From a policy standpoint, the spread of health conditions in social networks is important to quantify, because it implies externalities and possible market failures in the consumption of health interventions. Recent studies conclude that happiness and depression may be highly contagious across social ties. The results may be biased, however, because of selection and common shocks. We provide unbiased estimates by using exogenous variation from college roommate assignments. Our findings are consistent with no significant overall contagion of mental health and no more than small contagion effects for specific mental health measures, with no evidence for happiness contagion and modest evidence for anxiety and depression contagion. The weakness of the contagion effects cannot be explained by avoidance of roommates with poor mental health or by generally low social contact among roommates. We also find that similarity of baseline mental health predicts the closeness of roommate relationships, which highlights the potential for selection biases in studies of peer effects that do not have a clearly exogenous source of variation. Overall, our results suggest that mental health contagion is lower, or at least more context specific, than implied by the recent studies in the medical literature. Copyright © 2012 John Wiley & Sons, Ltd
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