Homeowners Self-Segregate by Race and Education

People are willing to dish out more dough to live in neighborhoods with others of the same race and education level, a new study finds.

Using 1990 U.S. Census data, researchers examined a quarter of a million households in the San Francisco Bay Area to look for statistical trends in where people preferred to live and found that they tend to self-segregate based on how these demographic factors apply to their choice of schools and neighbors.

College-educated people apparently were willing to pay $58 more per month on average for their property than those without a college education to live in a neighborhood where they would have more college-educated neighbors, according to the researchers' model of people's neighborhood choices.

That might not surprise you. This might: People without college educations would want compensation to live in a neighborhood with more college-educated neighbors, the study showed.

The model, detailed in an upcoming issue of the Journal of Political Economy, held moreso for homeowners than renters.

Blacks were willing to pay $98 more per month to live in a neighborhood with more black households, while whites were willing to pay more to have fewer black neighbors.

And perhaps unsurprisingly, all households preferred to live in higher-income neighborhoods.

Those with higher income, as well as a higher education level, also were willing to pay more to live in a neighborhood served by better schools, a factor that could lead to exclusion eventually of lower-income families from "good" school districts, the researchers stated.

"Our estimates suggest that the improvement in a school's quality would disproportionately attract more highly educated households to the neighborhood, in turn making the neighborhood even more attractive to higher-income, highly educated households, and raising prices further," Patrick Bayer of Duke University and his co-authors said in a prepared statement.

The researchers looked at households on either side of a school zone boundary, with one school performing better than the other. They found that households with higher incomes and a higher level of education were found on the side of the higher-ranked school; housing prices were also higher on that side by an average of $18,000.

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