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Identification of Peer Effects through Social Networks

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Author Info
Yann Bramoullé () (CIRPÉE, Université Laval)
Habiba Djebbari () (CIRPÉE, Université Laval and IZA)
Bernard Fortin () (CIRPÉE, Université Laval)

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Abstract

We provide new results regarding the identification of peer effects. We consider an extended version of the linear-in-means model where each individual has his own specific reference group. Interactions are thus structured through a social network. We assume that correlated unobservables are either absent, or treated as fixed effects at the component level. In both cases, we provide easy-to-check necessary and sufficient conditions for identification. We show that endogenous and exogenous effects are generally identified under network interaction, although identification may fail for some particular structures. Monte Carlo simulations provide an analysis of the effects of some crucial characteristics of a network (i.e., density, intransitivity) on the estimates of social effects. Our approach generalizes a number of previous results due to Manski (1993), Moffitt (2001), and Lee (2006).

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2652.

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Length: 43 pages
Date of creation: Mar 2007
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Handle: RePEc:iza:izadps:dp2652

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Related research
Keywords: peer effects social networks identification

Other versions of this item:

Find related papers by JEL classification:
D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology
C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July. [Downloadable!] (restricted)
  2. De Weerdt, Joachim & Dercon, Stefan, 2006. "Risk-sharing networks and insurance against illness," Journal of Development Economics, Elsevier, vol. 81(2), pages 337-356, December. [Downloadable!] (restricted)
    Other versions:
  3. Timothy G. Conley & Christopher R. Udry, 2005. "Learning about a new technology: pineapple in Ghana," Proceedings, Federal Reserve Bank of San Francisco. [Downloadable!]
    Other versions:
  4. Sanjeev Goyal & Marco van der Leij & José Luis Moraga-Gonzàlez, 2004. "Economics: An Emerging Small World?," Working Papers 2004.84, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  5. Fortin, Bernard & Lacroix, Guy & Villeval, Marie-Claire, 2004. "Tax Evasion and Social Interactions," IZA Discussion Papers 1359, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Yannis M. Ioannides & Adriaan R. Soetevent, 2005. "Social Networking and Individual Outcomes Beyond the Mean Field Case," Discussion Papers Series, Department of Economics, Tufts University 0521, Department of Economics, Tufts University. [Downloadable!]
  7. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May. [Downloadable!] (restricted)
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  8. Graham, Bryan S. & Hahn, Jinyong, 2005. "Identification and estimation of the linear-in-means model of social interactions," Economics Letters, Elsevier, vol. 88(1), pages 1-6, July. [Downloadable!] (restricted)
  9. Alejandro Gaviria & Steven Raphael, 2001. "School-Based Peer Effects And Juvenile Behavior," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 257-268, May. [Downloadable!] (restricted)
    Other versions:
  10. Bruce A. Weinberg, 2007. "Social Interactions with Endogenous Associations," NBER Working Papers 13038, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Brock, William A & Durlauf, Steven N, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Blackwell Publishing, vol. 68(2), pages 235-60, April.
  12. David J. Zimmerman, 2003. "Peer Effects in Academic Outcomes: Evidence from a Natural Experiment," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 9-23, November. [Downloadable!] (restricted)
  13. Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-65, July. [Downloadable!] (restricted)
  14. repec:att:wimass:192031 is not listed on IDEAS
  15. Evans, William N & Oates, Wallace E & Schwab, Robert M, 1992. "Measuring Peer Group Effects: A Study of Teenage Behavior," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 966-91, October. [Downloadable!] (restricted)
  16. Jacob M. Markman & Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2003. "Does peer ability affect student achievement?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 527-544. [Downloadable!]
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  17. D'Haultfoeuille, Xavier & Davezies, Laurent & Fougère, Denis, 2006. "Identification of Peer Effects Using Group Size Variation," CEPR Discussion Papers 5865, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  18. Adriaan R. Soetevent, 2006. "Empirics of the Identification of Social Interactions; An Evaluation of the Approaches and Their Results *," Journal of Economic Surveys, Blackwell Publishing, vol. 20(2), pages 193-228, 04. [Downloadable!] (restricted)
  19. Krauth, Brian V., 2006. "Simulation-based estimation of peer effects," Journal of Econometrics, Elsevier, vol. 127(1), pages 243-271, July. [Downloadable!] (restricted)
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  20. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Blackwell Publishing, vol. 60(3), pages 531-42, July. [Downloadable!] (restricted)
  21. William A. Brock & Steven N. Durlauf, 2003. "Multinomial Choice with Social Interactions," NBER Technical Working Papers 0288, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  22. repec:att:wimass:1920512 is not listed on IDEAS
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Giacomo De Giorgi & Michele Pellizzari & Silvia Redaelli, 2007. "Be as Careful of the Books You Read as of the Company You Keep: Evidence on Peer Effects in Educational Choices," IZA Discussion Papers 2833, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Ethan Cohen-Cole & Giulio Zanella, 2008. "Welfare Stigma or Information Sharing? Decomposing Social Interactions Effects in Social Benefit Use," Department of Economics University of Siena 531, Department of Economics, University of Siena. [Downloadable!]
  3. Ethan Cohen-Cole & Jason M. Fletcher, 2008. "Is obesity contagious?: social networks vs. environmental factors in the obesity epidemic," Quantitative Analysis Unit Working Paper QAU08-2, Federal Reserve Bank of Boston. [Downloadable!]
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