Valuing Primary Schools

Parents of young children are preoccupied with getting their children into good primary schools. If you have children who are approaching primary school age, then conversation inevitably comes round to this topic. Politicians and the media discuss the issue frequently. Government policy has, at least in principle, made parental preference the key factor in primary school admissions. In practice, demand for places in schools that perform well outstrips the number of places available. Constraints on class sizes mean that it is no longer possible to increases school size to accommodate excess demand. As a result, places must be rationed on the basis of other criteria – most importantly residential proximity. One of the few ways parents can increase the chances of admission to school of their choice is to move as close as possible to it. Indeed, we know of lots of anecdotal evidence to suggest that parents are prepared to move to try to secure admission to a good school, and that they pay a high premium for this privilege. Although widely recognised and researched in the US academic arena, this issue has received much less attention in Britain, despite the popular interest. This paper fills this gap. We measure the price premium attracted by observably better schools, using property price data from the Government Land Registry and primary school performance tables from the Department of Education and Skills. This sample gives us near-universal coverage of property transactions and school performance measures in England from 1996 to 1999. Our approach is to estimate how property prices change from one neighbourhood to the next, and over time, as primary school performance changes. We can place a common-sense interpretation on the change in household expenditure on property that proximity to better schools generates: it is the value, in monetary terms, that a household places on improvements in school performance. This interpretation has a sound theoretical basis, and the technique has been used over many years for valuing environmental goods and the physical attributes of property. Our main results show that households pay between 3.1 percent and 8.8 percent on property prices for each 10 percentage point improvement in the performance score of local primary schools. This score is the proportion of pupils attaining Level 4 and above in the age-11, Key Stage 2 tests, as appears in the publicly available school league tables. We believe that our estimates in the lower …