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Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes

Author

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  • Comola, Margherita

    (Paris School of Economics)

  • Prina, Silvia

    (Northeastern University)

Abstract

A large literature has studied how peers affect behavior by exploiting the preexisting social network structure only. What if networks rewire in response to changes in the economic environment, such as a randomized intervention? We exploit a unique panel dataset that contains detailed information on the network of informal financial transactions before and after a field experiment that randomized access to savings accounts in Nepal. First, we show that the intervention affects the structure of the network of informal financial transactions among households. Second, we estimate a panel model of peer effects in expenditure where the network may change endogenously, and we exploit the design of the randomized intervention to instrument for the observed network change. Our results suggest that disregarding the network change would underestimate both total peer effects and the overall impact of the intervention.

Suggested Citation

  • Comola, Margherita & Prina, Silvia, 2014. "Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes," IZA Discussion Papers 8641, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8641
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    References listed on IDEAS

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    Cited by:

    1. Rokhaya Dieye & Habiba Djebbari & Felipe Barrera-Osorio, 2014. "Accounting for Peer Effects in Treatment Response," AMSE Working Papers 1435, Aix-Marseille School of Economics, France, revised Jul 2014.
    2. Pascaline Dupas & Anthony Keats & Jonathan Robinson, 2019. "The Effect of Savings Accounts on Interpersonal Financial Relationships: Evidence from a Field Experiment in Rural Kenya," The Economic Journal, Royal Economic Society, vol. 129(617), pages 273-310.
    3. Gani Aldashev & Catherine Guirkinger, 2016. "Colonization and Changing Social Structure: Kazakhstan 1896-1910," Working Papers ECARES ECARES 2016-10, ULB -- Universite Libre de Bruxelles.
    4. Mori, Tomoya & Sakaguchi, Shosei, 2018. "Collaborative knowledge creation: Evidence from Japanese patent data," MPRA Paper 88716, University Library of Munich, Germany.
    5. Áureo de Paula, 2015. "Econometrics of network models," CeMMAP working papers 52/15, Institute for Fiscal Studies.
    6. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 561-624, Elsevier.
    7. Boucher, Vincent & Fortin, Bernard, 2015. "Some Challenges in the Empirics of the Effects of Networks," IZA Discussion Papers 8896, Institute of Labor Economics (IZA).
    8. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    9. Lenel, Friederike, 2021. "Expected neediness and the formation of mutual support arrangements: Evidence from the Philippines," University of Göttingen Working Papers in Economics 427, University of Goettingen, Department of Economics.
    10. Arun Advani & Bansi Malde, 2014. "Empirical methods for networks data: social effects, network formation and measurement error," IFS Working Papers W14/34, Institute for Fiscal Studies.
    11. Arun Advani & Bansi Malde, 2018. "Methods to identify linear network models: a review," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-16, December.

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    More about this item

    Keywords

    networks; peer effects; financial access;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • G2 - Financial Economics - - Financial Institutions and Services
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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