Some Challenges in the Empirics of the Effects of Networks

Oxford Handbook on the Economics of Networks, Y. Bramoullé, B. Rogers and A. Galeotti (Eds.), Oxford University Press, 2015, Forthcoming

CRREP Working Paper 2015-01

37 Pages Posted: 19 Feb 2015 Last revised: 29 Mar 2018

See all articles by Vincent Boucher

Vincent Boucher

Université Laval

Bernard Fortin

Université Laval - Département d'Économique; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: February 17, 2015

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.

Keywords: Social Networks, Social Multiplier, Network Formation, Identification, Proxy Variables, Policy Analysis

JEL Classification: A14, C33, C36, D85, Z13

Suggested Citation

Boucher, Vincent and Fortin, Bernard, Some Challenges in the Empirics of the Effects of Networks (February 17, 2015). Oxford Handbook on the Economics of Networks, Y. Bramoullé, B. Rogers and A. Galeotti (Eds.), Oxford University Press, 2015, Forthcoming , CRREP Working Paper 2015-01, Available at SSRN: https://ssrn.com/abstract=2566288

Vincent Boucher

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada

Bernard Fortin (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada
418-656-5678 (Phone)
418-656-7798 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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