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Identification and Estimation of Social Interaction-Based Models: A Changes-In-Changes Approach with an Application to Adolescent Substance Use

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  • Yang, Muzhe

Abstract

This paper outlines a method for detecting and assessing the strength of social interactions through a changes-in-changes design. The proposed approach is based on a linear-in-means model and aims to resolve the "reflection problem", unobserved heterogeneities and endogenous group formation that plague identification of social interactions. Using longitudinal data from Add Health with rarely collected information on peer group's composition, we explore an exogenous variation in peer's drug use induced by a "mover friend" that occurs between Add Health's survey periods. This quasi-experiment shares a similar nature of a policy intervention of removing drug-user friends from a peer group. Such treatment-control group differences together with changes over time form the basis of our changes-in-changes design. Our study confirms a strong endogenous effect, which in turn motivates a "social multiplier", both of which are large enough to be relevant and are well worth attention to policy makers, researchers, health-care providers and educators for better understanding of how to protect young people and secure our future.

Suggested Citation

  • Yang, Muzhe, 2007. "Identification and Estimation of Social Interaction-Based Models: A Changes-In-Changes Approach with an Application to Adolescent Substance Use," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9800, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea07:9800
    DOI: 10.22004/ag.econ.9800
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    Cited by:

    1. Dercon, Stefan & Orkin, Kate & Bernard, Tanguy & Taffesse, Alemayehu, 2014. "The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia," CEPR Discussion Papers 10224, C.E.P.R. Discussion Papers.

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    Demand and Price Analysis;

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