17/4/16: Peer Effects in Classroom: The Value of Better Discipline?

In workplace, as well as in education, peer-pressure and competition, peer-linked cooperation and collaboration and other peer-linked effects of have been important contributors to work- and learning-related outcomes. Ditto for entrepreneurship, as collaborated by the effects of clusters, such as the Silicon Valley. However, we tend to think of peer effects as arising from more mature, adult-level interactions in either third level education, or career-linked workplaces.

As noted by Scott Carrell, Mark Hoekstra and Elira Kuka in their paper “The Long-Run Effects of Disruptive Peers” (February 2016 as NBER WP No. w22042: http://ssrn.com/abstract=2739567), “there is relatively little evidence on the long-run educational and labor market consequences of childhood peers.”

So the authors examined “administrative data on elementary school students” and students’ “subsequent test scores, college attendance and completion, and earnings” to identify any potential effects of childhood peers on educational outcomes.

“To distinguish the effect of peers from confounding factors, we exploit the population variation in the proportion of children from families linked to domestic violence, who were shown by Carrell and Hoekstra (2010, 2012) to disrupt contemporaneous behavior and learning.”

The end results show that “exposure to a disruptive peer in classes of 25 during elementary school reduces earnings at age 26 by 3 to 4 percent. We estimate that differential exposure to children linked to domestic violence explains 5 to 6 percent of the rich-poor earnings gap in our data, and that removing one disruptive peer from a classroom for one year would raise the present discounted value of classmates' future earnings by $100,000.”

These are striking numbers. Accumulated over life-cycle of employment, gains from reducing classroom-level disruptive behaviour of peers can lead to a significant uplift in both, economic welfare and individual financial wellbeing. It can also, potentially, help closing the income inequality gaps. The question, however, is how does one achieve such an outcome in the real world, where even disruptive students have a right to education.