From Natural Variation to Optimal Policy? The Lucas Critique Meets Peer Effects

Scott Carrell, Bruce Sacerdote () and James West

No 16865, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We take cohorts of entering freshmen at the United States Air Force Academy and assign half to peer groups with the goal of maximizing the academic performance of the lowest ability students. Our assignment algorithm uses peer effects estimates from the observational data. We find a negative and significant treatment effect for the students we intended to help. We show that within our "optimal" peer groups, students self-selected into bifurcated sub-groups with social dynamics entirely different from those in the observational data. Our results suggest that using reduced-form estimates to make out-of-sample policy predictions can lead to unanticipated outcomes.

JEL-codes: I2 J01 (search for similar items in EconPapers)
Date: 2011-03
Note: CH ED LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Published as “ From Natural Variation to Optimal Policy? The Importance of Endogenous Peer Group Formation ,” Econometrica , 81(3): 855 - 882 , 2013 . (with B. Sacerdote and J. West)

Downloads: (external link)
http://www.nber.org/papers/w16865.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16865

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16865

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().