Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2018:32: The Persistent Effects of Short-Term Peer Groups in Higher Education

Petra Thiemann ()
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Petra Thiemann: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper studies the persistent effects of short-term peer exposure in a college setting. I exploit the random assignment of undergraduates to peer groups during a mandatory orientation week and follow the students until graduation. High levels of peer ability in a group harm the students’ test scores and lead to increases in the probability of early dropout; this result is driven by the adverse effect of high-ability peers on low-ability students. I find suggestive evidence for discouragement effects: Peer ability is negatively correlated with the students’ confidence in their academic ability after the first week.

Keywords: peer effect; higher education; natural experiment; ability; educational attainment; dropout; major choice

JEL-codes: I21; I23; J24

48 pages, November 14, 2018

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