The Persistent Effects of Short-Term Peer Groups in Higher Education

This paper studies the persistent effects of short-term peer exposure in a college setting. I exploit the random assignment of undergraduates to peer groups during a mandatory orientation week and follow the students until graduation. High levels of peer ability in a group harm the students’ test scores and lead to increases in the probability of early dropout; this result is driven by the adverse effect of high-ability peers on low-ability students. I find suggestive evidence for discouragement effects: Peer ability is negatively correlated with the students’ confidence in their academic ability after the first week.