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Identification of peer effects through social networks

Author

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  • Bramoullé, Yann
  • Djebbari, Habiba
  • Fortin, Bernard
Abstract
We provide new results regarding the identification of peer effects. We consider an extended version of the linear-in-means model where interactions are structured through a social network. We assume that correlated unobservables are either absent, or treated as network fixed effects. 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. We use data from the Add Health survey to provide an empirical application of our results on the consumption of recreational services (e.g., participation in artistic, sports and social activities) by secondary school students. Monte Carlo simulations calibrated on this application provide an analysis of the effects of some crucial characteristics of a network (i.e., density, intransitivity) on the estimates of peer effects. Our approach generalizes a number of previous results due to Manski [Manski, C., 1993. Identification of endogenous social effects: The reflection problem. Review of Economic Studies 60 (3), 531-542], Moffitt [Moffitt, R., 2001. Policy interventions low-level equilibria, and social interactions. In: Durlauf, Steven, Young, Peyton (Eds.), Social Dynamics. MIT Press] and Lee [Lee, L.F., 2007. Identification and estimation of econometric models with group interactions, contextual factors and fixed effects. Journal of Econometrics 140 (2), 333-374].

Suggested Citation

  • Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
    • Handle: RePEc:eee:econom:v:150:y:2009:i:1:p:41-55
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    More about this item

    Keywords

    Social network Peer effects Identification Add Health dataset;

    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 - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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