Are all Homeowners Willing to Pay for Better Schools? ─ Evidence from a Finite Mixture Model Approach

《Are all Homeowners Willing to Pay for Better Schools? ─ Evidence from a Finite Mixture Model Approach》

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关键字: Home price premium;Heterogeneity;Finite mixture model;School quality;D12;I25;L10;R21

作者单位: College of Business Administration, Northern New Mexico CollegeEspañolaUSA;Department of EconomicsEast Carolina UniversityGreenvilleUSA

摘要: School quality indicators such as student test scores have been shown to be capitalized into the value of local homes. The presence of households with different preferences for education implies that the implicit price of improvements in school quality might vary even within a region. In this paper, we employ a finite mixture model (FMM) to capture unobserved heterogeneity in household preferences. Using school quality and residential property sales data from Pitt County, North Carolina, we find evidence of two subpopulations of houses, where the prices for one group are virtually invariant to school quality. Consistent with recent research by Davis et al. (2017) these results indicate that heterogeneous valuation of educational quality by households with different socio-economic backgrounds should be taken into consideration when devising policies targeted at the local level.