Peer Effects in Education, Sport, and Screen Activities: Local Aggregate or Local Average?

52 Pages Posted: 20 Jul 2011

See all articles by Xiaodong Liu

Xiaodong Liu

University of Colorado at Boulder - Department of Economics

Eleonora Patacchini

Einaudi Institute for Economics and Finance (EIEF) ; IZA Institute of Labor Economics

Yves Zenou

Monash University - Department of Economics; Stockholm University; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 2011

Abstract

We develop two different social network models with different economic foundations. In the local-aggregate model, it is the sum of friends' efforts in some activity that affects the utility of each individual while, in the local-average model, it is costly to deviate from the average effort of friends. Even though the two models are fundamentally different in terms of behavioral foundation, their implications in terms of Nash equilibrium are relatively close since only the adjacency (social interaction) matrix differs in equilibrium, one being the row-normalized version of the other. We test these alternative mechanisms of social interactions to study peer effects in education, sport and screen activities for adolescents in the United States using the AddHealth data. We extend Kelejian's (2008) J test for spatial econometric models helping differentiate between these two behavioral models. We find that peer effects are not significant for screen activities (like e.g. video games). On the contrary, for sport activities, we find that students are mostly influenced by the aggregate activity of their friends (local-aggregate model) while, for education, we show that both the aggregate performance at school of friends and conformism matter, even though the magnitude of the effect is higher for the latter.

Keywords: conformism, econometrics of networks, peer effects, Social networks

JEL Classification: A14, D85, Z13

Suggested Citation

Liu, Xiaodong and Patacchini, Eleonora and Zenou, Yves, Peer Effects in Education, Sport, and Screen Activities: Local Aggregate or Local Average? (July 2011). CEPR Discussion Paper No. DP8477, Available at SSRN: https://ssrn.com/abstract=1890000

Xiaodong Liu (Contact Author)

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States

HOME PAGE: http://spot.colorado.edu/~xiaodong/

Eleonora Patacchini

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yves Zenou

Monash University - Department of Economics ( email )

Australia

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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