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Controlling for the endogeneity of peer substance use on adolescent alcohol and tobacco use

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  • Edward C. Norton
  • Richard C. Lindrooth
  • Susan T. Ennett

Abstract

This study examines whether the effects of peer substance use on adolescent alcohol and tobacco use are due to endogeneity of adolescents selecting their peer group. We analyzed data collected for a longitudinal analysis of a drug‐use prevention programme for upper elementary school students. We used a two‐step probit regression to control for the potentially endogenous explanatory variable peer substance use. Rigorous tests of endogeneity and the validity of the instrumental variables showed that controlling for the endogeneity of peer substance use to reduce bias is not worth the reduction in mean squared error in these data. Peer substance use has a positive and significant effect on adolescent substance use for both drinking and smoking. These results imply that peer influence is empirically more important than peer selection (endogeneity) in our sample of adolescents in grades 6–9. Living in a single‐parent family was by far the strongest predictor of adolescent drinking and smoking. © 1998 John Wiley & Sons, Ltd.

Suggested Citation

  • Edward C. Norton & Richard C. Lindrooth & Susan T. Ennett, 1998. "Controlling for the endogeneity of peer substance use on adolescent alcohol and tobacco use," Health Economics, John Wiley & Sons, Ltd., vol. 7(5), pages 439-453, August.
    • Handle: RePEc:wly:hlthec:v:7:y:1998:i:5:p:439-453
    DOI: 10.1002/(SICI)1099-1050(199808)7:5<439::AID-HEC362>3.0.CO;2-9
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    2. William N. Evans & Wallace E. Oates & Robert M. Schwab & William N. Evans & Wallace E. Oates & Robert M. Schwab, 2004. "Measuring Peer Group Effects: A Study of Teenage Behavior," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 13, pages 232-257, Edward Elgar Publishing.
    3. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    4. Kenneth Bollen & David Guilkey & Thomas Mroz, 1995. "Binary outcomes and endogenous explanatory variables: Tests and solutions with an application to the demand for contraceptive use in tunisia," Demography, Springer;Population Association of America (PAA), vol. 32(1), pages 111-131, February.
    5. Coate, Douglas & Grossman, Michael, 1988. "Effects of Alcoholic Beverage Prices and Legal Drinking Ages on Youth Alcohol Use," Journal of Law and Economics, University of Chicago Press, vol. 31(1), pages 145-171, April.
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