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Identification of Social Interactions through Partially Overlapping Peer Groups

  • Giacomo De Giorgi
  • Michele Pellizzari
  • Silvia Redaelli

In this paper, we demonstrate that, in a context where peer groups do not overlap fully, it is possible to identify all the relevant parameters of the standard linear-in-means model of social interactions. We apply this novel identification structure to study peer effects in the choice of college major. Results show that one is more likely to choose a major when many of her peers make the same choice. We also show that peers can divert students from majors in which they have a relative ability advantage, with adverse consequences on academic performance, entry wages, and job satisfaction. (JEL I23, J24, J31, Z13)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 2 (2010)
Issue (Month): 2 (April)
Pages: 241-75

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Handle: RePEc:aea:aejapp:v:2:y:2010:i:2:p:241-75
Note: DOI: 10.1257/app.2.2.241
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  1. Graham, Bryan S. & Hahn, Jinyong, 2005. "Identification and estimation of the linear-in-means model of social interactions," Economics Letters, Elsevier, vol. 88(1), pages 1-6, July.
  2. Robst, John, 2007. "Education and job match: The relatedness of college major and work," Economics of Education Review, Elsevier, vol. 26(4), pages 397-407, August.
  3. repec:oup:restud:v:60:y:1993:i:3:p:531-42 is not listed on IDEAS
  4. Bryan S. Graham, 2008. "Identifying Social Interactions Through Conditional Variance Restrictions," Econometrica, Econometric Society, vol. 76(3), pages 643-660, 05.
  5. repec:oup:qjecon:v:118:y:2003:i:3:p:815-842 is not listed on IDEAS
  6. Scott E. Carrell & Richard L. Fullerton & James E. West, 2009. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 439-464, 07.
  7. repec:oup:qjecon:v:116:y:2001:i:2:p:681-704 is not listed on IDEAS
  8. 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.
  9. Keith A. Bender & John S. Heywood, 2009. "Educational Mismatch among Ph.D.s: Determinants and Consequences," NBER Chapters, in: Science and Engineering Careers in the United States: An Analysis of Markets and Employment, pages 229-255 National Bureau of Economic Research, Inc.
  10. Francesco Giavazzi & Pietro Garibaldi & Andrea Ichino & Enrico Rettore, 2009. "College cost and time to complete a degree: Evidence from tuition discontinuities," Working Papers 354, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  11. Piero Cipollone & Alfonso Rosolia, 2007. "Social Interactions in High School: Lessons from an Earthquake," American Economic Review, American Economic Association, vol. 97(3), pages 948-965, June.
  12. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  13. Giacomo De Giorgi & Michele Pellizzari, 2014. "Understanding Social Interactions: Evidence from the Classroom," Economic Journal, Royal Economic Society, vol. 124(579), pages 917-953, 09.
  14. Jonathan Guryan & Kory Kroft & Matthew J. Notowidigdo, 2009. "Peer Effects in the Workplace: Evidence from Random Groupings in Professional Golf Tournaments," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 34-68, October.
  15. Patrick Bayer & Randi Hjalmarsson & David Pozen, 2007. "Building Criminal Capital behind Bars: Peer Effects in Juvenile Corrections," NBER Working Papers 12932, National Bureau of Economic Research, Inc.
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