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

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

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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16865.

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Date of creation: Mar 2011
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Handle: RePEc:nbr:nberwo:16865

Note: CH ED LS PE
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References

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  1. Scott E. Carrell & James E. West, 2008. "Does Professor Quality Matter? Evidence from Random Assignment of Students to Professors," NBER Working Papers 14081, National Bureau of Economic Research, Inc.
  2. Bhattacharya, Debopam, 2009. "Inferring Optimal Peer Assignment From Experimental Data," Journal of the American Statistical Association, American Statistical Association, vol. 104(486), pages 486-500.
  3. Todd R. Stinebrickner & Ralph Stinebrickner, 2005. "What Can Be Learned About Peer Effects Using College Roommates? Evidence From New Survey Data and Students from Disadvantaged Backgrounds," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20054, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  4. Scott E. Carrell & Richard L. Fullerton & James E. West, 2008. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," NBER Working Papers 14032, National Bureau of Economic Research, Inc.
  5. Foster, Gigi, 2006. "It's not your peers, and it's not your friends: Some progress toward understanding the educational peer effect mechanism," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1455-1475, September.
  6. David J. Zimmerman, 2003. "Peer Effects in Academic Outcomes: Evidence from a Natural Experiment," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 9-23, February.
  7. Scott E. Carrell & Frederick V. Malmstrom & James E. West, 2008. "Peer Effects in Academic Cheating," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
  8. Bryan S. Graham & Guido W. Imbens & Geert Ridder, 2009. "Complementarity and Aggregate Implications of Assortative Matching: A Nonparametric Analysis," NBER Working Papers 14860, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Leuven, Edwin & Rønning, Marte, 2011. "Classroom Grade Composition and Pupil Achievement," IZA Discussion Papers 5922, Institute for the Study of Labor (IZA).
  2. Mary Burke & Tim R. Sass, 2011. "Classroom peer effects and student achievement," Public Policy Discussion Paper 11-5, Federal Reserve Bank of Boston.
  3. Gordon B. Dahl & Katrine Vellesen Loken & Magne Mogstad, 2013. "Peer Effects in Program Participation," CESifo Working Paper Series 4349, CESifo Group Munich.
  4. David Kiss, 2013. "The impact of peer achievement and peer heterogeneity on own achievement growth: Evidence from school transitions," Working Papers 141, Bavarian Graduate Program in Economics (BGPE).
  5. Li, Tao & Han, Li & Zhang, Linxiu & Rozelle, Scott, 2014. "Encouraging classroom peer interactions: Evidence from Chinese migrant schools," Journal of Public Economics, Elsevier, vol. 111(C), pages 29-45.
  6. Debopam Bhattacharya & Shin Kanaya & Margaret Stevens, 2012. "Are University Admissions Academically Fair?," Economics Series Working Papers 608, University of Oxford, Department of Economics.
  7. Seth Richards-Shubik, 2012. "Peer Effects in Sexual Initiation: Separating Demand and Supply Mechanisms," PIER Working Paper Archive 12-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  8. Cai, Jing & de Janvry, Alain & Sadoulet, Elisabeth, 2013. "Social Networks and the Decision to Insure," MPRA Paper 46861, University Library of Munich, Germany.
  9. David Card & Laura Giuliano, 2011. "Peer Effects and Multiple Equilibria in the Risky Behavior of Friends," NBER Working Papers 17088, National Bureau of Economic Research, Inc.
  10. Noam Yuchtman & Florian Ederer & Bruno Ferman & Leonardo Bursztyn, 2013. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," 2013 Meeting Papers 222, Society for Economic Dynamics.
  11. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian & Katherine L. Milkman, 2011. "The Effect of Providing Peer Information on Retirement Savings Decisions," NBER Working Papers 17345, National Bureau of Economic Research, Inc.
  12. Androushchak, Gregory & Poldin, Oleg & Yudkevich, Maria, 2012. "Peer effects in exogenously formed student groups," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 26(2), pages 3-16.

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