How Does Peer Pressure Affect Educational Investments?

When effort is observable to peers, students may act to avoid social penalties by conforming to prevailing norms. To test for such behavior, we conducted an experiment in which 11th grade students were offered complimentary access to an online SAT preparatory course. Signup sheets differed randomly across students (within classrooms) only in the extent to which they emphasized that the decision to enroll would be kept private from classmates. In non-honors classes, the signup rate was 11 percentage points lower when decisions to enroll were public rather than private. Sign up in honors classes was unaffected. To further isolate the role of peer pressure we examine students taking the same number of honors classes. The timing of our visits to each school will find some of these students in one of their honors classes and others in one of their non-honors classes; which they happen to be sitting in when we arrive to conduct our experiment should be (and, empirically, is) uncorrelated with student characteristics. When offered the course in a non-honors class, these students were 25 percentage points less likely to sign up if the decision was public rather than private. But if they were offered the course in one of their honors classes, they were 25 percentage points more likely to sign up when the decision was public. Thus, students are highly responsive to who their peers are and what the prevailing norm is when they make decisions