Do social interactions in the classroom improve academic attainment? Student sorting into classes complicates policies that utilize peer effects to optimize educational outcomes

Peer effects in education matter for student achievement and, hence, for their success later in life. However, economists still disagree about the magnitude and shape of these effects and there is little evidence about the channels through which they might work. The contrasting nature of some research highlights a clear need for further investigation into these key areas. Nonetheless, interventions that manipulate student group composition in ways that improve the educational outcomes of low-achieving students may offer policy options that can simultaneously enhance welfare and reduce inequality.