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Peer Effects in Education: A Survey of the Theory and Evidence
Abstract
We survey the theoretical and empirical literature on peer effects in education. Theoretical models of peer effects are first summarized. Models of educational provision regimes in which peer effects play a central role are then discussed. Next we discuss the identification issues in estimating peer effects and strategies used to resolve them. Last we survey the empirical evidence on and channels of peer effects in education.
... Research has shown that parental educational and social class background are important factors that affect children's learning outcomes (e.g. Björklund and Salvanes 2011;, while peers appear to have less influence (for an overview, see and Epple and Romano 2011). It is challenging, however, to target educational inequalities between students with different social, ethnic or racial backgrounds with policy on an individual level (Jackson and Jonsson 2013), whereas the student composition of school classes can be manipulated more easily. ...
... It is challenging, however, to target educational inequalities between students with different social, ethnic or racial backgrounds with policy on an individual level (Jackson and Jonsson 2013), whereas the student composition of school classes can be manipulated more easily. Not least due to their policy relevance, there is a large body of research on compositional effects on learning outcomes (for an overview of peer effects, see Burke and Sass 2013;Downey and Condron 2016;Epple and Romano 2011;Sacerdote 2011). Yet, there are important research gaps concerning the relationship between school class composition and individual academic performance, two of which we address in our study. ...
The present study addresses the question to what extent language skills among students are influenced by the composition of the overall classroom context and the composition of friendship networks within school classes. Furthermore, we ask whether the effects differ between stratified school systems, with a more homogenous student body in school classes, and comprehensive school systems, with a more heterogeneous student body. Focusing only on classroom characteristics, we find positive effects of the socioeconomic and cognitive overall composition of the school class in Germany’s selective school system, but not in Sweden’s comprehensive system. In contrast, the ethnic composition does not matter significantly in any of the systems, while direct peer interactions, captured with social networks measures targeting friends in a school class, matter slightly more in Sweden’s comprehensive school system.
Supplemental data for this article is available online at https://doi.org/10.1080/01425692.2020.1799754.
... There is significant and diverse literature on what drives student success in the classroom. Scholars have looked at such factors as the impact of different types of instructors (Miskolczi & M arton Rakovics 2018;Chingos 2016;Sil en and Uhlin 2008;Nye et al. 2004;Basow 1995), the importance of student characteristics such as socioeconomic background and parental history (Dell'Angelo 2014; Misty & Tissington 2011;Epple and Romano 2011;Ermisch and Francesconi 2001), and the influence of course dynamics such as class size and mode of delivery (Miskolczi & M arton Rakovics 2018;Tobin 2017;Bolsen et al. 2016;Krueger and Whitmore 2001). With respect to curriculum development, there is an extensive literature supporting universal design (UD), with its focus on differing student needs and learning styles (Rao et al. 2014; Tanners 2011; Roberts et al. 2011;Scott et al. 2003;Silver et al. 1998). ...
... Putting AL to the test: Hypotheses, methods, results, and implications Having significant background in working to improve student engagement and performance in the large-section Global Issues class, and drawing on the broader literature on student success, education technology, and adaptive learning discussed above (Miskolczi & M arton Rakovics 2018;Bailey et al. 2018;Dziuban et al. 2018;Dziuban et al. 2018;Dziuban et al. 2017;Johnson 2017;Tobin 2017;Tyton Partners 2017;Yarnall, Means, and Wetzel 2016;Bolsen et al. 2016;Chingos 2016;Rashid and Asghar 2016;Pugliese 2016;Yarnall, Means, and Wetzel 2016;Oxman and Wong 2014;Dell'Angelo 2014;Rao et al. 2014;Rao and Tanners 2011;Roberts et al. 2011;Misty & Tissington 2011;Epple and Romano 2011;Chen et al. 2010;Sil en and Uhlin 2008;Nye et al. 2004;Scott et al. 2003;Ermisch and Francesconi 2001;Krueger and Whitmore 2001;Silver et al. 1998;Basow 1995), we approached the project with some belief that the AL courseware could help improve student perception of course materials and student performance. We were more skeptical of a positive impact on DFW rates, particularly in the short term, despite some positive results reported in previous studies (see above). ...
... Peer effects have been a heated topic in labor economics for years (Epple and Romano, 2011;Sacerdote, 2011). The research is closely related to the question of how policy makers should organize classes according to students' abilities, genders and races to achieve efficiency and fairness. ...
... The results are almost the same. 20 Details about the fundamental challenges in identifying peer effect model can be found in Sacerdote (2011); Epple and Romano (2011). outcome y i can affect his or her peers' outcomes, which reflects back when his or her peers' outcomes can also affect student i's outcome. ...
In this study, we investigate the peer effects of domestic migrant children and left-behind children on their classmates. Left-behind children are the children who are left in their hometown when their parents migrate. We exploit the large-scale random assignment of students into classes within schools in China to deal with the identification challenge due to the self-selection of students, which is rarely seen in other countries. Results show that an increase of ten percentage points in the proportion of left-behind peers and the proportion of migrant peers in the class results in a decrease of 0.12 and 0.06 standard deviations in a student's test score, respectively. However, the negative peer effects of left-behind peers are halved and the negative peer effects of migrant peers are totally erased in the second year. The reduction can be attributed to an improved class environment, such as students' relationships. Left-behind students' misbehavior due to the lack of parents' supervision may cause long-lasting damage and negative spillover. In addition, the indirect channel of family background of migrant and left-behind students explains only part of the peer effect. Relaxing the enrollment restriction of migrant students and encouraging migrant parents to take their children with them might reduce the overall negative spillovers.
... Peer training has been extensively investigated in the field of education (seeEpple andRomano, 2011, and Sacerdote, 2011, for surveys).13 Supporting our conjecture that solving nonograms can be taught in a lab setting, several studies have shown that Sudoku puzzles are teachable(Calsamiglia et al., 2013;Kimbrough et al., 2017). ...
... Peer training has been extensively investigated in the field of education (seeEpple andRomano, 2011, and Sacerdote, 2011, for surveys).13 Supporting our conjecture that solving nonograms can be taught in a lab setting, several studies have shown that Sudoku puzzles are teachable(Calsamiglia et al., 2013;Kimbrough et al., 2017). ...
We present experiments exploring why high ability workers join teams with less able coworkers when there are no short-term financial benefits. We distinguish between two explanations: prosocial preferences and expected long-term financial gains from teaching future teammates. Participants perform a real-effort task and decide whether to work independently or join a two-person team. Treatments vary the payment scheme (piece rate or revenue sharing), whether teammates can communicate, and the role of teaching. High ability workers are more willing to join teams in the absence of revenue sharing and less willing to join teams when they cannot communicate. When communication is possible, the choice of high ability workers to join teams is driven by expected future financial gains from teaching rather than some variety of prosocial preferences. This result has important implications for the role of adverse selection in determining the productivity of teams.
This paper was accepted by Yan Chen, decision analysis.
... 4 Bennett and Bergman (2018) provide a nice example of social multipliers in action using an attendance intervention. A good survey of the related theory can be found in Epple and Romano (2011). 5 See Carrell et al. (2013) for an example. ...
... Neymotin (2009) investigates the effect of immigration on different natives' outcomes in California and Texas, namely SAT scores and college application patterns. Using a 6 Epple andRomano (2011) or Brodaty (2010) provide a literature review of applied work estimating peer effects in the classroom. 7 Limited English students refers to students with limited English proficiency. ...
... Nevertheless, all these components of school effects are in fine impacting achievements and therefore of interest for students and families. Because peer effects are usually prevalent in education (for a survey see for instance Sacerdote [2011] or Epple and Romano [2011]), the school performance of one student is usually affected by the performances of his or her classmates -regardless of the teaching practices or school investment. Raudenbush and Willms [1995] emphasized that if these measures may not be appropriate for authorities to evaluate school practices, they may be valuable for parents when choosing a school for their children. ...
This paper presents a new method that goes beyond the measurement of average value-added of schools by measuring whether schools mitigate or intensify grades dispersion among initially similar students. In practice, school value-added is estimated at different levels of final achievements’ distribution by quantile regressions with school specific fixed effects. This method is
applied using exhaustive data of the 2015 French high-school diploma and controlling for initial achievements and socio-economic background. Results suggest that almost one-sixth of the high
schools significantly reduce, or on the contrary increase, the dispersion in final grades which were expected given the initial characteristics of their intake.
... A large and growing literature finds that social interactions influence many economic outcomes, including crime, education, and employment (for recent reviews, see Blume et al., 2011;Epple and Romano, 2011;Munshi, 2011;Topa, 2011). While research has long-recognized the effect of location decisions on individual and aggregate economic outcomes, there is little evidence on the importance of social interactions in location decisions, and even less evidence on the types of individuals or economic conditions for which social interactions are most important. ...
