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Understanding peer effects: On the nature, estimation, and channels of peer effects

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...

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Bibliographic Details
Published in:Journal of labor economics 2017-04, Vol.35 (2), p.387-428
Main Authors: Feld, Jan, Zölitz, Ulf
Format: Article
Language:English
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Summary: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.
ISSN:0734-306X
1537-5307
DOI:10.1086/689472