This paper develops a framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous residential choice model, addressing the endogeneity of school and neighborhood characteristics. The model is estimated using restrictedaccess Census data from a large metropolitan area, yielding a number preferences for schools and neighborhoods 589 of new results. First, households are willing to pay less than 1 percent more in house prices-substantially lower than previous estimateswhen the average performance of the local school increases by 5 percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood percent black and housing prices is due entirely to the fact that blacks live in unobservably lower-quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors, with households preferring to self-segregate on the basis of both race and education.

This paper develops a framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous residential choice model, addressing the endogeneity of school and neighborhood characteristics. The model is estimated using restricted-access Census data from a large metropolitan area, yielding a number of new results. First, households are willing to pay less than 1 percent more in house prices-substantially lower than previous estimates-when the average performance of the local school increases by 5 percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood percent black and housing prices is due entirely to the fact that blacks live in unobservably lower-quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors, with households preferring to self-segregate on the basis of both race and education. Disciplines Real EstateThis journal article is available at ScholarlyCommons: http://repository.upenn.edu/real-estate_papers/24 588 [ Journal of Political Economy, 2007, vol. 115, no. A Unified Framework for Measuring Preferences for Schools and Neighborhoods Patrick Bayer Duke University and National Bureau of Economic Research Fernando Ferreira University of Pennsylvania Robert McMillan University of Toronto and National Bureau of Economic ResearchThis paper develops a framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous residential choice model, addressing the endogeneity of school and neighborhood characteristics. The model is estimated using restrictedaccess Census data from a large metropolitan area, yielding a number preferences for schools and neighborhoods 589 of new results. First, households are willing to pay less than 1 percent more in house prices-substantially lower than previous estimateswhen the average performance of the local school increases by 5 percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood percent black and housing prices is due entirely to the fact that blacks live in unobservably lower-quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors, with households preferring to self-segregate on the basis of both race and education.

Despite extensive public infrastructure spending, surprisingly little is known about its economic return. In this paper, we estimate the value of school facility investments using housing markets: standard models of local public goods imply that school districts should spend up to the point where marginal increases would have zero effect on local housing prices. Our research design isolates exogenous variation in investments by comparing school districts where referenda on bond issues targeted to fund capital expenditures passed and failed by narrow margins. We extend this traditional regression discontinuity approach to identify the dynamic treatment effects of bond authorization on local housing prices, student achievement, and district composition. Our results indicate that California school districts underinvest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness to pay on the part of marginal homebuyers of $1.50 or more for each $1 of capital spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the impact on test scores appears to explain only a small portion of the total housing price effect. This paper estimates the impact of investments in school facilities using the housing market. We draw on the unique characteristics of California's system of school finance, comparing districts in which school bond referenda passed or failed by narrow margins. We extend the traditional regression discontinuity (RD) design to account for the dynamic nature of bond referenda: the probability of future proposals depends on the outcomes of past elections. Using our "dynamic RD" estimator, we first show that bond funds stick exclusively in the capital account, with no effect on current expenditures or other revenues. We can thus interpret the effect of referendum passage as reflecting the impact of improvements in the quality of school facilities. We find that passing a referendum causes immediate, sizable increases in home prices, implying a willingness-to-pay on the part of marginal homebuyers of $1.50 or more for each dollar per pupil of facility spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners. While we find suggestive evidence that bond passage leads to increases in student test scores, this effect cannot explain more than a small portion of the housing price effect, indicating that bond passage leads to improvements in other dimensions of school output (e.g., safety) that may be not captured by test scores. Disciplines Economics | Real Estate

We examine whether partisan political differences have important effects on policy outcomes at the local level using a new panel data set of mayoral elections in the United States. Applying a regression discontinuity design to deal with the endogeneity of the mayor's party, we find that party labels do not affect the size of government, the allocation of spending or crime rates, even though there is a large political advantage to incumbency in terms of the probability of winning the next election. The absence of a strong partisan impact on policy in American cities, which is in stark contrast to results at the state and federal levels of government, appears due to certain features of the urban environment associated with Tiebout sorting. In particular, there is a relatively high degree of household homogeneity at the local level that appears to provide the proper incentives for local politicians to be able to credibly commit to moderation and discourages strategic extremism.

Using two decades of American Housing Survey data from 1985-2005, we estimate the impact on household mobility of owners having negative equity in their homes and of rising mortgage interest rates. We find that both lead to lower, not higher, mobility rates over time. The impacts are economically large, with mobility being almost 50 percent lower for owners with negative equity in their homes. This does not imply that current worries about defaults and owners having to move from their homes are entirely misplaced. It does indicate that, in the past, the lock-in effects of these two factors were dominant over time. Our results cannot simply be extrapolated to the future, but policy makers should begin to consider the consequences of lock-in and reduced household mobility because they are quite different from those associated with default and higher mobility.

Age based school entry laws force parents and educators to consider an important tradeoff: though students who are the youngest in their school cohort typically have poorer academic performance, on average, they have slightly higher educational attainment. In this paper we document that for a large cohort of California and Texas natives the school entry laws increased educational attainment of students who enter school early, but also lowered their academic performance while in school. However, we find no evidence that the age at which children enter school effects job market outcomes, such as wages or the probability of employment. This suggests that the net effect on adult labor market outcomes of the increased educational attainment and poorer academic performance is close to zero.

Several findings relate the hippocampal formation to the behavioural consequences of stress. It contains a high concentration of corticoid receptors and undergoes plastic modifications, including decreased neurogenesis and cellular remodelling, following stress exposure. Various major neurotransmitter systems in the hippocampus are involved in these effects. Serotonin (5-HT) seems to exert a protective role in the hippocampus and attenuates the behavioural consequences of stress by activating 5-HT1A receptors in this structure. These effects may mediate the therapeutic actions of several antidepressants. The role of noradrenaline is less clear and possibly depends on the specific hippocampal region (dorsal vs. ventral). The deleterious modifications induced in the hippocampus by stress might involve a decrease in neurotrophic factors such as brain derived neurotrophic factor (BDNF) following glutamate N-methyl-D-aspartate (NMDA) receptor activation. In addition to glutamate, nitric oxide (NO) could also be related to these effects. Systemic and intra-hippocampal administration of nitric oxide synthase (NOS) inhibitors attenuates stress-induced behavioural consequences. The challenge for the future will be to integrate results related to these different neurotransmitter systems in a unifying theory about the role of the hippocampus in mood regulation, depressive disorder and antidepressant effects.

Are cities as politically polarized as states and countries? "No" is the answer from our regression discontinuity design analysis, which shows that whether the mayor is a Democrat or a Republican does not affect the size of city government, the allocation of local public spending, or crime rates. However, there is a substantial incumbent effect for mayors. We investigate three mechanisms that could account for the striking lack of partisan impact at the local level, and find the most support for Tiebout competition among localities within metropolitan areas. ABSTRACTWe examine whether partisan political differences have important effects on policy outcomes at the local level using a new panel data set of mayoral elections in the United States. Applying a regression discontinuity design to deal with the endogeneity of the mayor's party, we find that party labels do not affect the size of government, the allocation of spending or crime rates, even though there is a large political advantage to incumbency in terms of the probability of winning the next election. The absence of a strong partisan impact on policy in American cities, which is in stark contrast to results at the state and federal levels of government, appears due to certain features of the urban environment associated with Tiebout sorting. In particular, there is a relatively high degree of household homogeneity at the local level that appears to provide the proper incentives for local politicians to be able to credibly commit to moderation and discourages strategic extremism.