Bryan Caplan  

Choosing the Right Neighborhood

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To me, it's obvious that parents often choose neighborhoods in order to affect their kids' long-run outcomes.  True, they rarely wake up in the morning and say, "Let's move to a higher-income neighborhood to boost Billy's adult income."  But when parents decide where to live, the influence of the neighborhood on their children is an important part of their decision. 

Of course, this is a choice at the margin.  A family living on $20,000 a year can't easily relocate to Beverly Hills, but by making some other sacrifices, they can - and often do - move to a neighborhood that's 10% more expensive than the one where they already live.

Questions:

1. Is all this only obvious to me because I'm an economist - or is it obvious to everyone? 

2. Is it an abuse of language to categorize parents' choice of neighborhood as a form of parenting/ nurture/ upbringing?


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COMMENTS (22 to date)
John Thacker writes:

This is obvious to everyone, at least to parents, in my experience. There are lots of people, too, who think that private schools are a terrible idea, but think nothing of buying a much more expensive house because it has good public schools. Personally, I don't see a real difference between saving to pay for private school, and paying more than private school tuition to live in a better public school district, but a lot of people view them as morally different.

BTW, I was in a bit of a hurry, but it was interesting to meet you at Wegmans. I think that the same people that think that you're more certain than you are because of your bluntness (especially online) would be surprised to find that you seem fairly soft-spoken in person.

Bryan Caplan writes:

Nice meeting you, John. But you are the first person to ever call me "soft-spoken." :-)

aretae writes:

I think you over-narrow the question. Probably the single largest positive impact you can have on your child after they're born is in helping to choose their peer group(s).

Expensive districts are primarily a way of picking peer groups. So is homeschooling. Obsessive parent-driven activity levels are as well(Swim Team, Girl Scouts, Aiki-jujitsu, and Souzaphone practice after school on Monday...).

John Thacker writes:

Bryan,

That's probably because I read you online first before meeting you, and your bluntness in offering your opinions online gave me an impression that you'd be louder and more aggressive in person than you were.

BT writes:

It's obvious to me as well, and I am a Biologist.

Buddy Whittenburg writes:

I think it's obvious to everyone that has thought about kids.

Another point is that school monopolies in the US tend to amplify this effect. People with lower income can't afford better schooling than the public school in their district.

If you could choose any school (that you could afford) there would be less incentive to move to a nicer neighborhood with "better schools." At that point you would really only be concerned with the safety of your family (and all of the usual incentives of convenience, cost, and commute).

Ted writes:

(1) No, I think almost everyone knows this.

(2) If you use the rigid definition that nurturing is simply the act of providing nourishment, then yes you are abusing language. If you use the traditionally accepted, and broad, definition of nurturing you are fine.

Robert writes:

I know the only reason my dad bought a house where he did is because the high school nearby was extremely well-regarded and had very high average SAT scores -- he called and checked.

He bought the house even though it would mean a 1 hour commute every day and could have easily bought a home just as nice a few minutes away from his workplace.

Robert Book writes:

I'm an economist married to a real estate agent, and both of us find this obvious.

But I think there's an element of reverse causality in your explanation of this.

Suppose people choose certain neighborhoods because they're associated with better schools. This means they bid up the price of housing in those neighborhoods. School quality is a "normal good," so people with higher income buy more of it. (In non-economist jargon, they boy more because they can "afford" to.)

The result is, the people who end up in neighborhoods associated with better schools tend to be higher income -- not (just?) because they want to live among higher-income people, but because they are the ones who can afford to live there. Those neighborhoods are occupied by higher-income people for the same reason that Jaguar XJ6s are occupied by higher-income people.

Now, if better schools affect the adult income of their students, then this will show up in the data as a correlation between income in their childhood neighborhood and their own income as adults.

Of course, it may also be that having higher-income childhood neighbors affects one's adult income, or that having parents who are the type to choose better schools, or who are are the type to choose higher-income neighborhoods might also influence one's adult income.

But as long as schools are assigned by where students live, it's going to be difficult to disentangle these effects. Maybe the thing to do is use data from regions where schools aren't assigned by place of residence (other countries? Wisconsin?).

And -- of COURSE choice of neighborhood is part of "parenting/nurture/upbringing" -- how could it not be?


Praveen writes:

1. More obvious to parents. Particularly immigrant parents. As education is what got us here; so invariably, and sometimes unfairly to our kids, immigrants consider that almost a necessity.
2. I don't think so. It is definitely thinking choice. Living in a good neighbourhood is neither necessary nor sufficient to be successful for kids success. But it doesn't hurt. ;-) And as a parent, we do try to give our kids the best we can, albeit what 'we' parent think which naturally comes from our upbringing.

Steve Roth writes:

Yeah I'm with everyone else; #1 is obvious.

On #2, I'm with aretae:

"Probably the single largest positive impact you can have on your child after they're born is in helping to choose their peer group(s). Expensive districts are primarily a way of picking peer groups."