Chapter 1: “The Impact of College Education on Mortality: A Study of Marginal Treatment Effects.” With a newly constructed dataset that links the 2000 U.S. Census long-form to Social Security Administration records, I estimate the effect of college education on mortality. Using the proximity to college from birthplace as an instrument, I estimate the marginal treatment effect (MTE) of college education on 10-year mortality rate for adults aged 60-99 in the United States from 2000-2010. The OLS results show a strong association between college education and lower mortality. The MTE results show that individuals that have unobserved characteristics that make them least likely to attend college have the largest effects of education in reducing mortality. This suggests that the individuals who would benefit most from receiving college education in terms of health are those do not attend college. The positive effects on reducing mortality are solely concentrated among men. For women, I find no evidence of an effect of education on old-age mortality. Combined with evidence from the literature, these results provide suggestive evidence that income is not the mechanism through which education reduces mortality. Chapter 2: “Social Interactions and Location Decisions: Evidence from U.S. Mass Migration.” (with Bryan Stuart) This paper estimates the strength through which social interactions influenced location decisions during two large scale migrations in the United States during early to mid 1900s. We examine the Great Migration of African Americans out of the Southern United States and the Dust Bowl Migration of whites out of the Midwestern U.S. Using long-run data on migration patterns for individuals born 1916-1936, we estimate the effect of social interactions on influencing where individuals decided to migrate. We find that social interactions were very important for African Americans during the Great Migration in affecting location decisions. Our results suggest that 47-69 percent of blacks chose their destination city in the North because of influence from other people that were from their hometown. For whites, we estimate much smaller effects; only 14-24 percent of whites chose their destination city because of social interactions. Chapter 3: “The Effect of Social Migration on Crime: Evidence from the Great Migration.” (with Bryan Stuart) Using results from the second chapter of the dissertation, which shows that social interactions were influential in guiding migration patterns during the Great Migration, this paper estimates the effect these patterns had on crime in U.S. cities from 1960-2009. We document the large variations in the connectedness of migrants from the South that moved to different Northern cities. For example, some cities received almost one-third of their migrants from only one origin town in the South, where other comparable cities received no more than three percent of migrants from any one place. We find that, controlling for other economic characteristics, cities which received more connected migrants had lower crime rates from 1970-2000, which suggests an important role of social connectedness on crime during these periods. The results are largely driven by cities with a high population share of African Americans, and through crime increases among black juveniles. Cities that had more connected migrants had smaller increases in crime rates during the 1970s and 1980s.
... However, the presence of disruptive peers can undermine classroom learning environments and hurt academic achievement (Epple and Romano 2011;Sacerdote 2011). ...
To evaluate the net effects of classroom disciplinary practices, policymakers and educators must understand not only their effects on disciplined students but also their effects on non-disciplined peers. In this study, we estimate the link between peer suspensions and non-suspended students' learning trajectories in a California school district where middle and high school students took up to 12 basic skills tests in mathematics and English Language Arts (ELA) over the course of the 2009-10, 2010-11, and 2011-12 school years. We find that Hispanic students, students eligible for free or reduced-price lunch, English language learners, students enrolled in special education, and low-achieving students are disproportionately exposed to classmate suspensions. Analyses with student and classroom fixed effects show that student achievement in mathematics increases when their classmates receive suspensions, particularly suspensions attributed to disruptive behavior. We find no association between classmate suspension and ELA achievement. Since these results come from schools in which suspensions are relatively rare events, they may not generalize to settings with draconian disciplinary cultures. Nonetheless, our findings imply that suspensions, when used appropriately, can improve the academic achievement of non-suspended students, particularly for students from vulnerable populations.
... Outside of health insurance, where there are very limited papers studying peer effects at scale, there are some notable papers with very strong identification of peer effects and their underlying mechanisms for smaller samples including, e.g., for (i) mortgage refinancing by teachers (Maturana and Nickerson (2018)) (ii) firm performance under executives (Shue (2013)) (iii) housing purchases (Bailey et al. (2018)) and (iv) education (Epple and Romano (2011)). Our analysis studies peer effects on multiple dimensions at scale for an entire country and links those peer effects to measures of choice quality and inequality. ...
While citizens in rich countries have indisputably become healthier and richer on average, there is a general sense that this progress has not benefited everyone equally and that health and economic inequality has increased. This thesis contributes to the literature on the measurement and causes of such trends in inequalities by using newly available administrative data in the low countries Belgium and the Netherlands to document and analyze three separate dimensions of contemporary health and economic inequality. The first chapter analyzes the evolution of migrants' descendants' educational outcomes and incomes in the Netherlands, with a focus on second and third generations migrants from Morocco, Suriname and Turkey. While gaps between natives' and migrants' descendants remain large, gaps are generally smaller for later generations, and are overall decreasing. Moreover, using migrant-of-entry fixed effects, a positive effect of the length of stay of migrant families in the Netherlands on the test scores of migrants' children is established and continues after fifty years. I complement these findings with a discussion of migrants' mobility patterns and the role of intermarriage in economic integration. The second chapter concerns the choice quality of insurance contracts by individuals in the Netherlands. We study a specific attribute of the health insurance purchase decision all Dutch inhabitants make: the choice of the size of the deductible. We find that individual choice quality is strongly correlated with the education level and professional sector. Moreover, there is a strong correlation between the decision quality of an individual and those of his/her connections, as we find within-firm, location and family impacts on decision making. We document that such inequality in choice quality leads to substantial difierences in financial outcomes, and evaluate alternative policies. The third chapter analyzes the distributional pattern of mortality in Belgium during the first wave of the Covid-19 pandemic in 2020. Using population-wide administrative data, we find that there is a significant negative income gradient in excess mortality, with excess deaths in the bottom income decile more than twice as high as in the top income decile. However, compared to the inequality in mortality in normal times, the income gradient in all-cause mortality is only marginally steeper.
... Tanulmányuk bemutatja, hogy a magasabb színvonalú felsőoktatási intézményekben való továbbtanulás lehetősége miatt a hallgatók lakóhelyükről elvándorolnak, migrációjukat a felsőoktatási intézmények jobb régióközi elérhetősége is befolyásolja, illetve a férfiak mobilabbak, mint a nők. Leginkább az Egyesült Államokban figyelhető meg, hogy a diákok az egyetemek minősége szerint választanak maguknak iskolát (Epple-Romano [2011]). Ono [2001], valamint Lockley és Promnitz-Hayashi [2012] japán hallgatók mobilitását elemzik olyan modellt használva, mely a diákok társadalmi származásán és demográfiai jellemzőin (nem és életkor), valamint az egyetemek számán és minőségén alapul. ...
Although Affirmative Action policies have been enforced in many countries, their consequences are highly understudied, especially in the context of developing economies. Section 12(1)(c) of the Right to Education (RTE) Act enforced in 2009 is the first attempt to introduce affirmative action in primary schools in India. The act requires all private schools to reserve at least twenty five percent seats for children from economically weaker sections. To understand the effect of the act on i) social integration and ii) academic outcomes, we asked 1500 children (grades one to three) from four schools to answer friendship surveys and short tests in Mathematics and English. The schools in our sample vary considerably in constitution and were intentionally chosen to understand the impact of the act in different school settings. The friendship surveys show strong homophily i.e. non-RTE students cite other non-RTE students as friends, while RTE students chose to be friends primarily with other RTE students. Trends in test scores reveal that students admitted under the RTE quota score significantly lower than non-RTE students. However, RTE students who have a higher share of non-RTE friends have better test scores, suggesting that affirmative action may have a positive influence on learning outcomes for RTE children. Further we note that commitment from the school authorities and systematic monitoring and evaluation of the implementation of the act will go a long way in bringing out some of the benefits that this act was designed to achieve. Our findings have important policy implications with respect to ensuring proper implementation of the Section12(1)(c) of the RTE act in schools across the country.
Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a microfoundation of the linear-in-means model and investigate its properties. We show that individual outcomes may increase, decrease, or vary non-monotonically with the taste for conformity. Equilibria are usually inefficient and, to restore the first best, the planner needs to subsidize (tax) agents whose neighbors make efforts above (below) the social norms. Thus, giving more subsidies to more central agents is not necessarily efficient. We also discuss the policy implications of our model in terms of education and crime.
This paper discusses the formation of peers in an anonymous higher education setting using a unique data set of industrial engineering students. For identification, we exploit the random assignment of students into groups and student performance before students met. We compare two different settings for potential peer formation: a voluntary freshman orientation week organized by the students’ union and a mandatory group work course. It is only in the case of the group work course that we report persistent impacts on subsequent academic achievement. In line with our theoretical reasoning, peer effects exist between groups of two students who were already similar before.
