Estimation of Peer Effects with Predicted Social Ties: Evidence from Two Universities in Brazil and Russia

Abstract

Social interactions with peers during learning have a significant impact on university students’ academic achievement. As social ties are voluntary, an empirical estimation of peer effects is exposed to a potential endogeneity problem. To overcome this issue, we propose to define the peer group of an individual as their predicted friends. The specific features of the learning environment in higher education institutions may affect dimensions along which friendship ties form. To test the presence of peer effects in different educational and cultural contexts, we use data on students studying in two universities located in two different countries, Brazil and Russia. We assume that friendship is affected by homophily in student attributes, such as having the same region of origin, the same gender, and sharing the same study group. In both institutions, we find positive externalities from having high-ability peers.