Economics 147

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Economics 147

• Winter 2005
• Lecture 6

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Outline for today

• Peer effects (Hoxby article)
• How to read the readings
• ½ page of handwritten notes per reading

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Peer effects

• One component of school quality
• Vary across and within schools
• Policy implications
• Tracking
• Desegregation
• Magnet schools
• Charter schools
• Vouchers

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What are the channels?

• Direct effects
• Good peers teach you
• Bad peers bully you
• Indirect effects
• Peer behavior
• Peer wealth
• Peer achievement
• Generally we cant distinguish among the channels
  lump it all together under peers

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One potential mechanism

• Does one bad apple spoil the bunch? (Lazear)
• Simple model
• n students per class
• probability p that any student is behaving at a
  given time
• prob that all students are behaving pn
• prob that not all students are behaving 1 pn
• n? ? prob of disruption ?

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Simple example

• How does high-income students in a class affect
  low-income students?
• And high-income students?
• Problem selection
• Selection into school
• Within school-grade, selection into classroom

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Regression equation

• Baseline model Hoxby refers to
• We need variation in your peers to be caused by
  something that does not independently affect your
  outcomes!

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Random assignment of peers

• College roommates and dormmates (first year)
• Sacerdote, Dartmouth College
• Residential peer effects, not classroom
• Two types of peers room and dorm
• Multiple outcomes of interest

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Confirming that assignment is random
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Regression framework

• GPAi p0 p1ACAi p2ACAj ?
• i and j are roommates
• GPA is college GPA
• ACA is score academic index (based on high school)

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How does your college roommates high school
academic score affect your college GPA?
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How does your roommates choice of major affect
your choice?
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How do peers affect your social life?
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Real life residential location peer effects

• Case and Katz (1991)
• Detailed geographic data on Boston neighborhoods
• Find neighborhood peer effects strong for young
  adults
• Crime
• Drugs
• Out of work/out of school

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Peer effects in schools

• Hoxby (2002)
• Demographic idiosyncrasies ? good variation in
  class size
• Same idea for peers
• Strategy 1 Is there a high share of girls (or
  whites, or Hispanics) in fourth grade this year
  relative to other years at same school?
• Strategy 2 Is there a high share of low-ability
  white girls in fourth grade this year relative to
  other years at same school?

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Hoxby findings on peers

• Gender effects
• Race/ethnicity effects
• Strongest within racial/ethnic groups
• Not linear

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