Tim Cunningham
Lyci Hillman
UP 504
Assignment 6

Are the Realtors Right?
Starbucks Locations as an Indicator of Economic Growth

Research Question: Does a Starbucks store opening act as an indicator of increasing median home value and median income of the area in which it is located?

Hypothesis: Where Starbucks stores open, the median home values and median incomes will increase at a higher rate than the average increase in the City where the tract is located.

Methodology: We compared the rate of median income growth and median home value for selected census tracts with Starbucks locations to the City the tract was located in. Each tract had a Starbucks location open between 1992 and 1999.

Data: We utilized data for 16 individual Starbucks locations. The selection of the sites was limited by available data, particularly data available at the tract level, and then by Starbucks stores with opening dates between 1990 and 2000. Full data set.

Sources: United States Census; available at www.census.gov; Starbucks Everywhere; available at starbuckseverywhere.net.

Results:

Significance:

The difference in increase in median home value was significant. On average, the median home value for tracts with Starbucks stores increased 31% more than the cities they were located in. The average income in those tracts increased 8% more than the cities, but the increase was not statistically significant.

Conclusions:

• Starbucks stores in a particular census tract are a strong indicator of increasing median home value in that tract.
• No causation; merely a proxy variable.

Further Analysis:

2010 will be ripe for analysis. Many stores opened in around 1999 - 2000. This will allow analysis for both pre and post opening at tract level, analyzing 1990 - 2000 levels and 2000 to 2010 levels.