This paper uses the Economics of Incentives to develop and estimate a model of the effects of parenting styles on substance use by young children ages 10-14. The paper uses a game theoretic model which captures the repeated interactions between parents and children in the household. The NLSY-79 Child dataset is used and in the empirical specification a probit model is used for the different forms of substance use by the child to estimate the probabilities of taking substances. The results of the paper show that parenting style is significant in order to
provide a more complete model of behavior. Disengaged parents are most likely to have children smoking and consuming alcohol followed by Authoritarian and Authoritative and Permissive Parents. Thus the expected utility theory in the standard economic model can be supplemented with psychological variables in order to provide an empirical model of behavior
