Peer influences on adolescent alcohol consumption: evidence using an instrumental variables/fixed effect approach

In order to address empirical difficulties in research examining peer effects in alcohol consumption, I use instrumental variables/fixed effects methodology that compares students in different grades within the same school who face a different set of classmate decisions. Within this context, I suggest that alcohol availability in classmates' homes and classmates' parents' alcohol abuse can be used as instruments. Results indicate that a 10% increase in the proportion of classmates who drink increases the likelihood an individual drinks by five percentage points. This paper also provides evidence of peer effects in problem drinking, such as binge drinking and drunkenness.