"If my buddies use drugs, will I?" Peer effects on Substance Consumption Among Teenagers.

During adolescence, interactions with peers influence a teen's attitudes and behaviors. Adolescents seek for peer approval and acceptance, which may bring them to engage in health-risky behaviors such as smoking and drinking. In this study, we estimate the impact of peers on the drug use of Spanish students aged 14 to 18. We focus on the consumption of alcohol and tobacco, the most prevalent substances used at those ages. We estimate the effect of the average classmates' consumption-the measure of peers' use-on individual consumption. Since peers' use affects individual use and vice versa, we correct for this bias using instrumental variables. Results show that peers' consumption increases substantially the probability of using alcohol, while it does not significantly affect tobacco consumption. Our results are not sensitive to using different time spans of consumption. This study shows also novel evidence indicating that the higher the proportion of grade-retained students in the class, the stronger the peer effects, especially for alcohol. This suggests that future reforms of the grade retention policy should also consider the negative effects on non-academic outcomes, such as substance use.