My colleague Michael Gottfried offers us some evidence that peer effects in school can be pretty large. Measuring peer effects is hard. Here’s the problem: Suppose parents of particularly able kids maneuver their children into classes where learning works really well. To the outside observer it looks like being surrounded by particularly able kids is beneficial when what’s really going on is that particularly able kids are more likely to end up in a productive classroom.
Michael does several clever things to get around this methodological problem. One technique he uses is to restrict his sample to the roughly half of students who look to be in a classroom to which students were assigned randomly. In practice, this means that students in the class have roughly the same observable characteristics as does the whole population of students in the same grade in the same school.
So how big are the peer effects? Here’s one metric. If your classmates scored one point higher on their tests last year, then you’ll probably score about 6/10ths of a point higher this year than you would otherwise. That strikes me as pretty big.