Does the Market Value Value-Added? Evidence from Housing Prices After a Public Release of School and Teacher Value-Added
Value-added data are an increasingly common evaluation tool for schools and teachers. Many school districts have adopted these methods and released the results publicly. In this paper, we study the release of value-added data in Los Angeles by the Los Angeles Times newspaper to identify how measured value-added is capitalized into housing prices. This analysis is the first in the school valuation literature to examine property value responses to a value-added information shock, which is of interest as this measure is less correlated with demographics than typical school quality measures. Unique to this setting as well is the release of both school and teacher-level value-added data, which allows us to examine how property values respond to both types of information. Using a difference-in-differences methodology surrounding the release, we find that neither school nor teacher value-added scores are capitalized into home prices. Our results suggest that, despite the contentiousness following these data releases, homeowners do not consider value-added models as currently constructed to be a relevant school quality measure on the margin.
We would like to thank seminar participants at the AEA Annual Meetings, the APPAM Fall Meetings, CES-Ifo, Duke, Georgetown and the University of Michigan along with Julie Cullen, Susanna Loeb, Stephen Machin, Steven Rivkin, Guido Schwerdt, Gary Solon, and Kevin Stange for helpful comments and suggestions. We would also like to thank the Los Angeles County Tax Assessor's Office, the Los Angeles Times, the Los Angeles Unified School District, and Richard Buddin for providing us the data and for their assistance with the data. Finally, we would like to thank Margaret O'Rourke and Michael Naretta for excellent research assistance on this project. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Imberman, Scott A. & Lovenheim, Michael F., 2016. "Does the market value value-added? Evidence from housing prices after a public release of school and teacher value-added," Journal of Urban Economics, Elsevier, vol. 91(C), pages 104-121. citation courtesy of