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Essay: Peer pressure

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Peer pressure

Peer pressure

Social interactions play a clandestine role in determining behavioral and economic outcomes. Youths are collectively socialized through their interaction with adults. There are positive contagious effects in which the chances that a youth behaves in a particular fashion depends directly on the prevalence of such behavior among the his peers. The peer group tends to eat and drink similar types of food and drink. The presence of neighborhood and peer effects is frequently offered as justification for activities that seek to integrate neighborhoods and public institutions . In analyzing peer group pressure two methodological issues, in particular, stand out: first, it is difficult to distinguish among the various possible forms of social interactions; second, endogeneity problems are ubiquitous in this realm and may lead to overestimation of peer influences. There are two broad forms of social interactions: in the first, youth behavior is influenced by the exogenous characteristics of the youth’s reference group; in the second, youth behavior is influenced by the prevalence of that behavior in the group. An example may help clarify this distinction. According to the first hypothesis, a youth’s propensity to join Engineering/ Medicine will be affected by the mean parental education within the youth’s reference group; according to the second, a youth’s propensity to drop out will be affected by the proportion of the youth’s peers who prepare for the same. Distinguishing between these two effects, as “contextual” and “endogenous” effects, is important because they imply different responses to policy intervention. Whereas endogenous effects give rise to bidirectional influences, Peer influences your decision and you influence the peer group’s decision, contextual influences do not imply amplified responses to exogenous shocks. In this paper, we evaluate the importance of school/ college based peer influences in determining youth behavior on consumption of carbonated drinks. Our empirical strategy is designed to address the two methodological concerns discussed above: distinguishing endogenous from contextual effects and distinguishing real peer influences from spurious effects. Our focus on schools rather than neighborhoods as the relevant sphere of interaction is intended to limit the importance of contextual effects. If the study could have been of just spending we could have taken effects of neighborhood, but if it is about the consumption of carbonated drink we would stick to peer groups of friends rather than neighborhood. We argue that students are less exposed to the family background of their school peers than they are exposed to the family background of peers residing in the same neighborhood. Based on this contention, we argue that observable social interaction effects at the school level are more likely to be driven by bidirectional peer influences than are social interaction effects estimated at the neighborhood level. Indeed, to the extent that schools change with time and that endogenous sorting across schools is pervasive, peer-effect estimates should be higher for recent movers than for long-term residents. Estimating separate equations for long-term residents and recent movers and testing for differential effects provides then a simple test of endogeneity of school choices. We estimate strong evidence of social interaction effects for all activities of a school/ college going student.

  1. Wilson, W. J., The Truly Disadvantaged: The Inner City, The Underclass, and Public Policy (Chicago: The University of Chicago Press, 1987). ,
    When Work Disappears: The World of the New Urban Poor New York: Random House, 1996).
  2. Coleman, J. S., Foundations of Social Theory (Cambridge, MA: Harvard University Press, 1990).
  3. Corcoran, M., R. Gordon, D. Laren, and G. Solon, “The Association between Men’s Economic Status and Their Family and Community Origins,” Journal of Human Resources 27:4 (1992), 575-601.
  4. Crane, J., “The Epidemic Theory of Ghettos and Neighborhood Effects on Dropping Out and Teenage Childbearing,” American Journal of Sociology 96:5 (1991), 1226-1259.

Effect of Peer Pressure on attitude towards a product (carbonated drinks in our case)

Although the sociological literature has placed great emphasis on the importance of social interactions, economists have traditionally downplayed interactions not mediated through markets. Several attempts have been made to formalize the role of social interactions in human behavior and in the formation of preferences. Becker (1996), for example, proposes a “social capital” component to the utility function that depends on both one’s choices and the choices of one’s peers.2 In Becker’s theory, “an increase in a person’s social capital increases his demand for goods and activities that are complements to the capital and reduces the demand for those that are substitute” Accordingly, “a teenager may begin to drink alcoholic drinks, carbonated drinks or non carbonated drinks mainly because his friends drink it when they meet up to show that you are endorsing the peer group personality. We define the peer pressure as endogenous pressure within an individual to endorse the peer group personality.

Several explanations of social interactions that do not directly appeal to the human mind preferences have also been proposed. One can imagine, for example, a situation in which drug use is harshly punished and the probability of detection declines as more people use drugs. Under these circumstances, drug use by one’s peers will surely reduce one’s chances of getting caught, thus raising one’s propensity to use drugs. Alternatively, one can imagine a situation in which drug use is not only prevalent but is also perceived as a matter of status. Under these circumstances, deviators are likely to be punished through ostracism or merciless bullying. This will in turn create strong incentives to conform and so will raise the propensity to use drugs. Informational externalities can also give rise to social interactions. For example, if there is uncertainty about the relative payoffs of drinking a carbonated drink vis-a-vis spending more and drinking a non carbonated drink, one may use the previous decisions of one’s peers to make inferences. Under some circumstances, it will be optimal to follow the herd, that is, to drink what everyone is drinking. If this is the case, peer-group effects will arise even though conformity itself does not necessarily entail a reward, pecuniary or otherwise There are several empirical studies of contextual interactions. Our hypothesis tries to find out the correlation between peer group pressure vis-�-vis the decision of an individual to choose carbonated/ non carbonated drink.

