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The Use of Instrumental Variables in Peer Effects Models

Author

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  • Stephanie von Hinke
  • George Leckie
  • Cheti Nicoletti

Abstract

Instrumental variables are often used to identify peer effects. This paper shows that instrumenting the ‘peer average outcome’ with ‘peer average characteristics’ requires the researcher to include the instrument at the individual level as an explanatory variable. We highlight the bias that occurs when failing to do this.

Suggested Citation

  • Stephanie von Hinke & George Leckie & Cheti Nicoletti, 2019. "The Use of Instrumental Variables in Peer Effects Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(5), pages 1179-1191, October.
    • Handle: RePEc:bla:obuest:v:81:y:2019:i:5:p:1179-1191
    DOI: 10.1111/obes.12299
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    Citations

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    Cited by:

    1. Diemer, Andreas, 2022. "Endogenous peer effects in diverse friendship networks: Evidence from Swedish classrooms," Economics of Education Review, Elsevier, vol. 89(C).
    2. Cavapozzi, Danilo & Francesconi, Marco & Nicoletti, Cheti, 2021. "The impact of gender role norms on mothers’ labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 113-134.
    3. Boto-García, David & Baños-Pino, José Francisco, 2022. "Social influence and bandwagon effects in tourism travel," Annals of Tourism Research, Elsevier, vol. 93(C).
    4. Francesconi, Marco & Nicoletti, Cheti & Cavapozzi, Danilo, 2021. "The Impact of Gender Role Norms on Mothers’ Labor Supply," CEPR Discussion Papers 15957, C.E.P.R. Discussion Papers.
    5. Magnus Carlsson & Abdulaziz Abrar Reshid, 2022. "Co‐worker peer effects on parental leave take‐up," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(4), pages 930-957, October.
    6. Blankmeyer, Eric, 2021. "Peer Groups and Bias Detection in Least Squares Regression," MPRA Paper 110866, University Library of Munich, Germany.

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