Econometrica: May 2013, Volume 81, Issue 3

From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation

https://doi.org/10.3982/ECTA10168
p. 855-882

Scott E. Carrell, Bruce I. Sacerdote, James E. West

We take cohorts of entering freshmen at the United States Air Force Academy and assign half to peer groups designed to maximize the academic performance of the lowest ability students. Our assignment algorithm uses nonlinear peer effects estimates from the historical pre‐treatment data, in which students were randomly assigned to peer groups. We find a negative and significant treatment effect for the students we intended to help. We provide evidence that within our “optimally” designed peer groups, students avoided the peers with whom we intended them to interact and instead formed more homogeneous subgroups. These results illustrate how policies that manipulate peer groups for a desired social outcome can be confounded by changes in the endogenous patterns of social interactions within the group.

Log In To View Full Content

Supplemental Material

Supplement to "From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation"

This appendix contains tables not found within the manuscript.

Read More View PDF


Supplement to "From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation"

This zip file contains the replication files for the manuscript.

Read More View ZIP


Back