Multivariate Choice and Identification of Social Interactions
AbstractIn this paper, we investigate the impact of peers on own outcomes where all agents embedded in a network choose more than one activity. We develop a simple network model that illustrates these issues. We differentiate between the ‘seemingly unrelated’ simultaneous equations model where people are influenced only by others within the same activity, the ‘triangular’ simultaneous equations model, where there is some asymmetry in the peers’ cross effects, and the ‘square’ simultaneous equations model, where all possible cross-choice effects are taken into account. We develop the conditions under which each model is identified, showing that the general ‘square’ simultaneous equations model with both simultaneity effect and cross-choice peer effect cannot be identified without any exclusion restrictions. We then study the impact of peer effects on education and screen activities and show that the estimated within- and cross-choice peer effects both have non-trivial impacts on adolescent behavior. We find, in particular, that, keeping peers’ grades and screen activities fixed, watching more TV could be beneficial to a student’s grade.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9159.
Date of creation: Sep 2012
Date of revision:
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Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-13 (All new papers)
- NEP-DCM-2012-10-13 (Discrete Choice Models)
- NEP-NET-2012-10-13 (Network Economics)
- NEP-SOC-2012-10-13 (Social Norms & Social Capital)
- NEP-URE-2012-10-13 (Urban & Real Estate Economics)
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