Peer Effects: Evidence from Secondary School Transition in England
| Author | Stephen Gibbons,Shqiponja Telhaj |
| Date | 01 August 2016 |
| Published date | 01 August 2016 |
| DOI | http://doi.org/10.1111/obes.12095 |
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©2015 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 78, 4 (2016) 0305–9049
doi: 10.1111/obes.12095
Peer Effects: Evidence from Secondary School
Transition in England*
Stephen Gibbons†, ‡ and Shqiponja Telhaj‡,§
†Department of Geography and Environment, London School of Economics, London, UK
‡Centre for Economic Performance, London School of Economics, London, UK (e-mail:
s.gibbons@lse.ac.uk)
§Department of Economics, University of Sussex, Brighton, BN1 9RH, UK (e-mail:
s.telhaj@gmail.com)
Abstract
Weestimate the effect of peers’ prior achievement on student progress in secondary school,
using administrative data on four cohorts of students in England. Students leaving primary
for secondary school experience a big change in their peer group and these changes vary
randomly from cohort to cohort. We exploit this variation to identify the effect of new
peers on student achievement. We show that peer quality on entry to secondary school
has a significant effect on students’ subsequent achievement at age 14. The effect sizes are
relatively small and are linked to peers’f amily background and early age achievements.
I. Introduction
Schools seem often to be judged on the kind of children they enrol, rather than on the quality
of their teaching or the other facilities they offer. This observation has led many to argue
that the background and abilities of a child’s schoolmates must have an important influence
on his/her own achievements at school. Motivated by this argument, a rich international
literature has evolved to try to model and measure the consequences of social interactions
between students – so called ‘peer-group effects’ – spanning the economics, education,
sociological and psychological fields.
The issue is a critical one in respect to current educational policy which favours expan-
sion of school choice because choice based on school group composition can lead to a high
degree of sorting across schools along lines of prior ability (e.g. Epple and Romano, 2000).
JEL Classification numbers: I2, I21
*Wethank participants at the Workshop on Economics of Education and Education Policyin Europe, Uppsala; the
Centre for Economics of Education conference on School Effects and Student Outcomes, London; participants at the
SOLE/IZA TransatlanticMeeting of Labour Economists, SOLE annual conference in Chicago; seminars participants
at Centre for Economic Performance-London School of Economics, Nick Adnett, SteveMachin, Steve Pischke and
many others for comments on an earlier version of this paper. The Department of Children Schools and Families
provided the data for this project and funded an earlier version through the Centre for Economics of Education’s
Stratification and School Performance programme.
Peer effects and student achievement 549
An understanding of the prevalence of peer effects is also important because they imply
that educational interventions that appear beneficial when tested on the individual student
may be even more effective (or less effective) when rolled out to the population (Glaeser,
Sacerdote and Scheinkman, 2003). It is also well known that peer group effects have
efficiency implications when the effects are non-linear, or if there are complementarities
between group and individual characteristics.
Our aim in this paper is to contribute to the evidence on the benefits of being educated in
schools alongside high-ability peers. The investigation is carried out by looking at student
achievement in national standardized tests in secondary school age 14 (Key Stage 3 tests,
ks3)1and their prior achievement in national standardized tests in primary school age
11 (Key Stage 2 tests, ks2). We use a detailed administrative data set on the population of
students in England’s state schools, between 2004/5 and 2007/8. Specifically,our empirical
work investigates whether children progress faster academically during their secondary
school years up to ks3, if their secondary schoolmates performed well in their primary
school at ks2. Students’ secondary school peer quality is defined here as the mean of
secondary schoolmates’ prior achievement (ks2 primary school scores) upon enrolment
in secondary school. On average, we find that peers do have a positive impact on student
secondary school achievement: 1 SD increase in the mean ks2 scores on intake to secondary
school is associated with a 2% of 1 SD increase in student achievement in ks3.This effect
is small relative to the variation in achievement across students, lending weight to the
existing international evidence that finds that the causal effect of peer group quality is low
down the rankings of factors determining students’ academic outcomes. However, scaled
relative to other educational interventions, these effects are not so trivial. For instance, the
recent literature on teacher effects (Hanushek and Rivkin, 2010) finds that a 1 SD increase
in teacher quality raises student achievement by only 10–15% of 1SD. We further show
that these peer effects on age 14 achievement are also evident when we measure prior
achievement using even earlier age 7 (Key Stage 1, ks1) tests. This implies that students
benefit from attributes of their peers, perhaps motivation, innate ability, or aspects of family
background, that were evident very early on in their schooling. We find no evidence for
heterogeneity in the effects of peers across students of differenttypes, or complementarities
between students with different prior achievements.
In common with other work on peer effects (and other group and spatial effects),
the main threats to identification of a causal influence of peer group prior achievement
on individual student academic outcomes are: (i) non-random sorting of individuals into
groups, implying that unobservable characteristics of individuals tend to be correlated with
the characteristics of the group; (ii) unobservable factors affecting the group simultaneously
which, coupled with sorting, can lead individual outcomes and group characteristics to
become correlated;2(iii) reverse causality running from individuals to the group which
will tend to inflate the magnitude of the estimated effects;3and (iv) insufficiently large
1Compulsory education in state schools in England is organized into five Stages. Details of the English state school
system are provided in section IV.
2Manski’s (1993) ‘correlated’ effects; for example if high-quality students are attracted to schools with good
teachers
3Some researchers refer to this as Manski’s(1993) ‘reflection’ problem, but this is not preciselythe meaning of the
term as described in Manski (1993, 2000). In these papers, the ‘reflection’problem refers to fact that the ‘endogenous’
©2015 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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