Peer Quality or Input Quality?: Clean Evidence from Trinidad and Tobago

Using exogenous secondary school assignments to remove self-selection bias to schools and peers, I obtain credible estimates of (1) the effect of attending schools with higher-achieving peers, and (2) the direct effect of peer quality improvements within schools, on the same population. While students at schools with higherachieving peers have better academic achievement, within-school increases in peer achievement improve outcomes only at high-achievement schools. Estimates suggest that peer quality can account for over half of school valueadded among the top quartile of schools, but little value-added for other schools. The results reveal some large and important differences by gender. Social scientists have long aimed to determine whether students benefit from attending "better" schools (i.e. those schools that historically have good academic outcomes, typically attract higher-achieving students, and are perceived to confer greater value-added to students). Despite this fact, the broader question of whether students benefit from attending “better” schools remains unresolved. The empirical difficulty in uncovering the causal effect of attending a "better" school lies in the fact that students with the same incoming test scores who attend different schools may have different preferences or levels of motivation. While the evidence is mixed, there is a growing body of evidence based on credible research designs indicating that attending higher-achieving schools improves students' test scores (Hastings and Weinstein 2007, Pop-Eleches and Urquiola 2008, Jackson 2009) and broader outcomes such as course taking, secondary-school graduation, disciplinary incidents, and arrest rates (Culllen, Jacob and Levitt 2006, Clark 2007). From a policy perspective, the fact that students benefit from attending higher-achievement schools is encouraging as it may imply that one can improve student outcomes by improving the schools they attend. However, the extent to which policy can improve student outcomes through improving schools depends critically on how much of the benefits to attending a higher-achievement school can be attributed to school characteristics that are malleable and replicable. In most nations, high-achieving schools tend to have student bodies that have better observable or unobservable characteristics than the average school. This may be due to; (a) 1 This is closely related to studies showing positive effects of attending private schools (Angrist, Bettinger, et al. 2002, Rouse 1998) and the effect of attending Catholic schools (Evans and Schwab 1995, Neal 1997).