School segregation by socio-economic background is a feature of most education systems and impacts negatively on educational outcomes for poor children. Evidence on this issue is lacking for the Spanish primary education system and in particular the extent to which a) poor and rich students sort into different types of school and b) the extent of segregation within different school types. We measure the level of segregation of students from different socioeconomic backgrounds into public and semiprivate schools and within these two types of school using the Hutchens Index. The analysis is based on data for students attending 5th grade in the largest region in Spain (Andalusia). Our results indicate significant differences in the level of segregation across and within both school types. Students from higher socioeconomic backgrounds are more likely to attend semiprivate schools. This provides evidence of the inequity of providing public funding for semiprivate schools that are then disproportionately attended by wealthier students.
Charitable donations provide positive externalities and can potentially be increased with an understanding of donor preferences. We obtain a uniquely comprehensive characterization of donation motives using an experiment that varies treatments between and within subjects. Donations are increasing in peers’ donations and past subjects’ donations. These and other results suggest a model of heterogeneous beliefs about the social norm for giving. Estimation of such a model reveals substantial heterogeneity in subjects’ beliefs about and adherence to the norm. A simple fundraising strategy increases donations by an estimated 30% by exploiting previously unstudied correlations between dimensions of donor preferences.
The sorting of students into ability groups is one of the most common, controversial and long‐examined educational practices. Ability grouping also mechanically changes peer groups. We provide novel evidence on the cognitive and non‐cognitive impacts in early years, of being exposed to higher‐ability classroom peers through being assigned to the top within‐class ability group. We exploit panel data from the UK Millennium Cohort Study, which allows us to construct trajectories of the cognitive and non‐cognitive development of children from birth to entry into primary school. The data also record school grouping policies and the specific within‐class group assignment of each child, by subject. We combine these rich data with an instrumental variable design using child‐level variation in group assignment due to month of birth, in order to measure the local average treatment effect (LATE) of being assigned to the highest‐ability peer group. We find that if a marginal student is assigned higher‐ability peers, this significantly reduces their cognitive achievement in mathematics, and has no impact on literacy. There are countervailing impacts on non‐cognitive outcomes for the marginal student assigned higher‐ability peers: although they are more motivated to study and parents respond with an improved home learning environment, these children have more study‐related difficulties and their relations with their peers significantly worsen. These findings have important policy implications for the use and design of within‐class ability grouping in early years.
We study the development of social capital through adult civic engagement, in relation to social capital exposure having occurred during childhood based on experiences outside the family at primary school. We assume that the types of classmates in attendance at a child's school would have influenced her/his social capital. To identify the types of classmates, we take advantage of the heterogeneity in the ability levels of British primary-school classes during the 1960s. At that time, some schools were practicing a method of streaming, whereas others were not. Using British National Child Development data, we construct a single score of civic engagement and evaluate the effect on adult civic engagement of attending homogeneous-ability classes versus nonhomogeneous-ability classes and being in high-, average- or low-ability classes when enrolled in streamed schools. Our results show that children who were grouped in homogeneous-ability classes developed a lower interest in civic engagement than their peers who attended mixed-ability classes (nonstreamed schools). Moreover, among children who attended streamed schools, a lower attitude toward civic engagement was observed among low-ability students. Thus, streaming appears to be detrimental to social capital development, especially for low-ability individuals.
We trace the evolution of research on organizational learning. As organizations acquire experience, their performance typically improves at a decreasing rate. Although this learning-curve pattern is found in many industries, organizations vary in the rate at which they learn. In order to understand this variation, we separate organizational learning into four processes: search, knowledge creation, knowledge retention, and knowledge transfer. Within each process, we present research on how dimensions of experience and of the organizational context affect learning processes and outcomes. Our goals are to describe major findings and to identify opportunities for future research. The article concludes with a discussion of research directions that are likely to be productive in the future. These directions include investigating how new technological and organizational developments are likely to affect organizational learning.
This paper was accepted by David Simchi-Levi, finance.
While education equality is considered crucial for broader social equality, policies that aim to equalize educational resources are sometimes suspected of discriminating against high achievers. Such potential discrimination should be examined empirically to provide robust evidence for policymakers and the broader public. Using a quasi-experimental design and longitudinal dataset, this paper reports on research which has investigated potential discrimination arising from China’s high school quota admission policy, which is considered a successful initiative for distributing high achievers across middle schools in ways that equalize achievement, and hence improves overall quality. The results presented in this paper indicate there is basically no such discrimination after controlling for self-selection bias. The paper also reveals the broader value of evaluating potential discrimination as part of similar forms of education development.
This paper examines the causal effects of the proportion of low-ability students in the classroom on the academic performance of regular students, exploiting random assignment of students to classes within middle schools in China. We show that the share of students in a class who are low achievers has a significant negative impact on the academic achievement of regular students in the seventh grade. The peer effects are heterogeneous along their achievement distribution, with the strongest adverse impact at the bottom end but no discernable impact at the top end. In contrast, there is no evidence that low-ability students influence any part of the achievement distribution of regular students in the ninth grade. Therefore, peer effects in academic outcomes can vary with the length of regular students' exposure to the same group of low-ability classmates. We further show that the differences in peer effects of low-ability students in seventh and ninth grades are driven by the adjustments of students' friendship formation and learning environment when approaching the completion of middle school.
This study estimates the long-run effect of the school tracking age on educational attainment and labour market outcomes. We exploit within-country variation in tracking ages for students in the highest two tracks in the Netherlands, using the supply of early tracking schools at the municipal level as an instrument for early tracking (tracking at age 12–13 vs. age 14). Combining several data sources, we find that early tracking leads to a decrease in higher education completion, and that it lowers earnings for both low-ability and medium-ability students in the sample. Estimates for high-ability students are positive but imprecisely estimated. The negative effects appear largely driven by higher misallocation of students to tracks when they are sorted early. Robustness analyses strongly suggest that the results are not driven by sorting between municipalities.
This study presents estimates of Black–White, Hispanic–White, and income achievement gaps using data from two different types of reading and mathematics assessments: constructed‐response assessments that were likely more cognitively demanding and state achievement tests that were likely less cognitively demanding (i.e., composed solely or largely of multiple‐choice items). Specifically, the study utilized multilevel modeling of data from over 25,000 fourth‐ through eighth‐grade students participating in the 6‐state Measures of Effective Teaching (MET) study of 2009–2010, including data from the state reading and mathematics achievement tests used in MET districts at that time and data from the Stanford Achievement Test Open‐Ended Reading Assessment (SAT‐9OE) and the Balanced Assessment of Mathematics (BAM). The latter two assessments, consisting entirely of constructed‐response items, were selected by MET researchers to assess learning outcomes, such as those included in the Common Core State Standards, deemed more cognitively complex than those assessed by state achievement tests at the time. The investigator found that estimated Black–White, Hispanic–White, and income achievement gaps were smaller on the SAT‐9OE than on state reading assessments, before accounting for other relevant factors. Estimates of Black–White and Hispanic–White mathematics achievement gaps were slightly larger using BAM data, whereas the estimated income achievement gap was slightly smaller using BAM data. In later models, prior student academic achievement and average student subject‐specific prior achievement accounted for portions of these estimated achievement gaps.
Purpose
This article aims to analyze the impact that the inclusion of students with disabilities has on the achievement of their schoolmates and to analyze the impact that this inclusion has on the achievement of the students with disabilities themselves.
Design/methodology/approach
The author begins investigating how the inclusion of students with disabilities in regular schools affects achievement of schoolmates. To answer this research question, the author explores the natural variation in time in the number of students with disabilities and use data from National Exam of Upper Secondary Education (Enem). Then, the author investigates how the inclusion affects achievement of the students with disabilities themselves and uses propensity score matching methodologies and, again, data from Enem.
Findings
The results show that an additional percentage point in the proportion of students with disabilities would reduce schoolmates' writing scores by a 0.0031 standard deviation. In other subjects, the author finds weak or none evidence of a significant peer effect. In addition, using Propensity Score Matching methodologies, the results show that the mean scores are up to 44% of a standard deviation, which is higher among students with disabilities enrolled in regular schools compared to those who are enrolled in special schools. In summary, the evaluation is that inclusion policies achieve the goal of improving the performance of students with disabilities but such policies have a small and adverse side effect.
Originality/value
For this reason, the present study proposes to fill this gap in the literature by analyzing the impact of the inclusion of students with disabilities on both groups. In addition, this paper contributes to the empirical literature of peer effect with an analysis of the peer effect of students with disabilities per competency. Finally, the article is important given the existence of few articles in Brazil on the topic of education and people with disabilities.