Our study aims to establish whether an individual propensity to engage in drinking of carbonated/non carbonated drink is affected by the prevalence of that behavior among the individual’s school/college peers. We choose institutions as the relevant sphere of interaction for several reasons. First, schools provide a setting within which youth are forced to interact with a fixed, well defined (in terms of school, grade, and track) set of peers. Also students interact primarily during school hours, estimated social interaction effects are more likely to reflect the influence of the behavior of peers rather than the influence of peer background factors . To be more concrete, if the parents of one’s school peers use non carbonated drinks in day to day consumption , this may affect one’s propensity to consume it mainly through the increased probability that one’s peers consume it . Thus it is a moderator in our study because it acts as a moderator in individual’s decision of consuming the kind of drink.

  1. Becker, G., Accounting for Tastes (Cambridge, MA: Harvard University Press, 1996).
  2. Sah, R., “Social Osmosis and Patterns of Crime,” Journal of Political Economy 99:6 (1991), 169-217.

Effect of Health Consciousness on attitude towards a product (carbonated drinks in our case)

The decision of the drink consumption is affected by the health consciousness of an individual. Instead of using general food choice motives, this study adopts more specific attitudes i.e. health consciousness to predict the consumer’s attitude toward carbonated drink consumption. The one of the objective of the study is to test the hypothesis whether health consciousness attitudes influence the consumer’s attitude toward carbonated drinks through an individual’s healthy lifestyle. The Health consciousness wave swept India almost two decades ago. The youth became more health suave and conscious this has been mirrored by the fact that the movies of recent tried to show fitter and healthier actors in comparison of older movies. The brands advertised tried to show their inclination of better health. Health consciousness Consumers have become more conscious of the nutrition, health, and quality of the food they eat, and healthiness has become an important criterion for food purchases. Therefore, the demand for healthier drinks have grown production has increased. Moreover, carbonated drinks generally contain harmful additives and more primary and secondary additives than Non carbonated drinks. On the basis of the precautionary principle, choosing a Non carbonated drink over a carbonated drink seems to be a rational decision. This is why consumers perceive NCD’s to be healthier than CD’s. Moreover, it is reasonable to believe that a consumers’ readiness to take healthy actions is an important determinant of consumers’ attitudes toward Non carbonated drinks. A higher degree of an individual’s readiness to take healthy actions means a more positive attitude toward Non carbonated drinks. In other words, the consumer’s health consciousness influences the attitude towards Carbonated / non carbonated drinks. A consumer’s intake decision not only affects an individual’s healthiness, but also influences the success or failure of beverage products in today’s consumer-oriented beverage marketplace. In recent years, lifestyle factors have become important and are applied widely in describing how consumers make consumption decisions

  1. Magnusson, M.K., Arvola, A., Koivisto Hursti, U.-K., Aberg, L. and Sjoden, P.-O. (2001), “Attitudes towards organic foods among Swedish consumers”, British Food Journal, Vol. 103 No. 3, pp. 209-27.
  2. Magnusson, M.K., Arvola, A., Koivisto Hursti, U.-K., Aberg, L. and Sjoden, P.-O. (2003), “Choice of organic foods is related to perceived consequences for human health and to environmentally friendly behavior”, Appetite, Vol. 40 No. 2, pp. 109-17.

Attitude Towards A Product (Carbonated Drinks In Our Case)

Consumer’s attitude towards beverages is a complex vector sum of various marketing activities undertaken by the company to influence consumer behavior. It is also affected by the family values and peer group. Experience of using the product is also a major factor is also a prime factor in determining the Consumer Attitude towards the product. The various brands of the product may not be equally available to the consumers. It may well be that one brand of the commodity will be available at all retail outlets likely to carry such merchandise, whereas another brand may be available in only half or a third or even fewer of the available outlets. Also Consumer knowledge of the brands may not be equally distributed. It is conceivable that a particular brand may be made available for short or long periods of time in a number of outlets in a given market, but that consumers may not be aware of the existence of the brand, solely as a result of its store display. Many manufacturers have had the experience of securing distribution for a particular product, only to see it languish on the dealer’s shelves instead of moving into the hands of the ultimate consumer. Consumer opinions of the product attributes may differ markedly from brand to brand. This is an academic way of saying that some products are well liked by consumers, and others are not liked nearly as well, even though the two brands purport to serve the same consumer need. These product differences may be real or imaginary, but in any event the difference that exists in the mind of the consumer will reflect itself in the rate of consumer purchase. The price of the various brands may not be equal. Other things being the same, experience has shown that the differing price explains differences in rates of purchase in the same market. There are a host of special factors that may exist in any market situation. One brand may be packaged in a different size package than competing brands. It may be possible to secure a premium as a result of purchasing one brand whereas a similar offer may not be available for competing brands, or if the offer is similar, the premium available may not be the same. One brand may have been introduced to the market earlier in point of time than another, and this advantage may continue indefinitely his product, since the marketing action which he will take must be directed towards overcoming the obstacle to the sale. Thus we conclude that attitude of the consumer towards beverages is the combination of various above mentioned factors.

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