Academic Peer Effects with Different Group Assignment Policies: Residential Tracking versus Random Assignment

I study the relative academic performance of students tracked or randomly assigned to South African university dormitories. Tracking reduces low-scoring students' GPAs and has little effect on high-scoring students, leading to lower and more dispersed GPAs. I also directly estimate peer effects using random variation in peer groups across dormitories. Living with higher-scoring peers raises students' GPAs, particularly for low-scoring students, and peer effects are stronger between socially proximate students. This shows that much of the treatment effect of tracking is attributable to peer effects. These results present a cautionary note about sorting students into academically homogeneous classrooms or neighborhoods. (JEL I23, I24, I28, O15, Z13)