DP13918 Dynamic Social Interactions and Health Risk Behavior
We study risky behavior of adolescents. Concentrating on smoking and alcohol use, we
structurally estimate a dynamic social interaction model in the context of students' school
networks included in the National Longitudinal Study of Adolescent Health (Add Health). The
model allows for forward-looking behavior of agents, addiction effects, and social interactions
in the form of preferences for conformity in the social network.
We find strong evidence for forward looking dynamics and addiction effects. We also
find that social interactions in the estimated dynamic model are quantitatively large. A
misspecified static model would t data substantially worse, while producing a much smaller
estimate of the social interaction effect. With the estimated dynamic model, a temporary
shock to students' preferences in the 10th grade has effects on their behavior in grades 10, 11,
12, with estimated social multipliers 1.53, 1.03, and 0.76, respectively. The multiplier effect
of a permanent shock is much larger, up to 3.7 in grade 12. Moreover, (semi-) elasticities of a
permanent change in the availability of alcohol or cigarettes at home on child risky behavior
implied by the dynamic equilibrium are 25%, 63%, and 79%, in grades 10, 11, 12, respectively.