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The Use of Instrumental Variables in Peer Effects Models

Research output: Contribution to journalArticle

Original languageEnglish
Number of pages13
JournalOxford Bulletin of Economics and Statistics
Early online date4 Feb 2019
DOIs
DateAccepted/In press - 14 Dec 2018
DateE-pub ahead of print (current) - 4 Feb 2019

Abstract

Instrumental variables are often used to identify peer effects. This paper shows that instrumenting the ‘peer average outcome’ with ‘peer average characteristics’ requires the researcher to include the instrument at the individual level as an explanatory variable. We highlight the bias that occurs when failing to do this.

    Structured keywords

  • ECON Applied Economics
  • ECON CEPS

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  • Full-text PDF (accepted author manuscript)

    Rights statement: This is the author accepted manuscript (AAM). The final published version (version of record) is available online via Wiley at https://onlinelibrary.wiley.com/doi/full/10.1111/obes.12299 . Please refer to any applicable terms of use of the publisher.

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