Peer effects in education: When beliefs matter

• Main Author: FACCHINELLO, Luca
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Peer Effects; Ability; Self-concept; Grades; Motivation; Education Choices; Educational Attainment; Long-run Effects; Educational Assessment, Evaluation, and Research; Education Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research_all/8; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1007&context=soe_research_all
• Institution: Singapore Management University

Recent literature explains the puzzling finding of zero or negative peer effects in aca- demic achievement assuming that better peers negatively affect beliefs about ability (self-concept), motivation or peer interactions. This paper provides new evidence on such negative mechanisms, and on their impact on educational choices and attainment for students randomly assigned in compulsory school to classes with different cognitive ability. Using detailed longitudinal data on a nationally representative sample of Swedish compulsory school students, I find that students exposed to higher ability peers systematically underestimate their ability and are less likely to choose advanced subjects throughout compulsory school. While these students perform better, as measured by national test scores, they are assigned lower grades in subjects lacking national test scores, suggesting distortions in teachers’ assessment of student performance. Negative effects persist after compulsory school: students exposed to better peers have lower well-being and GPA in high school. I find substantial heterogeneity in treatment effects. Students who interact with better peers and receive early grades suffer more severe grade distortions, but exhibit stronger positive performance spillovers, better sort into non-compulsory education, and attain more education with respect to students lacking early grades. Negative peer effects in self-concept and grades are concentrated among disadvantaged students, who also receive lower parental support when exposed to better peers. This paper shows that class composition can distort students’ grades, self-concept and choices, and highlights the limits of assessing peer effects on test scores alone.