Surfing for Scores : School Quality, Housing Prices and the Changing Cost of Information

In this paper we investigate the relationship between school quality and information disclosure in housing markets. When presented with the option of identifying their local public school in a real estate listing, we find that sellers with homes assigned to higher-performing schools are more likely to provide this information, an effect that is stronger for sellers of large single-family units. Further, we find that controlling for school quality, information disclosure has no independent effect on housing prices for single-family homes, implying that buyers with a high willingness-to-pay for school quality will seek out information on school quality on their own. On the other hand, we find that sellers' disclosures about schools have a large positive impact on the sale price of small and attached residential units in 2001-02, but the effect disappears by 2006-07. Presumably, the increasing ubiquity of the Internet and the availability of new data under No Child Left Behind dramatically reduced the cost of gathering information on school quality over this period. Taken together the results reveal substantial heterogeneity in buyers' willingness-to-pay for information on school quality, they support the findings of the education literature on the importance of school quality in housing markets, and they confirm the “unraveling” theory of information disclosure found in other markets