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Be as Careful of the Books You Read as of the Company You Keep: Evidence on Peer Effects in Educational Choices

  • De Giorgi, Giacomo

    ()

    (Stanford University)

  • Pellizzari, Michele

    ()

    (University of Geneva)

  • Redaelli, Silvia

    ()

    (Bocconi University)

In this paper we investigate whether peers’ behavior influences the choice of college major. Using a unique dataset of students at Bocconi University and exploiting the organization of teaching at this institution, we are able to identify the endogenous effect of peers on such decision through a novel identification strategy which solves the common econometric problems of studies of social interactions. Results show that, indeed, one is more likely to choose a major when many of her peers make the same choice. We estimate that, when it diverts students from majors in which they seem to have a relative ability advantage, this effect leads to lower average grades and graduation mark, a penalty that could cost up to 1,117 USD a year in the labor market.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2833.

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Length: 49 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2833
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