This study investigates the causal effect of older siblings’ schooling on their younger siblings’ schooling and labor market outcomes by exploiting the temporal and geographical variations in the implementation of compulsory schooling laws in China. Reform exposure is quantified as the number of years that an individual is eligible for compulsory education. We find that older siblings’ exposure to compulsory schooling reform had negative impacts on their younger siblings’ academic achievement and labor market performance. We provide some suggestive evidence for the mechanism of resource reallocation within households. These findings suggest that we may be overestimating the social benefits of compulsory schooling reforms by ignoring the resources constraints within households and the spillover effects on siblings.
The effect of sorting students based on their academic performances depends not only on direct peer effects but also on indirect peer effects through teachers' efforts. Standard assumptions in the literature are insufficient to determine the effect of sorting on the performances of students and so are silent on the effect of policies such as tracking, implementing school choice, and voucher programs. We show that the effect of such policies depends on the curvature of teachers' marginal utility of effort. We characterize conditions under which sorting increases (decreases) the total effort of teachers and the average performance of students.
This chapter provides new evidence on educational inequality and reviews the literature on the causes and consequences of unequal education. We document large achievement gaps between children from different socio-economic backgrounds, show how patterns of educational inequality vary across countries, time, and generations, and establish a link between educational inequality and social mobility. We interpret this evidence from the perspective of economic models of skill acquisition and investment in human capital. The models account for different channels underlying unequal education and highlight how endogenous responses in parents' and children's educational investments generate a close link between economic inequality and educational inequality. Given concerns over the extended school closures during the Covid-19 pandemic, we also summarize early evidence on the impact of the pandemic on children's education and on possible long-run repercussions for educational inequality.
Peer effects are crucial to school activities contributing to students' human capital accumulation. However, existing studies offer little evidence on how peers affect a student's private tutoring, commonly called shadow education, outside the formal schooling. This paper investigates peer effects on the student's shadow education activities by using an instrumental variable approach with a randomization sample of junior high school students in China. We find that an increase in the proportion of classmates receiving shadow education, defined as participating in cram schools or extracurricular courses, positively affects a student's shadow education participation, expenditure, and time spent on weekends. To corroborate the identification strategy validity, we conduct various robustness checks that consider exclusion restriction, peer characteristics, sample exclusion, and personality traits. Heterogeneous analyses suggest that peer effects are more pronounced among male students, students from high-income families, senior students, and public school students.
This article studies peer effects on the decision to enroll at university. To determine the social influence of peers, we use a measure encompassing the two major dimensions of social influence in the classroom: the ability and capacity of peers to exchange information about study options. This paper uses French administrative data on the universe of first year applicants to a single university over seven consecutive cohorts. We exploit idiosyncratic variations in the proportion of peers advised to change their educational choice. We find that our variable of interest has a small but negative and significant effect on the individual decision to attend university and observe stronger peer effects among groups of students of similar gender or socio-economic background. We also find a weaker impact of the proportion of peers advised to change their educational choice on the individuals of higher level of academic ability.
Estimating the effect of linguistic diversity in kindergartens and schools on child development is challenging due to the endogeneity of the language spoken at home and self-selection. We employ an instrumental variables approach to address the former and accounted for self-selection by exploiting the variation in linguistic diversity across cohorts within kindergartens. The estimated causal effects of linguistic diversity are heterogeneous: There is a small negative but statistically significant effect on the development of German children, which is mainly driven by a detrimental effect on the language skills of German speakers, but there is no effect on non-German speakers.
This dissertation discusses the relevance of the implementation of market mechanisms in the educational system. It shows that such mechanisms are unlikely to improve the matching between schools and students, since centralized mechanisms perform better. Then, it measures peers effects in French public junior high school, and shows that they quite large. In a third part, it looks to the compensation of teachers in France, and show that it is not based on merit or performance. Last, it analyses the impact of the openness to competition of the education, and shows that it is unlikely to produce improvement. Indeed, such openness would lead to an increased vertical differentiation across, giving them more market power. As a result, market mechanisms seem unable to improve students’ achievement.
Future migration is central to contemporary politics, but we know little of how citizens and policy-makers perceive and predict migratory trends. I analyze migration forecasting in a representative sample of the population of France, using survey data and administrative records to document differences in the accuracy of forecasting among groups of individuals. The article takes an interdisciplinary approach to future-oriented thinking, conceiving it as a distributed cognitive process, and showing that educational attainment and migratory background shape one’s ability to predict short-term trends. My analysis stresses the importance of accounting for sociodemographic characteristics and social networks in forecasting: I show that social diversity can improve predictions and extend studies based on the Delphi methodology by discussing the relevant expertise to forecast in different realms.
This note studies the relationship between the gender composition of a student’s peers and two of their non-cognitive factors: sense of belonging and self-worth. Using data from Add Health and exploiting idiosyncratic variation in the share of female peers across grades within schools, I find positive but small effects of a higher share of female peers for male students. I do not find statistically significant effects for female students, but I can rule out large positive effects.
Using detailed Danish administrative data covering the entire population of students entering higher education in the period 1985 to 2010, we investigate the importance of a student’s peers in higher education for the decision to drop out. We use high school GPA as a predetermined measure of student ability and idiosyncratic variation in peer composition across cohorts within the same education and institution. Our findings suggest that peer ability is an important determinant of students’ drop out decisions as well as later labor market outcomes. Overall, we find that a one standard deviation increase in peers’ high school GPA reduces the probability of dropping out by 4.6 percentage points. This number masks considerable heterogeneity by level and field of study. Allowing for a more flexible specification, we find that low quality peers have adverse effects on the probability of dropping out while high quality peers have beneficial effects. These effects are more pronounced for lower ability students.
Network externalities (where the value of a practice is a function of network alters that have already adopted the practice) are mechanisms that exacerbate social inequality under the condition of homophily (where advantaged individuals poised to be primary adopters are socially connected to other advantaged individuals). The authors use an agent-based model of diffusion on a real-life population for empirical illustration and, thus, do not consider consolidation (correlation between traits), a population parameter that shapes network structure and diffusion. Using an agent-based model, this article shows that prior findings linking homophily to segregated social ties and to differential diffusion outcomes are contingent on high levels of consolidation. Homophily, under low consolidation, is not sufficient to exacerbate existing differences in adoption probabilities across groups and can even end up alleviating intergroup inequality by facilitating diffusion.
This paper estimates peer effects on children’s school entry age, using a dataset on 4,165 children from rural northwestern China (Gansu province). Instrumental-variable estimation, exploiting variations in (older) peers’ home-to-school distance to identify the effect of their school entry age, reveals that a one-year increase in (older) peers’ school entry age raises a child’s school entry age by 0.43 years. This effect is much stronger than the effects of family-background factors such as parental education and family wealth, suggesting that the dominant driving force of delayed school enrollment lies outside of the family.
Despite the efficacy of Pigouvian taxes, governments often find them surprisingly controversial to implement. Evidence suggests the reason may be their complexity, which stems from the delay of externality. This paper studies whether communication among peers can promote public support for Pigouvian taxation. Using a market experiment with time-delayed negative externalities, we find that support for Pigouvian taxation increases when tax supporters can explain their position to other voters. We show that the peer effects cannot be explained by simple imitation or compliance, but are more likely to be driven by social learning. Our findings provide converging evidence for the role of complexity in the lack of support for Pigouvian taxes. These results point to the importance of giving voice and visibility to members of the general public who support efficient but complex tax policies.
Ce papier mesure l'infuence du niveau scolaire des pairs sur la performance en fin de collège à La Réunion. Puisque les élèves avec des niveaux scolaires semblables ont tendance à se regrouper entre eux, nous utilisons la variation intra-école du niveau des pairs pour surmonter le biais lié à cette sélection endogène. De plus, nous supprimons explicitement les classes regroupant exclusivement des élèves en grande difficulté scolaire ou au contraire suivant des options destinées aux meilleurs élèves. Cela permet d'éliminer l'essentiel du biais de sélection endogène des pairs à travers les classes au sein d'une école donnée. Ce papier constitue également à notre connaissance la première application directe du modèle développé par Sojourner (2013) pour tenir compte de la présence non négligeable et non aléatoire des valeurs manquantes dans la mesure du niveau scolaire des pairs. Nous trouvons un effet de pairs moyen et positif et considérable dans la spécification linéaire en moyennes : un rang de percentile en plus sur le niveau initial des pairs procure toutes choses égales par ailleurs environ 0.2 rang de percentile sur les résultats en fin de collège. De manière surprenante, nous trouvons que cet effet augmente avec le niveau initial de l'individu. Enfin, nous documentons que les plus faibles ne sont pas affectés par ses pairs quel que soit le niveau de ces derniers et que les élèves avec d'autres niveaux bénéficient systématiquement de pairs très forts et sont négativement influencés par les pairs très faibles.
