“Like with like” or “do like?” Modeling peer effects in the classroom

Objective: The authors discuss the role of peer networks in shaping the decision to enroll at university. Using panel data from Italy, they apply innovative statistical methods to study a sample of students as they complete high school and decide whether or not to attend university. Methods: The authors use simultaneous autoregressive (SAR) models to analyze a four-wave panel database of Italian students. They explore the role of endogenous, exogenous, and correlated peer effects in relation to the decision about whether or not to enroll at university. Results: The findings suggest that endogenous peer effects exert a significant influence on the probability of enrolling after controlling for homophilous preferences and a range of variables. Exogenous peer effects do not appear to influence this outcome. Sensitivity tests suggest that the results of the estimation are robust to selection. Conclusions: This article contributes to an emerging body of literature on the use of SAR models to study peer effects, illustrating its considerable potential in the study of educational outcomes.