Peer influence and human capital accumulation Evidence from Delhi University colleges.

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College is an important milestone in life that is believed to develop several aspects of an individual's human capital, broadly defined to include both cognitive and socio-emotional traits. Consequently, there is great emphasis on obtaining admission into a more selective college. This column draws upon data from Delhi University to examine the returns to enrolling in a more selective college.

How does admission into a more selective college shape students' cognitive and non-cognitive aspects of human capital? We know from existing research that academic gains from attending elite education institutions are not uniformly positive (for example, Abdulkadiroglu et al. 2014 (https://economics.mit.edu/files/9518), Lucas and Mbiti 2014, Pop-Eleches and Urquiola 2013 (http://www.columbia.edu/~msu2101/Pop-Eleches_Urquiola(2013).pdf)). However, the literature remains largely silent on the underlying behavioural responses that could explain these mixed effects. In Dasgupta, Mani, Sharma and Singhal (2017) (https://www.wider.unu.edu/sites/default/files/wp2017-94.pdf), we estimate the effects of attending a more selective college on not only academic performance, but also on behavioural and personality traits that are equally important in determining educational attainment, occupational choice, and labour market performance (Almlund et al. 2011).

Elite colleges demand incoming students to score high on entrance examinations that determine admission. Consequently, a student who gets admitted in these colleges is surrounded by high-performing peers, and is expected to gain from a high-quality learning environment, and plausibly be motivated to keep up with the competition due to peer pressure, etc. Hence, the effect of being surrounded by a smarter peer group is expected to be positive. However, the education psychology literature suggests that there could also be negative effects of competitive peer environments on students. Those just above the cutoffs of more selective colleges are in fact also worst-off relative to their peer group ('small fish in a big pond') while those just below the cutoff who gain admission to the next best colleges are relatively better than their peers ('big fish in a small pond'). This lower relative position could result in a detrimental or zero impact on the behaviour and personality of the marginally admitted student. As a result, on the net, for the student who just makes it to a better college, the effects could go...

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