IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp16998.html
   My bibliography  Save this paper

Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students

Author

Listed:
  • Houndetoungan, Aristide

    (Université de Paris)

  • Kouame, Cristelle

    (World Bank)

  • Vlassopoulos, Michael

    (University of Southampton)

Abstract

Peer influence on effort devoted to some activity is often studied using proxy variables when actual effort is unobserved. For instance, in education, academic effort is often proxied by GPA. We propose an alternative approach that circumvents this approximation. Our framework distinguishes unobserved shocks to GPA that do not affect effort from preference shocks that do affect effort levels. We show that peer effects estimates obtained using our approach can differ significantly from classical estimates (where effort is approximated) if the network includes isolated students. Applying our approach to data on high school students in the United States, we find that peer effect estimates relying on GPA as a proxy for effort are 40% lower than those obtained using our approach.

Suggested Citation

  • Houndetoungan, Aristide & Kouame, Cristelle & Vlassopoulos, Michael, 2024. "Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students," IZA Discussion Papers 16998, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16998
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp16998.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sacerdote, Bruce, 2011. "Peer Effects in Education: How Might They Work, How Big Are They and How Much Do We Know Thus Far?," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 4, pages 249-277, Elsevier.
    2. Laurent Davezies & Xavier D'Haultfoeuille & Denis Fougère, 2009. "Identification of peer effects using group size variation," Econometrics Journal, Royal Economic Society, vol. 12(3), pages 397-413, November.
    3. Jochmans, Koen, 2023. "Peer effects and endogenous social interactions," Journal of Econometrics, Elsevier, vol. 235(2), pages 1203-1214.
    4. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
    5. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    6. Peter Arcidiacono & Gigi Foster & Natalie Goodpaster & Josh Kinsler, 2012. "Estimating spillovers using panel data, with an application to the classroom," Quantitative Economics, Econometric Society, vol. 3(3), pages 421-470, November.
    7. Sule Alan & Ceren Baysan & Mert Gumren & Elif Kubilay, 2021. "Building Social Cohesion in Ethnically Mixed Schools: An Intervention on Perspective Taking," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(4), pages 2147-2194.
    8. Christiern D. Rose, 2017. "Identification of peer effects through social networks using variance restrictions," Econometrics Journal, Royal Economic Society, vol. 20(3), pages 47-60, October.
    9. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    10. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
    11. Bryan S. Graham, 2008. "Identifying Social Interactions Through Conditional Variance Restrictions," Econometrica, Econometric Society, vol. 76(3), pages 643-660, May.
    12. Ida Johnsson & Hyungsik Roger Moon, 2021. "Estimation of Peer Effects in Endogenous Social Networks: Control Function Approach," The Review of Economics and Statistics, MIT Press, vol. 103(2), pages 328-345, May.
    13. Giacomo De Giorgi & Michele Pellizzari & Silvia Redaelli, 2010. "Identification of Social Interactions through Partially Overlapping Peer Groups," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 241-275, April.
    14. Sok Chul Hong & Jungmin Lee, 2017. "Who is sitting next to you? Peer effects inside the classroom," Quantitative Economics, Econometric Society, vol. 8(1), pages 239-275, March.
    15. Alan Griffith, 2022. "Name Your Friends, but Only Five? The Importance of Censoring in Peer Effects Estimates Using Social Network Data," Journal of Labor Economics, University of Chicago Press, vol. 40(4), pages 779-805.
    16. Greg Duncan & Johanne Boisjoly & Kathleen Mullan Harris, 2001. "Sibling, peer, neighbor, and schoolmate correlations as indicators of the importance of context for adolescent development," Demography, Springer;Population Association of America (PAA), vol. 38(3), pages 437-447, August.
    17. Lancaster, Tony, 2000. "The incidental parameter problem since 1948," Journal of Econometrics, Elsevier, vol. 95(2), pages 391-413, April.
    18. Andreas Dzemski, 2019. "An Empirical Model of Dyadic Link Formation in a Network with Unobserved Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 763-776, December.
    19. Jane Cooley Fruehwirth, 2013. "Identifying peer achievement spillovers: Implications for desegregation and the achievement gap," Quantitative Economics, Econometric Society, vol. 4(1), pages 85-124, March.
