The Impact of Local Government Services on House Prices

Local authorities are integral to the delivery of public services ranging from education and childcare to eldercare. Traditional measures of service quality, such as cost and school test scores, are limited in scope. We propose composite measures using a benefit-of-doubt data envelopment analysis (DEA) framework to better capture the full range of services. These measures are used to analyze the impact of service provision on house prices and moving patterns. Our findings indicate that the composite measures significantly explain variations in house prices and migration patterns, particularly concerning school services and eldercare. Other services have no significant impact. Further research, especially at more granular levels, is needed to establish valid causal relationships. Nevertheless, our findings suggest that composite measures of local government services are useful not only for conducting policy evaluations and benchmarking exercises but also for understanding citizen preferences.