Some Challenges in the Empirics of the Effects of Networks

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01 Février 2015
Types de publication: 
Cahier de recherche
Auteur(s): 
Vincent Boucher
Bernard Fortin
Axe de recherche: 
Enjeux économiques et financiers
Mots-clés: 
Social Networks
Social Multiplier
Network formation
Identification
Proxy Variables
Policy Analysis
Classification JEL: 
A14
C33
C36
D85
Z13

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.

Contact: 

Boucher: Department of Economics, Université Laval, CIRPÉE vincent.boucher@ecn.ulaval.ca
Fortin: Department of Economics, Université Laval, CIRPÉE and CIRANO bernard.fortin@ecn.ulaval.ca