Keeping it in the Family? If Parents Smoke Do Children Follow?

I use retrospective data on smokers from the German Socio-Economic Panel to investigate whether children are more likely to smoke if their parents smoke(d). Despite intense policy interest, researchers have not established whether the well-established (positive) association is causal. I exploit panel data observations on smoking behavior of parents and children to develop instrumental variables that identify the causal relationship between parental smoking and youth initiation. The results suggest that children are not more or less likely to start smoking if their parents smoke. Failing to control for the endogenous choice of parents to smoke leads to incorrect inferences.