This paper analyzes the academic peer influence of disabled students in the classroom, exploiting the random student-classroom assignment within middle schools in China. We show that the share of disabled students in a class has a significant negative impact on the academic achievement of their non-disabled classmates. This adverse influence remains largely stable over time when the classroom composition stays constant. We further find that the social spillovers of disabled students are attributable to their disability status rather than to their disability-correlated characteristics. An investigation into the mechanisms shows that disabled children lead to worsened learning environment and increased social interactions of their classmates with disruptive peers at school. There is no evidence that disabled children impair the learning efforts or the educational aspirations of non-disabled students in the same classroom.
Do students benefit differently from interacting with similar and diverse peers? Using register-linked survey data from a stratified sample of Swedish classrooms I test whether endogenous peer effects in student achievement are heterogeneous by immigrant status. My empirical strategy combines instrumental variables, classroom fixed effects, and a control function to identify the parameter of interest separately from contextual and correlated effects. In particular, by considering partially overlapping networks of peers and family members, I use peers’ parents’ education as instruments for peer behaviour. My findings suggest that endogenous effects are limited to interactions with native peers only, but benefit both native and migrant students. High-ability children of migrants appear to be particularly vulnerable to friendship segregation.
It is argued that simple vouchers are not sufficient for successful decentralization: To achieve the socially desired outcome, the government must pay schools for the educational outputs in addition to payments for the employment of students. Once this achievement based system (ABS) is in place, the optimal amount of integration will arise voluntarily, because in the ABS schools face the correct shadow wages for the employment of students.
In 2005, Hurricanes Katrina and Rita forced many children to relocate across the Southeast. While schools quickly enrolled evacuees, families in receiving schools worried about the impacts on incumbent students. We find no effect, on average, of the inflow of evacuees on achievement in Houston. In Louisiana we find little impact on average and we reject linear-in-means models. Moreover, we find that student achievement improves with high achieving peers and worsens with low achieving peers. Finally, an increase in the inflow of evacuees raised incumbent absenteeism and disciplinary problems in Houston's secondary schools.
Longitudinal, student performance-based, value-added accountability models have become popular of late and continue to enjoy increasing popularity. Such models require student data to be vertically scaled across wide grade and developmental ranges so that the value added to student growth/achievement by teachers, schools, and districts may be modeled in an accurate manner. Many assessment companies provide such vertical scales and claim that those scales are adequate for longitudinal value-added modeling. However, psychometricians tend to agree that scales spanning wide grade/developmental ranges also span wide content ranges, and that scores cannot be considered exchangeable along the various portions of the scale. This shift in the constructs being measured from grade to grade jeopardizes the validity of inferences made from longitudinal value-added models. This study demonstrates mathematically that the use of such “construct-shifting” vertical scales in longitudinal, value-added models introduces remarkable distortions in the value-added estimates of the majority of educators. These distortions include (a) identification of effective teachers/schools as ineffective (and vice versa) simply because their students’ achievement is outside the developmental range measured well by “appropriate” grade-level tests, and (b) the attribution of prior teacher/school effects to later teachers/schools. Therefore, theories, models, policies, rewards, and sanctions based upon such value-added estimates are likely to be invalid because of distorted conclusions about educator effectiveness in eliciting student growth. This study identifies highly restrictive scenarios in which current value-added models can be validly applied in high-stakes and low-stakes research uses. This article further identifies one use of student achievement data for growth-based, value-added modeling that is not plagued by the problems of construct shift: the assessment of an upper grade content (e.g., fourth grade) in both the grade below and the appropriate grade to obtain a measure of student gain on a grade-specific mix of constructs. Directions for future research on methods to alleviate the problems of construct shift are identified as well.
Understanding peer effects is critical to evaluating the effect of public school seg-regation on the achievement gap. This paper develops a new approach to identifying the effect of peer behavior on achievement, using a framework that integrates previ-ously unexplored types of heterogeneity in peer spillovers. Applying the strategy to North Carolina public elementary school students, I find stronger peer effects within than across race-based reference groups, the magnitude of which varies substantially across the percentiles of the achievement distribution. Desegregating peer groups helps nonwhites in the lowest performing peer groups but leads to only marginal changes in the achievement gap.
There is a widespread perception that externalities from troubled children are significant, though measuring them is difficult due to data and methodological limitations. We estimate the negative spillovers caused by children from troubled families by exploiting a unique dataset in which children's school records are matched to domestic violence cases. We find that children from troubled families significantly decrease the reading and math test scores of their peers and increase misbehavior in the classroom. The achievement spillovers are robust to within-family differences and when controlling for school-by-year effects, providing strong evidence that neither selection nor common shocks are driving the results. (JEL D62, I21, J12, J13, K42)
Few empirical strategies have been developed that investigate public provision under majority rule while taking explicit account of the constraints implied by mobility of households. The goal of this paper is to improve our understanding of voting in local communities when neighborhood quality depends on peer or neighborhood effects. We develop a new empirical approach which allows us to impose all restrictions that arise from locational equilibrium models with myopic voting simultaneously on the data generating process. We can then analyze how close myopic models come in replicating the main regularities about expenditures, taxes, sorting by income and housing observed in the data. We find that a myopic voting model that incorporates peer effects fits all dimensions of the data reasonably well.
The core methods in today's econometric toolkit are linear regression for statistical control, instrumental variables methods for the analysis of natural experiments, and differences-in-differences methods that exploit policy changes. In the modern experimentalist paradigm, these techniques address clear causal questions such as: Do smaller classes increase learning? Should wife batterers be arrested? How much does education raise wages?Mostly Harmless Econometricsshows how the basic tools of applied econometrics allow the data to speak.In addition to econometric essentials,Mostly Harmless Econometricscovers important new extensions--regression-discontinuity designs and quantile regression--as well as how to get standard errors right. Joshua Angrist and J rn-Steffen Pischke explain why fancier econometric techniques are typically unnecessary and even dangerous. The applied econometric methods emphasized in this book are easy to use and relevant for many areas of contemporary social science.An irreverent review of econometric essentialsA focus on tools that applied researchers use mostChapters on regression-discontinuity designs, quantile regression, and standard errorsMany empirical examplesA clear and concise resource with wide applications.
This paper evaluates a pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home energy reports to residential utility consumers. The reports compare a household’s energy use to that of its neighbors and provide energy conservation tips. Using data from randomized natural field experiment at 80,000 treatment and control households in Minnesota, I estimate that the monthly program reduces energy consumption by 1.9 to 2.0 percent relative to baseline. In a treatment arm receiving reports each quarter, the effects decay in the months between letters and again increase upon receipt of the next letter. This suggests either that the energy conservation information is not useful across seasons or, perhaps more interestingly, that consumers’ motivation or attention is malleable and non-durable. I show that “profiling,” or using a statistical decision rule to target the program at households whose observable characteristics suggest larger treatment effects, could substantially improve cost effectiveness in future programs. The effects of this program provide additional evidence that non-price “nudges” can substantially affect consumer behavior.
Past research suggests that congregating delinquent youth increases their likelihood of problem behavior. We test for analogous peer effects in the drug use and sexual behavior of male ( n = 279) and female ( n = 435) college students, using data on the characteristics of first-year roommates to whom they were randomly assigned. We find that males who reported binge drinking in high school drink much more in college if assigned a roommate who also binge drank in high school than if assigned a nonbinge-drinking roommate. No such multiplier effect is observed for females, nor are multiplier effects observed for marijuana use or sexual behavior for either males or females. Students who did not engage in these behaviors in high school do not appear to be affected by their roommates’ high school behavior. Peer Reviewed http://deepblue.lib.umich.edu/bitstream/2027.42/44594/1/10802_2005_Article_3576.pdf
Peer effects have figured prominently in debates on school vouchers, desegregation, ability tracking, and antipoverty programs. Compelling evidence of their existence remains scarce for plaguing endogeneity issues such as selection bias and the reflection problem. This paper is among the first to firmly establish the link between peer performance and student achievement, using a unique data set from China. We find strong evidence that peer effects exist and operate in a positive and nonlinear manner; reducing the variation of peer performance increases achievement; and our semiparametric estimates clarify the trade-offs facing policymakers in exploiting positive peer effects to increase future achievement. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
We model the links between residential choice, education, and productivity in a city composed of several communities. Local
complementarities in human capital investment induce occupational segregation, although efficiency may require identical communities.
