Interesting paper on peer effects

I'm not sure this is the ideal methodology to approach this problem (I'd like to see this combined with something that captures the actual interactions in the classroom), but, based on what I've seen, this is a definite improvement.

From VoxEU (via Thoma)

Our recent research uncovers peer effects in education as distinct from the contextual and other correlated influences. Our econometric strategy uses the topological structure of social networks as well as network fixed effects to identify each of these effects separately.

Our analysis is made possible by the use of a unique database on friendship networks from the National Longitudinal Survey of Adolescent Health (AddHealth). The AddHealth database has been designed to study the impact of the social environment (i.e. friends, family, neighbourhood and school) on adolescents' behaviour in the US by collecting data on students in grades 7-12 from a nationally representative sample of roughly 130 private and public schools in years 1994-95 (wave I). A subset of adolescents selected from the rosters of the sampled schools, was then interviewed again in 1995-96 (wave II), in 2001-2 (wave III), and again in 2007-2008 (wave IV). For our purposes, the most interesting aspect of the AddHealth data is the friendship information, which is based upon actual friend nominations. It is collected at wave I, i.e. when individuals were at school. Indeed, pupils were asked to identify their best friends from a school roster (up to five males and five females). As a result, we can reconstruct the whole geometric structure of the friendship networks.

In Calvó-Armengol et al. (2008), we exploit such information to test a peer-effect model which relates analytically equilibrium behaviour to network location. This analysis shows that the structure of friendships ties is an important, and so far unnoticed, determinant of a pupil performance at school. In Patacchini et al. (2011), we follow this line of research by exploiting the other AddHealth waves in order to investigate whether such effect is carried over time. Indeed, the longitudinal structure of the survey provides information on both respondents and friends during the adulthood. In particular, the questionnaire of wave IV contains detailed information on the highest education qualification achieved.

We analyse the impact of the friends' educational attainment on an individual's educational attainment where they are identified as friends during school and in to adulthood. We find that peer effects in education are not only strong but also persistent over time. We find that the most relevant peers are the friends people make in grade 10-12, from when they are around 15 years old. This suggests that individuals are more likely to work towards and apply to college if this choice is popular among their peers, especially in the last years at school. This could represent the effect of contagion and collective socialisation and mean that any education policy targeting specific individuals will have multiplier effects.