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Some Challenges in the Empirics of the Effects of Networks

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  • Vincent Boucher
  • Bernard Fortin

Abstract

We study some recent developments and challenges in the empirics of the effects of social networks. We focus in particular on researchers’ ability to make policy recommendations based on a standard linear econometric model. We examine the potential compatibility between this type of econometric model and a microeconomic theoretical approach based on fundamentals, such as preferences, technology and decision processes. We discuss sources of identification for the social multiplier as well as for the identity of the key player. We study the possibility of testing endogeneity in network formation. We analyse the use of proxy variables and their impact for the causal interpretation of the peer effect coefficients. Our analysis suggests that greater care should be taken in grounding econometric network models to sound and credible theoretical underpinnings.

Suggested Citation

  • Vincent Boucher & Bernard Fortin, 2015. "Some Challenges in the Empirics of the Effects of Networks," Cahiers de recherche 1501, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
  • Handle: RePEc:lvl:crrecr:1501
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    Cited by:

    1. Jóna, György & Tóth, Tamás, 2017. "Spatial Effects And Externalities Of The Rivals’ Networks In Hungary," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 5(3), pages 189-207.
    2. Timothy Conley & Nirav Mehta & Ralph Stinebrickner & Todd Stinebrickner, 2015. "Social Interactions, Mechanisms, and Equilibrium: Evidence from a Model of Study Time and Academic Achievement," NBER Working Papers 21418, National Bureau of Economic Research, Inc.
    3. Vincent Boucher & Finagnon A. Dedewanou & Arnaud Dufays, 2018. "Peer-Induced Beliefs Regarding College Participation," Cahiers de recherche 1817, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    4. Vincent Boucher & Yann Bramoullé, 2020. "Binary Outcomes and Linear Interactions," AMSE Working Papers 2038, Aix-Marseille School of Economics, France.
    5. Hahn, Youjin & Islam, Asadul & Patacchini, Eleonora & Zenou, Yves, 2015. "Network Structure and Education Outcomes: Evidence from a Field Experiment in Bangladesh," IZA Discussion Papers 8872, Institute of Labor Economics (IZA).
    6. Ushchev, Philip & Zenou, Yves, 2020. "Social norms in networks," Journal of Economic Theory, Elsevier, vol. 185(C).
    7. Patacchini, Eleonora & Rainone, Edoardo & Zenou, Yves, 2017. "Heterogeneous peer effects in education," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 190-227.
    8. Vincent Boucher & Marion Gousse, 2019. "Wage Dynamics and Peer Referrals," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 1-23, January.
    9. Rokhaya Dieye & Bernard Fortin, 2017. "Gender Peer Effects Heterogeneity in Obesity," Cahiers de recherche 1702, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    10. Olcina, Gonzalo & Panebianco, Fabrizio & Zenou, Yves, 2017. "Conformism, Social Norms and the Dynamics of Assimilation," CEPR Discussion Papers 12166, C.E.P.R. Discussion Papers.
    11. Lindquist, Matthew J. & Zenou, Yves, 2019. "Crime and Networks: 10 Policy Lessons," IZA Discussion Papers 12534, Institute of Labor Economics (IZA).
    12. Beugnot, Julie & Fortin, Bernard & Lacroix, Guy & Villeval, Marie Claire, 2019. "Gender and peer effects on performance in social networks," European Economic Review, Elsevier, vol. 113(C), pages 207-224.
    13. 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.
    14. Jackson, Matthew O. & Rogers, Brian & Zenou, Yves, 2016. "Networks: An economic perspective," CEPR Discussion Papers 11452, C.E.P.R. Discussion Papers.
    15. Lindquist, Matthew & Sauermann, Jan & Zenou, Yves, 2015. "Network Effects on Worker Productivity," CEPR Discussion Papers 10928, C.E.P.R. Discussion Papers.
    16. Eric Auerbach, 2019. "Identification and Estimation of a Partially Linear Regression Model using Network Data," Papers 1903.09679, arXiv.org, revised Jun 2021.
    17. Boucher, Vincent, 2016. "Conformism and self-selection in social networks," Journal of Public Economics, Elsevier, vol. 136(C), pages 30-44.
    18. 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.
    19. Timothy Conley & Nirav Mehta & Ralph Stinebrickner & Todd Stinebrickner, 2015. "Social Interactions, Mechanisms, and Equilibrium: Evidence from a Model of Study Time and Academic Achievement," NBER Working Papers 21418, National Bureau of Economic Research, Inc.
    20. Del Bello, Carlo & Panebianco, Fabrizio & Verdier, Thierry & Zenou, Yves, 2016. "Cultural Transmission and Socialization Spillovers in Education," CEPR Discussion Papers 11419, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Social Networks; Social Multiplier; Network formation; Identification; Proxy Variables; Policy Analysis;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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