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Toward a General Theory of Peer Effects

Author

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  • Boucher, Vincent
  • Rendall, Michelle
  • Ushchev, Philip
  • Zenou, Yves

Abstract

There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in-means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We provide two different theoretical models (based on spillovers and on conformism behavior) that microfound the LIM model and show that they have very different policy implications. We also develop a new general model of peer effects that relaxes the assumptions of linearity and mean peer behavior and that encompasses the spillover, conformist model, and LIM model as special cases. Then, using data on adolescent activities in the U.S., we structurally estimate this model. We find that for GPA, social clubs, self-esteem, and exercise, the spillover effect strongly dominates, while for risky behavior, study effort, fighting, smoking, and drinking, conformism plays a stronger role. We also find that for many activities, individuals do not behave according to the LIM model. We run some counterfactual policies and show that imposing the mean action as an individual social norm is misleading and leads to incorrect policy implications.

Suggested Citation

  • Boucher, Vincent & Rendall, Michelle & Ushchev, Philip & Zenou, Yves, 2022. "Toward a General Theory of Peer Effects," CEPR Discussion Papers 17315, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17315
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    Cited by:

    1. is not listed on IDEAS
    2. Comola, Margherita & Dieye, Rokhaya & Fortin, Bernard, 2025. "Heterogeneous peer effects and gender-based interventions for teenage obesity," Journal of Health Economics, Elsevier, vol. 102(C).
    3. Goulas, Sofoklis & Megalokonomou, Rigissa & Zhang, Yi, 2025. "Female neighbors and careers in science," Research Policy, Elsevier, vol. 54(7).

    More about this item

    Keywords

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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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