CONTROLLING FOR THE ENDOGENEITY OF PEER SUBSTANCE USE ON ADOLESCENT ALCOHOL AND TOBACCO USE

This study examines whether the effects of peer substance use on adole scent alcohol and tobacco use are due to endogeneity of adolescents se lecting their peer group. We analyzed data collected for a longitudina l analysis of a drug-use prevention programme for upper elementary sch ool students. We used a two-step probit regression to control for the potentially endogenous explanatory variable peer substance use. Rigoro us 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 adol escent substance use for both drinking and smoking. These results impl y that peer influence is empirically more important than peer selectio n (endogeneity) in our sample of adolescents in grades 6-9. Living in a single-parent family was by far the strongest predictor of adolescen t drinking and smoking. (C) 1998 John Wiley & Sons, Ltd.