69 | P a g e Effects of Peers and Social Environment on Adolescent Psychological Well-Being

We use data from Add Health to estimate models of peer effects and effects of social environment on adolescent psychological well-being. Past literature has focused mostly on the role of peers on adolescents, notably on schooling (GPA, high school graduation, etc.) and risk behavioral (smoking, drinking, drug use, etc.) outcomes. Our study’s core innovation lies in the conceptual testing of the hypothesis that an enlarged adolescent social environment encompasses support from peers, school, parents, and the neighborhood. In this paper, we isolate the effects of each of these groups on adolescent psychological well-being and find significant effects of support from schools and parents. However, peer effects are insignificant except for the baseline Ordinary Least Squares (OLS) model. Separate models for males and females and different age groups are also estimated and similar results are found, although the effects are greatest during late adolescence. Given the likely endogeneity of peer group formation, we also use an instrumental variables (IV) approach. The IV results indicate that peer effects are not statistically significant, but otherwise mimic OLS estimates, supporting the presence of a multi-faceted social network influencing adolescent health. These results, reinforced by further statistical testing, suggest that past work limiting influence on adolescent behavior or outcome to only the peers tends to be incomplete