It's not your peers, and it's not your friends: Some progress toward understanding the educational peer effect mechanism

Using a new administrative panel data set from the University of Maryland, this paper explores conventional peer effects and the effects of socially proximate peers at a large public university where some students are randomly assigned to housing. Results show that there is little evidence of robust residential peer effects on undergraduate performance. The impact of socially proximate peers' characteristics on student achievement is then examined using an instrumental variables technique. Results indicate that social “friends” do not impact performance more than randomized peers. The paper casts doubt on the notion that social tie formation is the route to peer effects, and urges caution in the continued pursuit of peer effects in education without substantial empirical or theoretical innovation.