Even when some asymmetry is optimal, equilibrium segregation can cause entire “ghettos” to drop out of the labor force. Underemployment
is more extensive, the easier it is for high-skill workers to isolate themselves from others. When perfect segregation is
feasible, individual incentives to pursue it are self-defeating and lead instead to a collapse of the productive sector.
In a multicommunity model, high-income families cluster together in any equilibrium, and cluster near effective schools if effectiveness is an important component of community desirability. Governmental fragmentation facilitates this residential sorting. Thus, if parents prefer effective schools, income correlates with effectiveness in high-choice-market equilibrium. I examine the distribution of student background and test scores across schools within metropolitan areas that differ in the structure of educational governance. I find little indication of the "effectiveness sorting" that is predicted if parents choose neighborhoods for the efficacy of the local schools. This suggests caution about the productivity implications of school choice policies.
In the last and current decade, the W ake County school district reassigned numerous students to schools, moving up to five percent of the enrolled population in any given year. Before 2000, the explicit goal was balancing schools'racial composition; after 2000, it was balancing schools'income composition. Throughout, finding space for the area's rapidly expanding student population was the most important concern. The reassignments generate a very large number of natural experiments in which students experience new peers in the classroom. Using panel data on students before and after they experience policy-induced changes in peers, we explore which models of peer effects explain the data. We also review common models and econometric identification of peer effects. Our results reject the popular linear-in-means and single-crossing models as stand-alone models of peer effects. We find support for the Boutique and Focus models of peer effects, as well as for a monotonicity property by which a higher achieving peer is better for a student's own achievement all else equal. Our results indicate that, when we properly account for the effects of peers'achievement, peers'race, ethnicity, income, and parental education have no or at most very slight effects. W e compute that switching from race-based to income-based desegregation has at most very slight effects, so that W ake County's numerous reassignments mainly affected achievement through the redistribution of lower and higher-achieving peers.
To study the effect of college roommates upon one another's grades, study habits, and other activities, dormitory roommates with various combinations of academic ability were experimentally formed. An analogous correlational study was conducted on roommates who had selected one another. Observed effects are mediated in various ways by the birth ordinal positions of the roommates in their respective families. It appears that first-born students are more susceptible to influence and later-borns more influential. In the experiment, students with high-ability roommates obtain better grades than those with low-ability roommates only if the roommate is later-born. Among males, first-borns profit more than later-borns from sharing courses with their roommate. Effects of the roommate on other educationally relevant activities are also examined.
We present a model in which compulsory school attendance laws, which typically require school attendance until a specified birthday, induce a relationship between years of schooling and age at school entry. Variation in school starting age created by children's dates of birth provides a natural experiment for estimating the effect of age at school entry. Because no large data set contains information on both age at school entry and educational attainment, we use an instrumental variables (IV) estimator with data derived from the 1960 and 1980 Censuses to estimate and test the age-at-entry/compulsory schooling model. In most IV applications, the two covariance matrices that form the estimator are constructed from the same sample. We use a method-of-moments framework to discuss IV estimators that combine moments from different data sets. In our application, quarter of birth dummies are the instrumental variables used to link the 1960 Census, from which age at school entry can be derived for one cohort of students, to the 1980 Census, which contains educational attainment for the same cohort of students. The results suggest that compulsory attendance laws constrain roughly 10% of students to stay in school.
Education research is replete with studies of how various policies impact student achievement, yet little attention is paid to the forces driving variation in policy across schools. With the basic structure of education up for debate in the U.S., it is critical to understand how individual school policies will respond to systemic change. Using out of school suspension as the policy of interest, I model the discipline setting process and the impact discipline has on student outcomes in an equilibrium setting. Using the estimated model, I consider various structural changes in the education market aimed at closing the racial gap in suspension. I calculate the new discipline, behavior, and achievement equilibrium and discuss the tradeoffs policymakers face when attempting to close the discipline gap.
The impact of peers on student outcomes has important policy implications for how students are organized into classes and the overall impact of education interventions. But it is difficult to accurately measure peer effects because of the nonrandom sorting of students and teachers into classrooms and the endogeneity of peers' achievement. In this study, an education production function (EPF) is specified that includes student and peer characteristics as regressors. This model is estimated using student-level data from New York City public schools for 1995–2000. The richness of these data allows six sources of bias that arise in the EPF model to be addressed, including the above-mentioned nonrandom classroom assignment and the endogeneity of peers' achievement. This results in credible evidence of (small) peer group effects. Instrumenting for the mean of peers' achievement significantly reduces the associated peer effect. Nonlinear peer group effects are evident in the form of a small positive impact associated with the homogeneity of peers' achievement. Generally, peer characteristics do not appear to affect individual performance. Also included in this analysis is an application of a new methodology developed by Graham (2007) that identifies peer group effects through their impact on the variance in classroom mean test scores. The approach is less susceptible to the six biases that plague the EPF approach. The evidence from this exercise indicates that peer group effects are present and corroborates the results from the EPF approach. © 2008 American Education Finance Association
This paper addresses a central difficulty in the estimation of causal relationships between teacher characteristics and student achievement: the tendency for highly qualified teachers to teach in schools serving more advantaged students, and the tendency for parents to seek out teachers with better credentials within schools. These two processes tend to bias estimates of teacher effects upward. Using administrative data on North Carolina public schools, we employ several strategies for eliminating this bias: controlling for a rich set of student covariates, using school fixed effects, and restricting the analysis to schools that appear to assign students randomly to classrooms. In all our analyses, we find significant returns to teacher experience and licensure test scores. We also find that these returns are greater for students from advantaged families, a pattern that may help explain why nonrandom matching that benefits the affluent is allowed to persist in equilibrium.
Obtaining consistent estimates of spillovers in an educational context is hampered by two issues: selection into peer groups and peer efiects emanating from unobservable characteristics. We develop an algorithm for estimating spillovers using panel data that addresses both of these problems. The key innovation is to allow the spillover to operate through the flxed efiects of a student's peers. The only data requirements are multiple outcomes per student and heterogeneity in the peer group over time. We flrst show that the non-linear least squares estimate of the spillover is consistent and asymptotically normal as N ! 1 with T flxed. We then provide an iterative estimation algorithm that is easy to implement and that converges to the non-linear least squares solution. Using University of Maryland transcript data, we flnd statistically signiflcant peer efiects on course grades, particularly in courses of a collaborative nature. We compare our method with traditional approaches to the estimation of peer efiects, and quantify separately the biases associated with selection and spillovers through peer unobservables.
Empirical studies of peer effects rely on the assumption that peer spillovers can be measured through observables. However, in the education context, many theories of peer spillovers center around unobservables, such as ability, effort or motivation. I show that when peer effects arise from unobservables, the typical empirical specifica-tions will not measure peer effects accurately, which may help explain differences in the magnitude and even sign of peer effects estimates across studies. I further show that under reasonable assumptions these estimates cannot be applied to determine the effects of regrouping students, a central motivation of the literature.
We use administrative data covering all public school students in the state of North Carolina to estimate the relationship between peer characteristics and student achievement. In models defining peer groups at the classroom level and employing school fixed effects, we find a significant positive relationship between peer ability, as measured by 3 rd grade standardized test scores, and 5 th grade achievement. We also find that greater dispersion in peer ability predicts higher math test scores. We estimate a significant positive impact of 5 th grade peer characteristics carrying forward to the 6 th , 7 th and 8 th grades. Concerns of endogenous selection into peer groups are very important in this study. While the use of school fixed effects does not substantially affect our peer characteristic coefficients, alternative specifications that exploit changes in school composition associated with the redrawing of attendance zone boundaries show no significant impact of changes in peer group composition on changes in achievement.
This paper develops a model in which colleges seek to maximize the quality of the educational experience provided to their students. We deduce predictions about the hierarchy of schools that emerges in equilibrium, the allocation of students by income and ability among schools, and about the pricing policies that schools adopt. The empirical findings of this paper suggest that there is a hierarchy of school qualities which is characterized by substantial stratification by income and ability. The evidence on pricing by ability is supportive of positive peer effects in educational achievement from high ability at the college level. Copyright © 2003 John Wiley & Sons, Ltd.
