Peer Effects, Tobacco Control Policies, and Youth Smoking Behavior

This paper expands the youth cigarette demand literature by undertaking an examination of the determinants of smoking among high school students incorporating the importance of peer effects and allowing cigarette prices (taxes) and tobacco control policies to have a direct effect and an indirect effect (via the peer effect) on smoking behavior. To control for the potential endogeneity of our school-based peer measure we implement a generalized least squares estimator for a dichotomous dependent variable. Our results show that peer effects have a significant impact on youth smoking behavior and that there is a strong potential for social multiplier effects with respect to any exogenous change in cigarette taxes or tobacco control policies.

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