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Paying for good neighbours: estimating the value of an implied educated community

By Stephen Gibbons

Abstract

By definition, spillovers across households in residential communities mean that people incur costs from living in neighbourhoods where a high proportion of households suffer deprivation, regardless of their own economic circumstances. To verify the existence of intracommunity spillovers, this paper shows that home-owners in England and Wales are prepared to pay a substantial premium to avoid educationally poor neighbourhoods. An increase of 1 per cent in the proportion of higher-educated residents in a community, relative to the regional mean, increases prices by 0.24 per cent. One interpretation of this educational elasticity is that it estimates the social benefits of education in the local community. A hedonic approach is used, paying careful attention to the endogeneity of neighbourhood characteristics in a property price model

Topics: G Geography (General)
Publisher: SAGE
Year: 2003
DOI identifier: 10.1080/0042098032000065317
OAI identifier: oai:eprints.lse.ac.uk:19296
Provided by: LSE Research Online
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