Property Left Behind: An Unintended Consequence of a No Child Left Behind “Failing” School Designation

Bogin, A.; Nguyen-Hoang, P.
Jan-07-2014

Abstract

Under the No Child Left Behind Act (NCLB), schools receiving Title I funding that fail to meet adequate academic performance targets for two consecutive years are deemed “failing.” This broadly defined, but often misunderstood designation has exerted a negative and unintended effect on low-income neighborhoods—the same neighborhoods NCLB was originally intended to help. Specifically, we find that “failing” designations significantly decrease home prices. This property value response is observed even after controlling for a myriad of traditional test score measures and school-level student demographics. Additional analyses suggest that this home price effect is largely due to strong perceptions of poor school quality or social stigma surrounding a “failing” designation.