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Estimating Social Effects with Randomized and Observational Network Data

Author

Listed:
  • TszKin Julian Chan
  • Juan Estrada
  • Kim Huynh
  • David Jacho-Chavez
  • Chungsang Tom Lam
  • Leonardo Sanchez-Aragon

Abstract

This paper introduces an innovative approach to identifying and estimating the parameters of interest in the widely recognized linear-in-means regression model under conditions where the initial randomization of peers determines the observed network. We assert that peers who are initially randomized do not produce social effects. However, after randomization, agents can endogenously develop significant connections that potentially generate peer influences. We present a moment condition that compiles local heterogeneous identifying information for all agents within the population. Under the assumption of $\psi$-dependence in the endogenous network space, we propose a Generalized Method of Moments (GMM) estimator, which is proven to be consistent, asymptotically normally distributed, and straightforward to implement using commonly available statistical software due to its closed-form expression. Monte Carlo simulations demonstrate the GMM estimator's strong small-sample performance. An empirical analysis utilizing data from Hong Kong high school students reveals substantial positive spillover effects on math test scores among study partners in our sample, provided that their seatmates were exogenously assigned by their teachers.

Suggested Citation

  • TszKin Julian Chan & Juan Estrada & Kim Huynh & David Jacho-Chavez & Chungsang Tom Lam & Leonardo Sanchez-Aragon, 2026. "Estimating Social Effects with Randomized and Observational Network Data," Papers 2608.01405, arXiv.org.
  • Handle: RePEc:arx:papers:2608.01405
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    References listed on IDEAS

    as
    1. Kojevnikov, Denis & Marmer, Vadim & Song, Kyungchul, 2021. "Limit theorems for network dependent random variables," Journal of Econometrics, Elsevier, vol. 222(2), pages 882-908.
    2. Jenish, Nazgul & Prucha, Ingmar R., 2009. "Central limit theorems and uniform laws of large numbers for arrays of random fields," Journal of Econometrics, Elsevier, vol. 150(1), pages 86-98, May.
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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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