This book, by one of the world's leading experts on dynamic panel data, presents a modern review of some of the main topics in panel data econometrics. The author concentrates on linear models, and emphasizes the roles of heterogeneity and dynamics in panel data modelling. The book combines methods and applications, so will appeal to both the academic and practitioner markets. The book is divided in four parts. Part I concerns static models, and deals with the problem of unobserved heterogeneity and how the availability of panel data helps to solve it, error component models, and error in variables in panel data. Part II looks at time series models with error components. Its chapters deal with the problem of distinguishing between unobserved heterogeneity and individual dynamics in short panels, modelling strategies of time effects, moving average models, inference from covariance structures, the specification and estimation of autoregressive models with heterogeneous intercepts, and the impact of assumptions about initial conditions and heteroskedacity on estimation. Part III examines dynamics and predeterminedness. Its two chapters consider alternative approaches to estimation from small and large T perspectives, looking at models with both strictly exogenous and lagged dependent variables allowing for autocorrelation of unknown form, models in which the errors are mean independent of current and lagged values of certain conditioning variables but not with their future values. Together Parts II and III provide a synthesis, and unified perspective, of a vast literature that has had a significant impact on recent econometric practice. Part IV reviews the main results in the theory of generalized method of moments estimation and optimal instrumental variables. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/0199245290/toc.html
Using a new administrative panel data set from the University of Maryland, this paper explores conventional peer effects and the effects of socially proximate peers at a large public university where some students are randomly assigned to housing. Results show that there is little evidence of robust residential peer effects on undergraduate performance. The impact of socially proximate peers' characteristics on student achievement is then examined using an instrumental variables technique. Results indicate that social “friends” do not impact performance more than randomized peers. The paper casts doubt on the notion that social tie formation is the route to peer effects, and urges caution in the continued pursuit of peer effects in education without substantial empirical or theoretical innovation.
To study the effects of ability grouping on school competition, we develop a theoretical and computational model of tracking in public and private schools. We examine tracking’s consequences for the allocation of students of differing abilities and income within and between public and private schools. Private schools tend to attract the most able and wealthiest students, and rarely track in equilibrium. Public sector schools can maximize attendance by tracking students. Public schools retain a greater proportion of higher-ability students by tracking, but lose more wealthy, lower-ability students to the private sector. Consequently, socioeconomic status is a predictor of track assignment in public schools. For the entire population, public-sector tracking has small aggregate effects on achievement and welfare, but results in significant redistribution from lower- to higher-ability students.
We propose a simple short-cut to the problem of estimating endogenous peer effects from observed behavior: asking students about peers' ability and their own effort. Our survey evidence indicates that students believe in own-peer complementarities in educational production.
In 1994 the state of Michigan implemented one of the most comprehensive school finance reforms undertaken to date in any of the states. Understanding the effects of the reform is thus of value in informing other potential reform initiatives. In addition, the reform and associated changes in the economic environment provide an opportunity to assess whether a simple general equilibrium model can be of value in framing the study of such reform initiatives. In this paper, we present and use such a model to derive predictions about the effects of the reform on housing prices and neighborhood demographic compositions. Broadly, our analysis implies that the effects of the reform and changes in the economic environment are likely to have been reflected primarily in housing prices and only modestly on neighborhood demographics. We find that evidence for the Detroit metropolitan area from the decade encompassing the reform is largely consistent with the predictions of the model.
When there are peer effects in education, private schools have an incentive to vary tuition to attract relatively able students. Epple and Romano [American Economic Review 88(1) (1998) 33] develop a general equilibrium model characterizing equilibrium pricing and student selection into schools when peer effects are present. The model predicts that competition will lead private schools to give tuition discounts to more able students, and that this will give rise to an equilibrium exhibiting stratification by income and ability between the public and private sectors and to a hierarchy of schools within the private sector. The model also yields a variety of comparative-static predictions. The predictions of the model are tested in this paper using a unique data set assembled by Figlio and Stone [Research in Labor Economics (1999) 115]. Tests of equilibrium predictions of the model reveal that: The propensity to attend private school increases with both income and ability, and, among private schools, the propensity to attend the highest-tuition schools rises with both income and ability. Within private schools, tuition declines with student ability, with a substantial number of even high-income households paying little or no tuition. The correlation between income and ability is greater in public than private schools. Tests of comparative static predictions of the model reveal that: Both income and ability become stronger predictors of private school attendance as public school expenditure falls. Income becomes increasingly important in determining placement in the private school hierarchy as public school expenditure falls. Discounts to ability in the lowest-quality private school decline as public school expenditure rises while discounts to ability in the highest-quality private school are little affected by changes in public school expenditure. Expenditure in private schools rises as expenditure in public schools increases. These empirical results are consistent with the predictions of the theoretical model.
This paper develops a differentiated products model of school competition that distinguishes among different dimensions that matter in the skill acquisition process. The model predicts that when identical schools compete for students, specialization may arise as a competition strategy. This serves rich students' education goals well. Poorer students, however, may attend schools with specializations that do not cater to their relative strengths. By doing so, these poorer students complement the weaknesses of the richer students through peer effects and receive financial aid in return. The empirical analysis provides strong support for the model's predictions about within-school implications of specialization.
This paper provides a set of results on the econometric identifiability of binary choice models with social interactions. Our analysis moves beyond parametric identification results that have been obtained in the literature to consider the identifiability of model parameters when the distribution of random payoff terms is unknown. Further, we consider how identification is affected by the presence of unobservable payoff terms of various types as well as identification in the presence of certain forms of endogenous group membership. Our results suggest that at least partial identification may be achieved under assumptions that in certain contexts may be plausible.
In 1981, Chile introduced nationwide school choice by providing vouchers to any student wishing to attend private school. As a result, more than 1000 private schools entered the market, and the private enrollment rate increased by 20 percentage points, with greater impacts in larger, more urban, and wealthier communities. We use this differential impact to measure the effects of unrestricted choice on educational outcomes. Using panel data for about 150 municipalities, we find no evidence that choice improved average educational outcomes as measured by test scores, repetition rates, and years of schooling. However, we find evidence that the voucher program led to increased sorting, as the “best” public school students left for the private sector.
Understanding how heterogeneity in peer group composition affects academic attainment has important implications for how schools organize students in group settings. The random assignment of cadets to companies at West Point affords an opportunity to investigate this issue empirically. Estimates of the impact of peer group heterogeneity in math SAT scores on freshmen-year academic performance reveals that more heterogeneous peer groups have positive effects on individual grades. High-ability peers account for most of the positive effect, while low-ability peers have no measureable effect. (JEL I23, J24, M54)
This paper evaluates a pilot program run by a company called OPOWER, previously known as Positive Energy, to mail home energy reports to residential utility consumers. The reports compare a household’s energy use to that of its neighbors and provide energy conservation tips. Using data from randomized natural field experiment at 80,000 treatment and control households in Minnesota, I estimate that the monthly program reduces energy consumption by 1.9 to 2.0 percent relative to baseline. In a treatment arm receiving reports each quarter, the effects decay in the months between letters and again increase upon receipt of the next letter. This suggests either that the energy conservation information is not useful across seasons or, perhaps more interestingly, that consumers’ motivation or attention is malleable and non-durable. I show that “profiling,” or using a statistical decision rule to target the program at households whose observable characteristics suggest larger treatment effects, could substantially improve cost effectiveness in future programs. The effects of this program provide additional evidence that non-price “nudges” can substantially affect consumer behavior.
In this paper we show that, when endogenous fertility is considered via Cobb-Douglas preferences, public debt plays a clear-cut role on dynamic inefficiency (DI) of an OLG economy: in fact, for correcting the DI problem, debt must be increased (decreased) when the economy is overaccumulating (underaccumulating). The occurrence of overaccumulation, and, thus, the necessity of a positive level of debt, is favoured by a small capital income share, on the technological side, and a sufficiently high degree of patience and a low preference for children on preferences grounds. As for the optimal level of debt, our analysis shows that a high level ofdebt is more likely to be optimal for countries with a relatively low share of capital, with high costs for rearing children, with high individuals' degree of patience; as for individuals preference for children, as expected, the preference for a numerous family reduces the risk of overaccumulation and, thus, the optimal level of national debt. Moreover, interestingly, although in our model the occurrence of dynamic inefficiency (DI) does not depend on the level of the child rearing cost, such cost magnifies the degree of inefficiency and, therefore, a higher public debt is required for correcting DI. Finally, it is argued that such findings can provide useful criteria for assessing the optimality of public debt-cutting policies undertaken by several Europen countries.