    20. Lung-Fei Lee, 2004. "Asymptotic Distributions of Quasi-Maximum Likelihood Estimators for Spatial Autoregressive Models," Econometrica, Econometric Society, vol. 72(6), pages 1899-1925, November.
    21. Xu Lin, 2010. "Identifying Peer Effects in Student Academic Achievement by Spatial Autoregressive Models with Group Unobservables," Journal of Labor Economics, University of Chicago Press, vol. 28(4), pages 825-860, October.
    22. Chih‐Sheng Hsieh & Lung Fei Lee, 2016. "A Social Interactions Model with Endogenous Friendship Formation and Selectivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(2), pages 301-319, March.
    23. Lung-fei Lee & Xiaodong Liu & Xu Lin, 2010. "Specification and estimation of social interaction models with network structures," Econometrics Journal, Royal Economic Society, vol. 13(2), pages 145-176, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aristide Houndetoungan & Cristelle Kouame & Michael Vlassopoulos, 2024. "Identifying Peer Effects in Networks with Unobserved Effort and Isolated Students," Papers 2405.06850, arXiv.org.
    2. Vincent Boucher & Yann Bramoullé, 2020. "Binary Outcomes and Linear Interactions," Working Papers halshs-03031767, HAL.
    3. Vincent Boucher & Yann Bramoullé, 2020. "Binary Outcomes and Linear Interactions," AMSE Working Papers 2038, Aix-Marseille School of Economics, France.
    4. Boucher, Vincent & Dedewanou, F. Antoine & Dufays, Arnaud, 2022. "Peer-induced beliefs regarding college participation," Economics of Education Review, Elsevier, vol. 90(C).
    5. Patacchini, Eleonora & Hsieh, Chih-Sheng & Lin, Xu, 2019. "Social Interaction Methods," CEPR Discussion Papers 14141, C.E.P.R. Discussion Papers.
    6. Yann Bramoullé & Habiba Djebbari & Bernard Fortin, 2020. "Peer Effects in Networks: A Survey," Annual Review of Economics, Annual Reviews, vol. 12(1), pages 603-629, August.
    7. Boucher, Vincent & Fortin, Bernard, 2015. "Some Challenges in the Empirics of the Effects of Networks," IZA Discussion Papers 8896, Institute of Labor Economics (IZA).
    8. Diemer, Andreas, 2022. "Endogenous peer effects in diverse friendship networks: Evidence from Swedish classrooms," Economics of Education Review, Elsevier, vol. 89(C).
    9. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 115-168, Elsevier.
    10. Sadat Reza & Puneet Manchanda & Juin-Kuan Chong, 2021. "Identification and Estimation of Endogenous Peer Effects Using Partial Network Data from Multiple Reference Groups," Management Science, INFORMS, vol. 67(8), pages 5070-5105, August.
    11. Lin, Zhongjian & Hu, Yingyao, 2024. "Binary choice with misclassification and social interactions, with an application to peer effects in attitude," Journal of Econometrics, Elsevier, vol. 238(1).
    12. Kwok, Hon Ho, 2019. "Identification and estimation of linear social interaction models," Journal of Econometrics, Elsevier, vol. 210(2), pages 434-458.
    13. Chih‐Sheng Hsieh & Lung‐Fei Lee & Vincent Boucher, 2020. "Specification and estimation of network formation and network interaction models with the exponential probability distribution," Quantitative Economics, Econometric Society, vol. 11(4), pages 1349-1390, November.
    14. Patacchini, Eleonora & Rainone, Edoardo & Zenou, Yves, 2017. "Heterogeneous peer effects in education," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 190-227.
    15. Konstantinidi, Antri & Kourtellos, Andros & Sun, Yiguo, 2023. "Social threshold regression," Journal of Econometrics, Elsevier, vol. 235(2), pages 2057-2081.
    16. Marisa Miraldo & Carol Propper & Christiern Rose, 2020. "Identification of Peer Effects using Panel Data," Discussion Papers Series 639, School of Economics, University of Queensland, Australia.
    17. Chih‐Sheng Hsieh & Xu Lin, 2021. "Social interactions and social preferences in social networks," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(2), pages 165-189, March.
    18. Yingyao Hu & Zhongjian Lin, 2018. "Misclassification and the hidden silent rivalry," CeMMAP working papers CWP12/18, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    19. Guo, Juncong & Qu, Xi, 2022. "Competition in household human capital investments: Strength, motivations and consequences," Journal of Development Economics, Elsevier, vol. 158(C).
    20. Horrace, William & Jung, Hyunseok & Presler, Jonathan & Schwartz, Amy Ellen, 2021. "What Makes a Classmate a Peer? Examining which peers matter in NYC elementary schools," Working Papers 21-4, Sinquefield Center for Applied Economic Research, Saint Louis University, revised 17 Jan 2022.

    More about this item

    Keywords

    social networks; peer effects; academic achievement; unobserved effort; isolated agents;
    All these keywords.

    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
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp16998. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.