Structural Estimation of Peer Effects in Youth Smoking

Abstract

This chapter outlines a new approach to measuring peer influence on the choice of a young person to smoke cigarettes. The methodology is based on estimating an equilibrium discrete choice model in which the relative benefit to smoking is increasing in the fraction of peers who smoke. In contrast to much of the literature, this structural model allows for positive correlation in observable and unobservable characteristics between peers. The structural approach has been applied to estimating close friend peer effects in Canada, California, and the U.S.A. in general. In all three settings, I find that close friend smoking is substantially less influential than is generally found by previous studies.

Citation

Krauth, B. (2005), "Structural Estimation of Peer Effects in Youth Smoking", Lindgren, B. and Grossman, M. (Ed.) Substance Use: Individual Behaviour, Social Interactions, Markets and Politics (Advances in Health Economics and Health Services Research, Vol. 16), Emerald Group Publishing Limited, Leeds, pp. 201-211. https://doi.org/10.1016/S0731-2199(05)16009-9