Peer Preferences, School Competition, and the Effects of Public School Choice | Zendy

Levon Barseghyan | Zendy; Damon Clark | Zendy; Stephen Coate | Zendy

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Peer Preferences, School Competition, and the Effects of Public School Choice

Author(s) -

Levon Barseghyan,

Damon Clark,

Stephen Coate

Publication year - 2019

Publication title -

american economic journal economic policy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.868

H-Index - 62

eISSN - 1945-7731

pISSN - 1945-774X

DOI - 10.1257/pol.20170484

Subject(s) - incentive , competition (biology) , school choice , peer pressure , quality (philosophy) , microeconomics , economics , peer effects , welfare , free riding , public economics , psychology , social psychology , ecology , philosophy , epistemology , market economy , biology

This paper develops a new economic model of public school choice. The key innovation is to model competition between schools in an environment in which parents have peer preferences. The analysis yields three main findings. First, peer preferences dampen schools' incentives to exert effort in response to competitive pressure. Second, when peer preferences are sufficiently strong, choice can reduce social welfare. This is because choice is costly to exercise but aggregate peer quality is fixed. Third, given strong peer preferences, choice can reduce school quality in more affluent neighborhoods. We conclude that peer preferences weaken the case for choice.

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