Land Use Regulations, School Quality and Metropolitics

A new paper from the Brookings Institute Metropolitan Policy Program authored by Jonathan Rothwell has received quite a bit of attention. Here is a link to the highlights, papers and interactive features. The main claims the author makes are:

An analysis of national and metropolitan data on public school populations and state standardized test scores for 84,077 schools in 2010 and 2011 reveals that:

Nationwide, the average low-income student attends a school that scores at the 42nd percentile on state exams, while the average middle/high-income student attends a school that scores at the 61st percentile on state exams. This school test-score gap is even wider between black and Latino students and white students. There is increasingly strong evidence—from this report and other studies—that low-income students benefit from attending higher-scoring schools.

Northeastern metro areas with relatively high levels of economic segregation exhibit the highest school test-score gaps between low-income students and other students. Controlling for regional factors such as size, income inequality, and racial/ethnic diversity associated with school test-score gaps, Southern metro areas such as Washington and Raleigh, and Western metros like Portland and Seattle, stand out for having smaller-than-expected test score gaps between schools attended by low-income and middle/high-income students.

Across the 100 largest metropolitan areas, housing costs an average of 2.4 times as much, or nearly $11,000 more per year, near a high-scoring public school than near a low-scoring public school. This housing cost gap reflects that home values are $205,000 higher on average in the neighborhoods of high-scoring versus low-scoring schools. Near high-scoring schools, typical homes have 1.5 additional rooms and the share of housing units that are rented is roughly 30 percentage points lower than in neighborhoods near low-scoring schools.

Large metro areas with the least restrictive zoning have housing cost gaps that are 40 to 63 percentage points lower than metro areas with the most exclusionary zoning. Eliminating exclusionary zoning in a metro area would, by reducing its housing cost gap, lower its school test-score gap by an estimated 4 to 7 percentiles—a significant share of the observed gap between schools serving the average low-income versus middle/higher-income student. As the nation grapples with the growing gap between rich and poor and an economy increasingly reliant on formal education, public policies should address housing market regulations that prohibit all but the very affluent from enrolling their children in high-scoring public schools in order to promote individual social mobility and broader economic security.

Overall this provocative work and I enjoyed the paper. Income segregation is associated with unequal educational outcomes as measured by test scores. Of the four claims above, the first is descriptive and points to a major problem with public education, the second associates income segregation with test score gaps, suggesting that populations self-sort according to income (this has been shown in many other studies), and the third point confirms that school performance is capitalized into housing costs. This is not new, but nice to be validated again.

The fourth point is the one that is getting the most attention and most provocative. Rothwell argues that restrictive land use regulations prevent families from moving to areas with better schools. If density restrictions were lifted then developers would build sufficient quantities of housing in good school districts to eliminate the premium associated with being near good schools (in the case an average of $11,000 per year). On this claim the limits of the research don't support his policy recommendations. Rothwell uses a number of regression techniques and instrumental variables in his analysis. His work is nicely described and technically sound, so I'm confident that the data accurately described the situation in 2010 and 2011. The problems are that these data provide a snapshot of test scores and housing prices when what is really needed is the effect of test score gaps over time. School improve and decline in quality, as do neighborhoods, and we need to better understand why this is and what to do about it.

As Rothwell assumes that school quality is fixed then the obvious and easiest solution is to move everybody to the good schools. But since these are public schools, why is there such a difference in quality, and shouldn't that be the policy focus? Myron Orfield made his name with his Metropolitics work (which I recommend to anyone interested in regional planning), where he eloquently argued that high quality public services should be available to everybody regardless of where they live. What if we were talking about fire protection rather than schools? Should people accept that some parts of the city do without while other parts of the city have good fire services, so we should move everybody next door to a station? All public schools, in particular, should have access to the same resources which is why Orfield promotes property tax base sharing. He has recently published a book on Twin Cities planning. From a Minnesota Alumni story about him:

Racial segregation is increasing in all of the 25 largest U.S. metros, Orfield says, but it’s happening at a much faster clip in the 16th largest, the Twin Cities. Neighborhoods and schools have remained more stubbornly segregated here, those once integrated have resegregated at alarming rates, and segregation is pushing steadily outward from cities to suburbs.

The causes of these trends are complex, says Orfield, a national authority on metropolitan growth. Segregation’s prime drivers include racial prejudice, housing-market discrimination, and misguided public planning and tax policies. And in the Twin Cities, Orfield says, segregation is exacerbated by mind-boggling government fragmentation that was once, but is no longer, well-managed by a muscular Metropolitan Council.

Segregation is complex, and Rothwell's models leave a lot unexplained. The connection between school quality and housing costs is well-established, and only in the past couple of years have voters stopped approving tax increases for school districts (here is a Minnesota example of this). Where Rothwell looks for silver bullets Orfield explains the complexity of segregation, and Orfield documents changes over time, which is critical if we want to understand causality. Rothwell's work only provides correlations of factors at a particular time, which is a limitation of not having time series data.

Overall, the Brookings research suggests to me that we should focus on developing high quality public schools in all locations, rather than try to move everybody from poorly performing schools to high performing schools in other areas of the region. Moving families may be a reasonable policy approach on the margin, but not for everyone. Taken to its extreme, Rothwell argues for families to abandon parts of the city (region) because the public services are irrevocably broken, crowd into areas with better performing schools and assume that the high quality schools will remain high quality. I don't think school quality is exogenous to this analysis. His research is interesting an provocative, but doesn't tell us much about causality. For a better and more complete discussion of these issues I recommend Orfield.