Peer Effects in Young Adults’ Marital Decisions

Abstract:
This paper studies peer group effects on marital decisions. We use data from Waves I and III of the National Longitudinal Study of Adolescent Health (Add Health). This database contains detailed information on adolescents’ high school friends as well as their marital behavior later in life. We construct a balanced panel for the years 1995-2002 using the calendar of all past and current relationships of the respondents, which allows us to recover the marital status of each individual and of her friends at any given year. Hence, we are able to analyze how the marital transitions of individuals depend on the marital status of their friends. We use panel data, instrumental variables techniques, and exploit the timing of friendship formation to identify the effect of peers on marital decisions. Our results after controlling for various observable characteristics of individuals and their friends show that peer effects in marital decisions are significant. Robustness checks using former and placebo friends support our results, and indicate that actual peers do matter.