So there’s a proposal in your town to build a new high school (I chose high school construction because it’s where the money’s at). As with just about everything in life where you stand on the matter depends on your perception of what benefits you will receive.
As an economist (or some shut in with a blog who thinks he’s one) your analysis must begin with a complete rejection of the rational expectations theory. The theory states that people will act according to very well thought through outcomes based on maximizing their ‘utility’ or simply put, satisfying their wants and needs.
Having recently been through a multi-year saga of living in a town debating the merits of a new high school, I can tell you that any evidence of rational thought as to why or why not to build was a rare find. In discussions with pro or con factions I felt as if I was talking to Howard Beale (the crazed news anchor played by Peter Finch in the film Network) on a bender. Yes, it gets that passionate.
So in trying to decide where I really stand on this issue I tried to strip out my own beliefs and look at research and hard data on the economics of new school construction. In hindsight I would have had more success looking for hard data on the Loch Ness Monster or the heterosexuality of Ryan Seacrest.
What I found was mostly heavily partisan based research supporting either the benefits of new or refurbished schools or supporting the abandonment of public schools altogether. With only slight hyperbolae I can say that what’s out there for research on this topic is written by, on the one hand, people who believe school facilities should be the equivalent of the Four Seasons in Dubai or, on the other hand, people who believe the government has no place educating children and such matters should be handled by the private sector or by parents blessed with the wisdom of Aristotle and the math skills of Isaac Newton. But hey, lack of data has never stopped me before so here I goes.
When trying to judge the economic benefit to a community from building a new high school one must consider the relationship between school facilities and academic performance, the relationship between academic performance and housing values, and the relationship between infrastructure development and community utilization (value). Think of this as a hierarchy of needs: You can’t have good performance without a good foundation, you can’t derive benefit without performance, and you can’t derive value without benefit.
The Relationship of School Facilities to Academic Performance:
This one is easy to sum up: The conditions of school facilities have a direct impact on everything from absenteeism to teacher job satisfaction and job performance. What is not evident is any direct correlation between capital expenditures and academic performance. However, there is strong evidence that without quality facilities there can not be sustainable improvements in performance.
The Relationship of Academic Performance to Housing Values:
Ask any realtor what the top factor for home selection is and they will say school quality. It may not be number one for every buyer but it is the 600 pound gorilla. If you don’t want to take my word for it (and I recommend you don’t) check out the effort the National Association of Realtors is going through to get members to work directly with communities to improve schools and school performance: Schools and Real Estate. Academic or school performance influence on home values is measurable. According to one study (please see the Federal Reserve of New York’s research paper) that used house prices to quantify the value parents place on school quality, the impact of school quality on housing prices suggested an increase of 1.8% - 4.5% for each 5% increase in standardized test scores.
The Relationship of Infrastructure to Community Utilization:
This relationship isn’t as cut and dry as the other two but I wanted to add it because almost every piece of research I looked at mentioned it. In summary, any capital expenditure undertaken by a community should consider as much benefit to the community as possible. Mixed use facilities are one way to achieve lasting and widespread value for a community. The lesson learned here is if you’re going to build something expensive like a high school, make sure you can get as much use out of it as possible. This does not mean you have to build a Taj Ma High School, it merely suggests considering broader community needs and requirements. Don’t provide a specific group with a Mercedes, provide many groups with a Ford.
I call myself a Libertarian because I believe the government (at all levels) should leave me alone with my guns, bourbon, and discount books. But I’m also a realist. A long time ago the founders of this country believed that public education could provide this country with a key element for lasting freedom. Public education, as much as it has been maligned by all shades of the political spectrum, has helped to create a society and economic system of advancement and achievement seen nowhere else. State of the art school facilities do not guarantee economic success but communities that do not invest wisely in their schools can not expect the same level of benefits as those that do. Choose wisely.