Category Archives: financing

Thought experiment: Financing public education

The overall quality of a public school is largely derived from two characteristics: the quality of the education provided (which depends in large part on teachers and facilities) and the quality of the learning (which depends on students). Hedonic models of house price indicate that the quality of public schools is capitalized in the value of land. Such matters are important. First, schools are a major determinant of property values and thus residential sorting by income, where the rich can isolate themselves from the poor. This introduces inequity into the system. Second, an analogy can be drawn to how roads should be paid for and whether users should pay or they should be capitalized into property taxes.

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