Peer Influences on Adolescent Alcohol Consumption: Evidence Using an Instrumental Variables/Fixed Effect Approach

33 Pages Posted: 14 Mar 2011

See all articles by Jason M. Fletcher

Jason M. Fletcher

University of Wisconsin - Madison - Robert M. La Follette School of Public Affairs; Yale University - School of Public Health

Date Written: March 13, 2011

Abstract

There is a large literature that attempts to estimate the importance of peer effects for adolescent decision making, including alcohol consumption. There are several empirical difficulties in addressing this research question, including the endogeneity of peers, ‘third factors’ that affect the decisions of all peers simultaneously, and the difficulty of the identification of policy relevant parameters due to simultaneity of decisions by peers. In order to address these empirical difficulties, I use an instrumental variables/fixed effects methodology that compares students in different grades within the same school who face a different set of classmates and classmates’ decisions. Within this context, I suggest that availability of alcohol in classmates’ homes and classmates’ parents’ alcohol abuse can then be used as instruments, tackling the simultaneity problem in empirical models of peer effects. The results indicate that a 10% increase in the proportion of classmates who drink increases the likelihood an individual drinks by 5 percentage points. This paper also provides evidence of peer effects in problem drinking, such as binge drinking, drunkenness, and being drunk at school.

Keywords: Peer Effects, Social Interactions, Alcohol Consumption

JEL Classification: I12, I1

Suggested Citation

Fletcher, Jason M., Peer Influences on Adolescent Alcohol Consumption: Evidence Using an Instrumental Variables/Fixed Effect Approach (March 13, 2011). Available at SSRN: https://ssrn.com/abstract=1784983 or http://dx.doi.org/10.2139/ssrn.1784983

Jason M. Fletcher (Contact Author)

University of Wisconsin - Madison - Robert M. La Follette School of Public Affairs ( email )

1180 Observatory Drive
Madison, WI 53706-1393
United States

Yale University - School of Public Health ( email )

PO Box 208034
60 College Street
New Haven, CT 06520-8034
United States

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