School quality is considered a key factor affecting homebuyers’ location choices and willingness to pay. Previously, many studies found that school quality plays a critical role in determining housing prices and location choice. School quality is positively capitalized into housing prices. Households are willing to pay for school quality, in particular, school outcomes such as test scores and performance index. However, there is a view that willingness to pay for school quality is different based on household demographics and socioeconomic status (SES). The purpose of this dissertation is to investigate heterogeneous preference for school quality, school district choice, and willingness to pay for school quality according to a household’s demographic background and SES, including the presence of school-age children, marital status, income, education, race/ethnicity, and occupation. This dissertation takes occupational variables into account in the model as a proxy for human capital. This dissertation was also developed to find whether or not a household’s preference for school quality leads to their school quality consumption regarding school district choice and willingness to pay.
Two datasets were used: the 2006 homebuyer’s survey and the 2006 transacted housing sales in Cuyahoga County, Ohio. With the aggregated dataset, the national model also analyzes household demographics and school quality data aggregated by school district in 2,531 school districts in 14 states. Three models were used to test the groups of hypotheses for preference, school district choice, and willingness to pay: ANOTA, ordered logit, and the hedonic price model.
The findings of this dissertation indicate household heterogeneous preferences for school district choices and willingness to pay for school quality. It also found a gap between preference for school quality and actual consumption of school quality. In particular, larger gaps appear in low-income, low-educated, and single-head households than in other households. These findings help policy makers understand residents’ preferences, school district choice, and willingness to pay for specific public goods and services according to their demographics and SES. They also call for policies to reduce the gaps.