source, expensive housing can negatively impact the surrounding communities. High housing costs are directly related to quality education; therefore, soaring prices prevent — negatively affect — the less affluent third party from accessing better schools.

Related sources:

The main source material for this post can be found here. The link to the Brookings study cited above. And a very interesting NYU study about the correlation between public housing and lower standardized test scores.

 

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