How measures of perception from survey data lead to inconsistent regression results: evidence from adolescent and peer substance use

In studies of peer group behavior, the direct measure of peer group behavior is often not available, and so is replaced by perceptions from survey respondents. This study shows that regression estimators are inconsistent when the correctly measured independent variable of group behavior is replaced with perceived measures from survey respondents. The inconsistency is due to three sources: projection of own behavior onto the group, rescaling the marginal effect of the group, and simple random measurement error. We discuss why each effect may cause inconsistency, derive formulas for the probability limit to quantify their effects, and illustrate with three examples of adolescent smoking and drinking. Copyright © 2002 John Wiley & Sons, Ltd.