Peer and selection effects on youth smoking in California
A number of studies have indicated that peer smoking is a highly influential factor in a young person's decision to smoke. However, these results are suspect because the studies often fail to account for selection and simultaneity bias. This paper develops an econometric model of youth smoking which incorporates both peer effects and selection effects, and estimates its parameters using data on California youth. Identification is achieved by using the degree of selection on observables as a proxy for the degree of selection on unobservables. The results indicate that the influence of peers on a young person's decision to smoke is much weaker than is suggested by reduced form models.
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