Social interactions are generally thought to play an important role in smoking initiation among adolescents. In this paper we exploit detailed friendship nominations in the US Add Health data, and extend the Spatial Autoregressive Model (SAR) model to deal with (i) endogenous peer selection, and (ii) unobserved contextual effects, in order to identify the endogenous peer effect. We show that peer effects in the uptake of smoking are predominantly affecting individuals who are emotionally unstable. That is, individuals with "weaker" personalities are more vulnerable to peer pressure. This finding not only helps understanding heterogeneity in peer effects, but additionally provides a promising mechanism through which personality affects later life health and socioeconomic outcomes.
Smoking Peer effects Personality SAR model Bayesian MCMC