Be as Careful of the Books You Read as of the Company You Keep: Evidence on Peer Effects in Educational Choices
49 Pages Posted: 2 Jul 2007
Date Written: June 2007
Abstract
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.
Keywords: peer effects, education, social interaction, reflection
JEL Classification: J0, I21
Suggested Citation: Suggested Citation
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