The Use of Instrumental Variables in Peer Effects Models

13 Pages Posted: 2 Jun 2020

See all articles by Stephanie von Hinke

Stephanie von Hinke

University of Bristol; Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

George Leckie

affiliation not provided to SSRN

Cheti Nicoletti

University of York - Department of Economics and Related Studies

Date Written: October 2019

Abstract

Instrumental variables are often used to identify peer effects. This paper shows that instrumenting the ‘peer average outcome’ with ‘peer average characteristics’ requires the researcher to include the instrument at the individual level as an explanatory variable. We highlight the bias that occurs when failing to do this.

Suggested Citation

von Hinke, Stephanie and Leckie, George and Nicoletti, Cheti, The Use of Instrumental Variables in Peer Effects Models (October 2019). Oxford Bulletin of Economics and Statistics, Vol. 81, Issue 5, pp. 1179-1191, 2019, Available at SSRN: https://ssrn.com/abstract=3615215 or http://dx.doi.org/10.1111/obes.12299

Stephanie Von Hinke (Contact Author)

University of Bristol

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

George Leckie

affiliation not provided to SSRN

No Address Available

Cheti Nicoletti

University of York - Department of Economics and Related Studies ( email )

Heslington
York, YO1 5DD
United Kingdom

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