Ability Tracking or Comprehensive Schooling? A Theory on Peer Effects in Competitive and Non-Competitive Cultures

42 Pages Posted: 10 Feb 2016

See all articles by Kathrin Thiemann

Kathrin Thiemann

University of Hamburg - Department of Economics

Date Written: July 10, 2015

Abstract

We develop a model of student decision making that shows that it depends on the culture of competitiveness in a country whether it is optimal to choose a School design with ability tracking or comprehensive schooling. Students with different cultural background differ in their concern for relative position in the classroom, which is modelled by reference dependent preferences. We contrast competitive cultures, where students compare their performance to the best performance in class, and non-competitive cultures where the reference point is the average performance. Taking into account students with heterogeneous abilities, we show that the average performance in competitive cultures is maximized under comprehensive schooling and in non-competitive cultures under ability tracking. Segregation of abilities in non-competitive cultures, however, leads to a higher dispersion of performances. This means high ability students perform higher and low ability students lower under ability tracking than under comprehensive schooling.

Keywords: Loss Aversion, Reference Dependence, Ability Tracking, Peer Effects, Social Comparison, Culture, Competitiveness

JEL Classification: I28, J24, D83

Suggested Citation

Thiemann, Kathrin, Ability Tracking or Comprehensive Schooling? A Theory on Peer Effects in Competitive and Non-Competitive Cultures (July 10, 2015). Available at SSRN: https://ssrn.com/abstract=2730602 or http://dx.doi.org/10.2139/ssrn.2730602

Kathrin Thiemann (Contact Author)

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

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