Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Most risky behaviors among youths involve a trade-off between short-term benefits and long-term costs. In general, research indicates that adolescents are not merely impulsive or emotional decision makers, but on the contrary rationally weigh the benefits and costs of undertaking risky actions. Much of the economic analyses on youth risk-taking have been written from the perspective of the costs of these activities. There is less research, however, on the gains that young people derive from such actions. This paper sheds light on the social determinants of underage drinking by studying the relationship between an adolescent’s use of alcohol and his/her popularity at school. We hypothesize that use of alcohol may increase an adolescent’s popularity through two channels. First, it may enhance the student’s level of des-inhibition, friendliness, or other personal features that lead to social facilitation. Alternatively, popularity may be a reward for adhering to group norms. Adolescents whose actions are complementary to the behaviors endorsed by the peer group may be more likely to be accepted among their peers (Becker, 1996; Akerlof, 1997).

We empirically assess the affect of alcohol use on popularity using data from the National Longitudinal Study of Adolescent Health (Add Health), a rich and nationally representative study that makes possible the identification of school social networks as well as the construction of indicators of popularity or social position within the network. Popularity is measured on the basis of the count of friendship nominations received by a student at school. In addition to assessing a main effect of alcohol use on popularity, we analyze whether there is a complementarity between an adolescent’s use of alcohol, and peers’ alcohol consumption in the determination of the individual’s social status. A positive coefficient for this interaction suggests endogenous preference formation mechanisms behind peer influence.

The main challenge to the estimation stems from the simultaneity of influences between popularity and alcohol use. To address endogeneity, estimation is conducted using an instrumental variables approach. Exclusion restrictions are based on a set of variables that include the adolescent’s number of older siblings, whether he/she has siblings aged at least 21, and state resources and policies directed towards alcohol and tobacco control. We also instrument for the average use of alcohol by peers using the average number of older siblings in the peer group and the proportion of peers with siblings aged 21 or older.

The proposed study contributes to the understanding of the etiology of adolescent alcohol consumption in several ways. First, it directly estimates social payoffs from engaging in alcohol consumption. Second, it sheds light on the importance of endogenous preference formation mechanisms behind peer influence in adolescence. Understanding the nature of these mechanisms is important for the design and implementation of prevention programs. Interventions that rely only on the provision of information to adolescents may be ineffective if behavior is strongly shaped by peer pressure.