Ordinal rank and the structure of ability peer effects

Marco Bertoni and Roberto Nisticò ()

Journal of Public Economics, 2023, vol. 217, issue C

Abstract: Exposure to high-ability peers entails positive learning externalities, but it also decreases students’ academic self-concept because of lower ordinal ability rank. We show that, as a result, the linear-in-means parameter identifies a composite (i.e., reduced form) effect. We illustrate the empirical relevance of this issue using data from two experiments that randomly assign students to groups. We find that the structural effect of mean peer ability estimated by a model that includes rank is much larger than the reduced form effect obtained when rank is omitted. This finding also holds in non-linear and heterogeneous peer effects models and helps clarify the mechanisms behind the effects of ability tracking policies.

Keywords: Rank effects; Peer effects; Omitted variables bias; Ability tracking (search for similar items in EconPapers)
JEL-codes: I21 I24 J24 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:217:y:2023:i:c:s0047272722001992

DOI: 10.1016/j.jpubeco.2022.104797

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