Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students

Aristide Houndetoungan (), Cristelle Kouame () and Michael Vlassopoulos ()
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Aristide Houndetoungan: Université de Paris
Cristelle Kouame: World Bank
Michael Vlassopoulos: University of Southampton

No 16998, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Peer influence on effort devoted to some activity is often studied using proxy variables when actual effort is unobserved. For instance, in education, academic effort is often proxied by GPA. We propose an alternative approach that circumvents this approximation. Our framework distinguishes unobserved shocks to GPA that do not affect effort from preference shocks that do affect effort levels. We show that peer effects estimates obtained using our approach can differ significantly from classical estimates (where effort is approximated) if the network includes isolated students. Applying our approach to data on high school students in the United States, we find that peer effect estimates relying on GPA as a proxy for effort are 40% lower than those obtained using our approach.

Keywords: social networks; peer effects; academic achievement; unobserved effort; isolated agents (search for similar items in EconPapers)
JEL-codes: C31 J24 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2024-05
New Economics Papers: this item is included in nep-edu, nep-net and nep-ure
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