Peer effects refer to the influence that individuals have on each other's behaviors, attitudes, and outcomes within a social group. This concept is significant in understanding how the actions of peers can impact an individual's decisions and life choices, often leading to correlated behaviors within groups such as schools, neighborhoods, or workplaces. Analyzing peer effects is crucial in causal inference, especially when dealing with complex data structures, as it highlights how relationships and interactions can confound or clarify causal relationships.
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