NCPA - National Center for Policy Analysis

School Spending Raises Property Values

April 8, 2003

Spending on education has direct effects on property values, as well as the quality of education, say economists. An analysis of school expenditures from 1980 to 1990 recently found:

  • Overall, a $1.00 increase in per pupil state aid increases aggregate housing values by about $20.00 per pupil.
  • Part of the added property value is due to lower local tax burdens, but most reflects increases in total per pupil district expenditures.
  • This indicates that potential residents value education expenditures.

The study also found that there is no evidence that school districts are overspending, but that "large school districts, and those areas with fewer homeowners and in areas in which residents are poor or less educated," are more likely to overspend.

Source: Linda Gorman, "School Spending Raises Property Values," NBER Digest, January 2003; based on Lisa Barrow and Cecilia Rouse, "Using Market Valuation to Assess Public School Spending," Working Paper No. 9054, July 2002, National Bureau of Economic Research.

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