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Ability tracking or comprehensive schooling? A theory on peer effects in competitive and non-competitive cultures

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  • Thiemann, Kathrin

Abstract

We develop a model of student decision making that shows that it depends on the culture of competitiveness in a country or region whether it is optimal to choose a school design with ability tracking or comprehensive schooling. Students with different cultural background differ in their concern for relative position in the classroom, which is modeled by reference-dependent preferences. We contrast competitive cultures, where students compare their performance with the best performance in class, and non-competitive cultures where the reference point is the average performance. Taking into account students with heterogeneous abilities, we show that the average performance in competitive cultures is maximized under comprehensive schooling and in non-competitive cultures under ability tracking. Segregation of abilities, however, always leads to a higher dispersion of performances.

Suggested Citation

  • Thiemann, Kathrin, 2017. "Ability tracking or comprehensive schooling? A theory on peer effects in competitive and non-competitive cultures," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 214-231.
  • Handle: RePEc:eee:jeborg:v:137:y:2017:i:c:p:214-231
    DOI: 10.1016/j.jebo.2017.03.005
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    References listed on IDEAS

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    1. Eric A. Hanushek & Ludger Wössmann, 2006. "Does Educational Tracking Affect Performance and Inequality? Differences- in-Differences Evidence Across Countries," Economic Journal, Royal Economic Society, vol. 116(510), pages 63-76, March.
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    More about this item

    Keywords

    Loss aversion; Reference dependence; Ability tracking; Peer effects; Culture; Competitiveness;

    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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