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A discrete choice model with social interactions: an analysis of high school teen behavior

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  • Kooreman, Peter
  • Soetevent, Adriaan

    (Groningen University)

Abstract

We develop an empirical discrete choice model that explicitly allows for endogenous social interactions. We analyze the issues of multiple equilibria, statistical coherency, and estimation of the model by means of simulation methods. In an empirical application, we analyze a data set containing information on the individual behavior of some 8000 high school teenagers from almost 500 different school classes. We estimate the model for five types of teen discrete choice behavior: smoking, truanting, moped ownership, cell phone ownership, and asking parents\' permission for purchases. We find strong social interaction effects for behavior closely related to school (truanting), somewhat weaker social interaction effects for behavior partly related to school (smoking, moped and cell phone ownership) and no social interaction effects for behavior far away from school (asking parents\' permission for purchases). Intra-gender interactions are much stronger than cross-gender interactions.

Suggested Citation

  • Kooreman, Peter & Soetevent, Adriaan, 2002. "A discrete choice model with social interactions: an analysis of high school teen behavior," CCSO Working Papers 200214, University of Groningen, CCSO Centre for Economic Research.
    • Handle: RePEc:gro:rugccs:200214
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    File URL: http://irs.ub.rug.nl/ppn/241217318
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    References listed on IDEAS

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    1. Jonathan Gruber, 2001. "Youth Smoking in the 1990's: Why Did It Rise and What Are the Long-Run Implications?," American Economic Review, American Economic Association, vol. 91(2), pages 85-90, May.
    2. Alessie, Rob & Kapteyn, Arie, 1991. "Habit Formation, Interdependent References and Demographic Effects in the Almost Ideal Demand System," Economic Journal, Royal Economic Society, vol. 101(406), pages 404-419, May.
    3. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 235-260.
    4. Woittiez, Isolde & Kapteyn, Arie, 1998. "Social interactions and habit formation in a model of female labour supply," Journal of Public Economics, Elsevier, vol. 70(2), pages 185-205, November.
    5. Kent Smetters & Jennifer Gravelle, 2001. "The Exchange Theory of Teenage Smoking and the Counterproductiveness of Moderate Regulation," NBER Working Papers 8262, National Bureau of Economic Research, Inc.
    6. Stern, Steven, 1992. "A Method for Smoothing Simulated Moments of Discrete Probabilities in Multinomial Probit Models," Econometrica, Econometric Society, vol. 60(4), pages 943-952, July.
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    Cited by:

    1. William A. Brock & Steven N. Durlauf, 2003. "Multinomial Choice with Social Interactions," NBER Technical Working Papers 0288, National Bureau of Economic Research, Inc.
    2. Tom Kauko, 2004. "Towards Infusing Institutions and Agency into House Price Analysis," Urban Studies, Urban Studies Journal Limited, vol. 41(8), pages 1507-1519, July.
    3. Soetevent, Adriaan R., 2003. "Equilibrium properties of finite binary choice games," CCSO Working Papers 200314, University of Groningen, CCSO Centre for Economic Research.
    4. David Card & Laura Giuliano, 2013. "Peer Effects and Multiple Equilibria in the Risky Behavior of Friends," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1130-1149, October.
    5. repec:dgr:rugccs:200314 is not listed on IDEAS
    6. Aughinbaugh, Alison & Gittleman, Maury, 2004. "Maternal employment and adolescent risky behavior," Journal of Health Economics, Elsevier, vol. 23(4), pages 815-838, July.
    7. Peter Kooreman, 2007. "Time, money, peers, and parents; some data and theories on teenage behavior," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(1), pages 9-33, February.
    8. Brian Krauth, 2005. "Peer effects and selection effects on smoking among Canadian youth," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 735-757, August.
    9. Yannis Ioannides, 2006. "Topologies of social interactions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 559-584, August.
    10. Adriaan R Soetevent & Peter Kooreman, 2005. "Social Ties within School Classes: The Roles of Gender, Ethnicity, and Having Older Siblings," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(3), pages 373-391, Autumn.
    11. Andrew Grodner & Thomas J. Kniesner, 2008. "Labor supply with social interactions: econometric estimates and their tax policy implications," Research in Labor Economics, in: Work, Earnings and Other Aspects of the Employment Relation, pages 1-23, Emerald Group Publishing Limited.
    12. Marcucci, Edoardo & Rotaris, Lucia & Paglione, Guido, 2009. "A methodology to evaluate the prospects for the introduction of a Park&Buy service," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 42, pages 26-46.

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