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Understanding Peer Effects: On the Nature, Estimation, and Channels of Peer Effects

Jan Feld¹; Ulf Zölitz^2,3

¹ Victoria University of Wellington · ² Maastricht University · ³ BRIQ Institute on Behavior and Inequality

This paper estimates peer effects in a university context where students are randomly assigned to sections. While students benefit from better peers on average, low-achieving students are harmed by high-achieving peers. Analyzing students’ course evaluations suggests that peer effects are driven by improved group interaction rather than adjustments in teachers’ behavior or students’ effort. Building on Angrist’s research, we further show that classical measurement error in a setting where group assignment is systematic can lead to a substantial overestimation of peer effects. However, when group assignment is random—like in our setting—peer effect estimates are biased toward zero.

DOI

10.1086/689472

Volume

35 (2)

Pages

387-428

Language

en

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BibTeX

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