Association for Public Policy Analysis & Management

Aspiration is a fundamental determinant of individuals' future outcomes and understanding the process of aspirations formation helps to inform public policies. Theoretical works show how aspiration is socially constructed and empirical contributions have shown how peers' socioeconomic status determines one's level of aspiration. The present work asks whether peers' aspiration also matters, over and above socioeconomic considerations.

Sociologists have long found a positive correlation between friends’ aspirations and one’s own aspirations. However, methodological and data limitations have prevented these works from inferring causality. The identification of peer effects raises two main issues. The first is the endogenous formations of networks: homophily plays an important role in friendship formation. That is, individuals are more likely to become friends with similar others, which is a confounding factor for identifying peers’ influence. The second issue is the reflection problem: friends might influence each other simultaneously, so it is hard to disentangle who is influencing whom. The present work uses novel data on Brazilian students' networks and addresses these two issues in order to identify causal peer effects on students' college aspiration.

In 2011, students in the 9th grade of some state schools in Sao Paulo, Brazil, answered a very comprehensive survey about their personal profile, study habits, and expectations. In one specific question, they were asked about their willingness to pursue a college degree. This is my main variable of interest. Two features of this survey make it very unique. The first is that it is possible to merge the survey with administrative data from Sao Paulo state schools and hence recover students' information about performance, grade retention and school completion. The second feature is the fact that students had to nominate their four best friends in the 9th grade, such that it is possible to map a complete network of that grade in each school.

The employed methodology acknowledges that social cliques are formed endogenously and addresses this challenge by modeling friendship formation based on homophily in predetermined characteristics and on students' as-good-as-random chances of interaction. Using the predicted adjacency matrix, I explore network structures and use predicted friends of friends' characteristics as instruments for friends' aspirations.

The results show evidence of positive, significant, and quite large peer effects on aspiration - an extra friend aspiring to go to college increases on average 9.9% the likelihood that a student will also aspire to it. Such an impact is driven mostly by boys. While peers' aspirations do not seem to influence students' proficiency, an extra aspiring friend decreases the likelihood of dropping out of high school and increases class attendance in reading. Compliance with social norms seems to play a role in explaining such an impact.