Credit default swaps (CDS) which constitute up to 98% of credit derivatives have had a unique, endemic and pernicious role to play in the current financial crisis. However, there are few in depth empirical studies of the financial network interconnections among banks and between banks and nonbanks involved as CDS protection buyers and protection sellers. The ongoing problems related to technical insolvency of US commercial banks is not just confined to the so called legacy/toxic RMBS assets on balance sheets but also because of their credit risk exposures from SPVs (Special Purpose Vehicles) and the CDS markets. The dominance of a few big players in the chains of insurance and reinsurance for CDS credit risk mitigation for banks’ assets has led to the idea of “too interconnected to fail” resulting, as in the case of AIG, of having to maintain the fiction of non-failure in order to avert a credit event that can bring down the CDS pyramid and the financial system. This paper also includes a brief discussion of the complex system Agent-based Computational Economics (ACE) approach to financial network modeling for systemic risk assessment. Quantitative analysis is confined to the empirical reconstruction of the US CDS network based on the FDIC Q4 2008 data in order to conduct a series of stress tests that investigate the consequences of the fact that top 5 US banks account for 92% of the US bank activity in the $34 tn global gross notional value of CDS for Q4 2008 (see, BIS and DTCC). The May-Wigner stability condition for networks is considered for the hub like dominance of a few financial entities in the US CDS structures to understand the lack of robustness. We provide a Systemic Risk Ratio and an implementation of concentration risk in CDS settlement for major US banks in terms of the loss of aggregate core capital. We also compare our stress test results with those provided by SCAP (Supervisory Capital Assessment Program). Finally, in the context of the Basel
In a range of settings, private firms manage peer effects by sorting agents into different groups, be they schools, neighbourhoods or teams. This paper considers such a firm, which controls group entry by setting a series of anonymous prices. We show that private provision systematically leads to two distortions relative to the efficient solution: first, agents are segregated too finely; second, too many agents are excluded from all groups. We demonstrate that these distortions are a consequence of anonymous pricing and do not depend upon the nature of the peer effects. This general approach also allows us to assess the way the `returns to scale' of peer technology and the cost of group formation affect the optimal group structure.
Public-service output depends on input expenditures, on own personal characteristics, and on the characteristics of the other residents in the community (the peer group effect). In a community model with public expenditures set by voting, with migration between communities, and with land price differentials (capitalization), it is shown that communities may become heterogeneous in composition and (second-best) inefficient. This equilibrium occurs when the peer group effect is neither "too strong" nor "too weak." The inefficiency arises because an externality is created by migration. The land price differential does not play the part of the "price" of the better peer group, but of a transfer payment. Copyright 1990 by University of Chicago Press.
This paper develops a framework for estimating household preferences for school and neighborhood attributes in the presence of sorting. It embeds a boundary discontinuity design in a heterogeneous residential choice model, addressing the endogeneity of school and neighborhood characteristics. The model is estimated using restricted-access Census data from a large metropolitan area, yielding a number of new results. First, households are willing to pay less than 1 percent more in house prices—substantially lower than previous estimates—when the average performance of the local school increases by 5 percent. Second, much of the apparent willingness to pay for more educated and wealthier neighbors is explained by the correlation of these sociodemographic measures with unobserved neighborhood quality. Third, neighborhood race is not capitalized directly into housing prices; instead, the negative correlation of neighborhood percent black and housing prices is due entirely to the fact that blacks live in unobservably lower-quality neighborhoods. Finally, there is considerable heterogeneity in preferences for schools and neighbors, with households preferring to self-segregate on the basis of both race and education.
Research over the past several years has led to development of models characterizing equilibrium in a system of local jurisdictions. An important insight from these models is that plausible single-crossing assumptions about preferences generate strong predictions about the equilibrium distribution of households across communities. To date predictions have not been subjected to formal empirical tests. The purpose of this paper is to provide an integrated approach for testing predictions from this class of models. We first test conditions for locational equilibrium implied by these models. In particular about the distribution of households by income across communities. We then test the models predictions about the relationships among locational equilibrium conditions and housing prices. By drawing inferences from a structural general equilibrium model approach of this paper offers a unified treatment of theory and empirical testing.
Many services provide outputs that depend partially on the customers as inputs; the presence of other customers often contributes to the output experienced by each purchaser. Higher education is the premier example; others are legion. The authors provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services. Prices that charge customers for what they get on net (output minus input) from the firm both are competitive and support efficient allocations; these prices internalize the apparent external effects of customers on each other. Few examples of such prices exist in the real world. Copyright 1995 by University of Chicago Press.
The random assignment of cadets to social groups at West Point provides a rare opportunity to highlight potentially misleading estimates of social group effects found in many studies. Estimates of contemporaneous group effects in human capital production are typically positive and significant; however, evidence in this study suggests that occurrences common to a group may account for much of this correlation. Models that address these biases provide little evidence of group effects in academic performance, although there is evidence of group influences in choice outcomes such as the selection of academic major and the decision to remain in the Army. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
I use data from Williams College to implement a quasi-experimental empirical strategy aimed at measuring peer effects in academic outcomes. In particular, I use data on individual students' grades, their SAT scores, and the SAT scores of their roommates. I argue that first-year roommates are assigned randomly with respect to academic ability. This allows me to measure differences in grades of high-, medium-, or low-SAT students living with high-, medium-, or low-SAT roommates. With random assignment these estimates would provide compelling estimates of the effect of roommates' academic characteristics on an individual's grades. I also consider the effect of peers at somewhat more aggregated levels. In particular, I consider the effects associated with different academic environments in clusters of rooms that define distinct social units. The results suggest that peer effects are almost always linked more strongly with verbal SAT scores than with math SAT scores. Students in the middle of the SAT distribution may have somewhat worse grades if they share a room with a student who is in the bottom 15% of the verbal SAT distribution. The effects are not large, but are statistically significant in many models. Copyright (c) 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
This paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees' decisions to enroll in a Tax Deferred Account (TDA) retirement plan within a large university. The experiment encouraged a random sample of employees in a subset of departments to attend a benefits information fair organized by the university, by promising a monetary reward for attendance. The experiment multiplied by more than five the attendance rate of these treated individuals (relative to controls), and tripled that of untreated individuals within departments where some individuals were treated. TDA enrollment five and eleven months after the fair was significantly higher in departments where some individuals were treated than in departments where nobody was treated. However, the effect on TDA enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did. We provide three interpretations-differential treatment effects, social network effects, and motivational reward effects-to account for these results. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Classroom education has public good aspects. The technology is such that when one student disrupts the class, learning is reduced for all other students. A disruption model of educational production is presented. It is shown that optimal class size is larger for better-behaved students, which helps explain why it is difficult to find class size effects in the data. Additionally, the role of discipline is analyzed and applied to differences in performance of Catholic and public schools. An empirical framework is discussed where the importance of sorting students, teacher quality, and other factors can be assessed. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
This paper uses a unique data set to measure peer effects among college roommates. Freshman year roommates and dormmates are randomly assigned at Dartmouth College. I find that peers have an impact on grade point average and on decisions to join social groups such as fraternities. Residential peer effects are markedly absent in other major life decisions such as choice of college major. Peer effects in GPA occur at the individual room level, whereas peer effects in fraternity membership occur both at the room level and the entire dorm level. Overall, the data provide strong evidence for the existence of peer effects in student outcomes. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
This paper proposes a production function describing processes subject to mistakes in any of several tasks. It shows that
high-skill workers—those who make few mistakes—will be matched together in equilibrium, and that wages and output will rise
steeply in skill. The model is consistent with large income differences between countries, the predominance of small firms
in poor countries, and the positive correlation between the wages of workers in different occupations within enterprises.
Imperfect observability of skill leads to imperfect matching and thus to spillovers, strategic complementarity, and multiple
equilibria in education.
Non-random assignment of students to teachers can bias value added estimates of teachers' causal effects. Rothstein (2008a, b) shows that typical value added models indicate large counter-factual effects of 5th grade teachers on students' 4th grade learning, indicating that classroom assignments are far from random. This paper quantifies the resulting biases in estimates of 5th grade teachers' causal effects from several value added models, under varying assumptions about the assignment process. If assignments are assumed to depend only on observables, the most commonly used specifications are subject to important bias but other feasible specifications are nearly free of bias. I also consider the case where assignments depend on unobserved variables. I use the across-classroom variance of observables to calibrate several models of the sorting process. Results indicate that even the best feasible value added models may be substantially biased, with the magnitude of the bias depending on the amount of information available for use in classroom assignments.
With the growing recognition of the role played by geography in all sorts of economic problems, there is strong interest in measuring the size and scope of local spillovers (i.e., simple anonymous agglomeration or congestion effects, or more complicated interactions between individuals or firms of specific types). It is well-understood, however, that such spillovers cannot be distinguished from unobservable local attributes using just the observed location decisions of individuals or firms. We propose an empirical strategy for recovering estimates of spillovers in the presence of unobserved local attributes for a broadly applicable class of equilibrium sorting models. This approach relies on an instrumental variables strategy derived from the internal logic of the sorting model itself. We show practically how the strategy is implemented, provide intuition for our instrumental variables, and discuss the role of effective choice-set variation in identifying the model, and carry-out a series of Monte Carlo experiments to demonstrate the instruments' performance in small samples.