I agree with you about peer effects but I think you assume without cause that they are lasting. Twin studies, despite their flaws, would seem to be the best way to establish that, whatever their influence now, differing peer groups and adolescent environments will not lead to different adult characteristics. Any efforts that parents take NOW to improve children's peer groups, in order to improve current well-being, are valuable. But if the effect fades over time, then the harm is less than most parents think it is, and therefore on the margin children are less costly and Caplan's conclusion is warranted.