But I don't really care whether it's an abuse of language. I'm pondering (not for the first time) how such a definition affects our analysis and view of the whole "parental influence" thing.

Steve Roth writes:

IOW, could we answer first Yes then No to your question #2, adjust our analysis/interpretations to accomodate each, and if the results are different, gain some insights from those differences?

I don't think I'm smart enough to answer that, or even really to know if it's a useful thought.

Hooeyoak writes:

hey Robert Book, have you had much success explaining to your wife that renting is not "throwing your money away"? I have tried to explain the fallacy of this fact to others and usually experience a frustrating mixture of hostility and ineptness.

Brian C writes:

1. Yes but if we had a Sweden or Netherland system of vouchers it would not be so other than commute times.

2. My answer is yes but in only some cases. Other than price Many parents prime consideration in a house is because they like it, proximity to work, and other location consideration that have little to do with their children at home. Assuming safety is not a consideration.

Marcus writes:

I would extend your argument. Part of what people are looking for when choosing a neighborhood is to differentiate themselves and their children as much as reasonably possible from the rest of the masses.

Similar with education.

And which is why subsidizing it doesn't help. It just pushes everyone up the ladder and pushes prices up.

jan writes:

This neighborhood resource site just launched New York and San Francisco and is about to introduce LA, Chicago and Boston. You can search over 30 neighborhood attributes including income, parks, trendiness etc...but what seems to be most important to people is a safe neighborhood, and that of course ties into socioeconomic status...Check it out here, interesting stuff: Nabewise.com

[Comment edited for overuse of the same URL.--Econlib Ed.]

larry writes:

I think it's obvious to a great many parents, at least the ones who can purchase expensive houses in highly-regarded school districts.

I have talked to many parents who spent a lot of extra money to buy a house in an area that has good schools. I have also talked to some parents who have moved away from an area they enjoyed when their kids became school-age if they lived in an area where the schools were more violent.

Steve Sailer writes:

This is the kind of insight that is absolutely obvious to everybody in thinking about their own private lives, but doesn't come up much in public discourse, so countless public policy discussions leave out elephants in the living room.

For example, Bryan's public views in favor of immigration fail to take into consideration the neighborhood and peer impacts on current citizens of letting a lot of highly fertile and undereducated people into America.

If you think about your private life, you can predict exactly what we've seen in California: poor performance by public schools overwhelmed by low skilled children and grandchildren of illegal immigrants and an arms race rush by residents to buy more house than they can afford in outlying exurbs to get their kids into better school districts. Thus, the California-centric mortgage meltdown that set off the crash of the world economy.

Mo writes:

First, I think this is how many (but probably not all people) think. Evidence: Sandra Black 1999 (?). A nice RD study showing school districts affect housing prices. So, if parents didn't value this amenity then why should prices be different? Not everyone has to value it of course, but probably more than just the local economists are driving the price differentials.

Second, I have a feeling this is very much a middle class obsession. Higher incomes purchase private school. But, I have a feeling, unfortunately, that some socioeconomic groups don't really think about this. Even if they are low income, many at the margin may not be thinking about this. This is probably correlated with not reading to your kid or showing up to parent teacher conferences. Evidence: many low income parents don't bother to enter voucher lotteries to get out of really bad schools.

Steve Sailer writes:

"Second, I have a feeling this is very much a middle class obsession. Higher incomes purchase private school. But, I have a feeling, unfortunately, that some socioeconomic groups don't really think about this."

Perhaps, but I think this logic appeals fairly broadly. After all, what we witnessed in California when zero down payment mortgages became widely available after George W. Bush's 10/15/02 White House Conference on Increasing Minority Homeownership was a huge rush of working class minorities in Los Angeles County to buy fairly expensive homes in exurban school districts to save their kids from growing up in the 'hood.

Inevitably, though, zero down mortgages meant that virtually anybody could buy one of those exurban McMansions, so the Bush Push for zero down payments wound up just bringing some of the 'hood with the new buyers.

And that helped puncture the belief that Inland Empire homes would always go up, up, up. Who wants to pay a half million to live in what is, demographically, pretty much still the 'hood that all the new buyers are trying to flee?

That's one reason housing prices dropped like a rock in SoCal's exurbs, while not falling much in, say, Santa Monica.

And that's why new exurban developments that opened during the zero down era were such a disaster. In an existing neighborhood, if 20% of the homeowners sell out to zero downers, well, that's not good, but it's not terrible. But in a McMansion development that opens in 2006, if everybody who buys in is somebody who couldn't qualify for a mortgage even in 2005, well, then you have an instant slum.

Steve Sailer writes:

In 2008, I published a short story in The American Conservative about how two real estate speculators in the SoCal exurbs that's all about these questions:

http://isteve.blogspot.com/2010/03/unreal-estate.html

Peter writes:

Last year the local public school was identified as the best primary school in the State (public and private) based on standardised testing. It was the first time such data was made public.

You can only go to that school if you live in a defined local catchment. Pretty much straight away the local real estate agents were telling us about the uplift in enquiries from parents wanting to get their kids in the school.

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