A structural model of segregation in social networks
In this paper, I develop and estimate a dynamic model of strategic network formation with heterogeneous agents. While existing models have multiple equilibria, I prove the existence of a unique stationary equilibrium, which characterizes the likelihood of observing a specific network in the data. As a consequence, the structural parameters can be estimated using only one observation of the network at a single point in time. The estimation is challenging because the exact evaluation of the likelihood is computationally infeasible. To circumvent this problem, I propose a Bayesian Markov Chain Monte Carlo algorithm that avoids direct evaluation of the likelihood. This method drastically reduces the computational burden of estimating the posterior distribution and allows inference in high dimensional models. I present an application to the study of segregation in school friendship networks, using data from Add Health containing the actual social networks of students in a representative sample of US schools. My results suggest that for white students, the value of a same-race friend decreases with the fraction of whites in the school. The opposite is true for African American students. The model is used to study how different desegregation policies may affect the structure of the network in equilibrium. I find an inverted u-shaped relationship between the fraction of students belonging to a racial group and the expected equilibrium segregation levels. These results suggest that desegregation programs may decrease the degree of interracial interaction within schools.
|Date of creation:||Nov 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+44) 020 7291 4800
Fax: (+44) 020 7323 4780
Web page: http://cemmap.ifs.org.uk
More information through EDIRC
|Order Information:|| Postal: The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE|
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.:
- Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Wiley Blackwell, vol. 70(1), pages 147-165, January.
- Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009.
"An Economic Model of Friendship: Homophily, Minorities, and Segregation,"
Econometric Society, vol. 77(4), pages 1003-1045, 07.
- Sergio Currarini & Paolo Pin & Matthew O. Jackson, 2007. "An Economic Model of Friendship: Homophily, Minorities and Segregation," Working Papers 2007_20, Department of Economics, University of Venice "Ca' Foscari".
- Topa, Giorgio, 2001.
"Social Interactions, Local Spillovers and Unemployment,"
Review of Economic Studies,
Wiley Blackwell, vol. 68(2), pages 261-95, April.
- Topa, Giorgio, 1997. "Social Interactions, Local Spillovers and Unemployment," Working Papers 97-17, C.V. Starr Center for Applied Economics, New York University.
- Mayer, Adalbert & Puller, Steven L., 2008. "The old boy (and girl) network: Social network formation on university campuses," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 329-347, February.
- Oriana Bandiera & Imran Rasul, 2002.
"Social networks and technology adoption in Northern Mozambique,"
LSE Research Online Documents on Economics
3539, London School of Economics and Political Science, LSE Library.
- Oriana Bandiera & Imran Rasul, 2006. "Social Networks and Technology Adoption in Northern Mozambique," Economic Journal, Royal Economic Society, vol. 116(514), pages 869-902, October.
- Bandiera, Oriana & Rasul, Imran, 2002. "Social Networks and Technology Adoption in Northern Mozambique," CEPR Discussion Papers 3341, C.E.P.R. Discussion Papers.
- Oriana Bandiera & Imran Rasul, 2002. "Social Networks and Technology Adoption in Northern Mozambique," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 35, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Ryo Nakajima, 2007.
"Measuring Peer Effects on Youth Smoking Behaviour,"
Review of Economic Studies,
Oxford University Press, vol. 74(3), pages 897-935.
- Giacomo De Giorgi & Michele Pellizzari & Silvia Redaelli, 2010. "Identification of Social Interactions through Partially Overlapping Peer Groups," American Economic Journal: Applied Economics, American Economic Association, vol. 2(2), pages 241-75, April.
- Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
- Jackson, Matthew O. & Watts, Alison, 2002.
"The Evolution of Social and Economic Networks,"
Journal of Economic Theory,
Elsevier, vol. 106(2), pages 265-295, October.
- Nicholas A. Christakis & James H. Fowler & Guido W. Imbens & Karthik Kalyanaraman, 2010. "An Empirical Model for Strategic Network Formation," NBER Working Papers 16039, National Bureau of Economic Research, Inc.
- repec:dgr:kubcen:200470 is not listed on IDEAS
- De Martí, Joan & Zenou, Yves, 2009. "Ethnic Identity and Social Distance in Friendship Formation," CEPR Discussion Papers 7566, C.E.P.R. Discussion Papers.
- Blume Lawrence E., 1993.
"The Statistical Mechanics of Strategic Interaction,"
Games and Economic Behavior,
Elsevier, vol. 5(3), pages 387-424, July.
- L. Blume, 2010. "The Statistical Mechanics of Strategic Interaction," Levine's Working Paper Archive 488, David K. Levine.
- Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
- Andrea Galeotti, 2006. "One-way flow networks: the role of heterogeneity," Economic Theory, Springer, vol. 29(1), pages 163-179, September.
- COMOLA Margherita, 2007. "The network structure of informal arrangements : evidence from rural Tanzania," Research Unit Working Papers 0708, Laboratoire d'Economie Appliquee, INRA.
When requesting a correction, please mention this item's handle: RePEc:ifs:cemmap:32/10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Stephanie Seavers)
If references are entirely missing, you can add them using this form.