Identification of peer effects with missing peer data: Evidence from Project STAR

Identification of Peer Effects with Missing Peer Data: Evidence from Project STAR This paper studies peer effects on student achievement among first graders randomly assigned to classrooms in Tennessee’s Project STAR. The analysis uses previously unexploited pre-assignment achievement measures available for 60 percent of students. Data are not missing at random, making identification challenging. The paper develops new ways, given random assignment of individuals to classes, to identify peer effects without imposing other missing-data assumptions. Estimates suggest positive effects of mean peer lagged achievement on average. Allowing heterogeneous effects, evidence suggests lowerachieving students benefit more than higher-achieving students do from increases in peer mean. Further, the bias in a widely used, poorly understood peer-effects estimator is analyzed, implying that caution is warranted in interpreting many peer-effects estimates extant in the literature. NON-TECHNICAL SUMMARY This paper provides evidence that, as early as first grade, the academic achievement of a classroom peers affects student achievement. Putting a student in a first-grade class with peers whose achievement averaged 10 percentile points higher at the end of kindergarten is estimated to increase that student’s first-grade achievement by about 2.5 percentile points. Most interesting, there is some evidence that average peer achievement matters more for low-achieving students than for high-achieving students. JEL Classification: C2, I21, J13