Ester Faia, Monica Paiella, 19 September 2017

Over the past decade, there has been substantial growth in peer-to-peer lending through digital platforms, which come with unique benefits and risks compared with traditional funding and investment instruments. This column presents an empirical analysis of the two largest platforms in the US. The results show that various hard and soft information signals have emerged to address inherent information asymmetries. The growth of the sector was further helped by fragility of the banking sector in the wake of Global Crisis.

Ruiqing Cao, Theresa Kuchler, Johannes Stroebel, Arlene Wong, 08 September 2017

Systematic analyses of social connectedness and social networks have traditionally been complicated by a lack of high-quality, large-scale data. This column uses data on friendship links on Facebook to construct a new measure of social connectedness between US counties, and between US counties and foreign countries. Social networks in the US are quite local, and both national and international networks are substantially shaped by historical events and migration patterns. The populations of US counties with more geographically dispersed social networks are generally richer and better educated, and have higher life expectancy and greater social mobility.

Jörg Paetzold, Hannes Winner, 17 December 2016

Since the Global Crisis, many governments around the world have initiated policies against tax evasion and harmful tax avoidance. This column uses data from an Austrian commuter allowance scheme to explore how the design of tax schemes and the social environment affect compliance. A substantial share of employees in the study misreport their commuting distance in order to receive more compensation. Employees also appear to be influenced by the misreporting behaviour of their co-workers, showing how tax evasion can have spillover effects.

Marcel Fafchamps, Julien Labonne, 31 May 2016

Politicians may have the opportunity to interfere with the allocation of public services to help to achieve their electoral objectives. This column argues that politicians share rents with central players to build and sustain coalitions. Using detailed data from the Philippines, it examines social networks and the allocation of municipal services. Households with greater potential to broker political coalitions do indeed appear to receive more services from their municipal government. 

William Kerr, Martin Mandorff, 31 October 2015

Immigrants are more likely to concentrate around specific industries and entrepreneurship. Market integration and discrimination only go a certain way towards explaining this phenomenon. This column explores how social interactions affect immigrants’ employment decisions in the US. Fifteen ethnic groups are found to cluster around certain industries at a rate 10 times greater than the native population. Immigrants are argued to be drawn to the same industries as their countrymen due to the ease of diffusing skills through social interactions in the group, along with higher earnings due to specialisation.

Eleonora Patacchini , Pierre Picard, Yves Zenou, 20 July 2015

Little is known about how social interactions are affected by geographical distance. This column argues that students tend to interact more with those who are highly central in the network of social contacts, and who are geographically closer. Geographical distance is then a hinder to social interactions. 

Trevon Logan, John Parman, 09 March 2015

Racial disparities in socioeconomic conditions remain a major policy issue throughout the world. This column applies a new neighbour-based measure of residential segregation to US census data from 1880 and 1940. The authors find that existing measures understate the extent of segregation, and that segregation increased in rural as well as urban areas. The dramatic decline in opposite-race neighbours during the 20th century may help to explain the persistence of racial inequality in the US.

Corrado Giulietti, Jackline Wahba, Yves Zenou, 21 December 2014

Migration is heavily influenced by social networks. Nonetheless, little is known about the underlying mechanisms. This column uses a new dataset from China to disentangle the effects of strong and weak ties on the migration decision. The findings indicate that strong and weak ties act as complements. Having many weak ties with an urban area amplifies the positive impact of having a strong tie in the same area. 

Margherita Comola, Marcel Fafchamps, 04 November 2014

How should researchers investigate the true role of people’s self-reported social links in getting a job, getting a favour or simply getting information? This column introduces a framework to estimate the process by which people’s self-reported social links are formed. The authors show that different link formation rules predict the different network structures seen in data from a risk-sharing survey in a Tanzanian village and the diffusion of agricultural knowledge in the Indian state of Maharashtra.

Xiaodong Liu, Eleonora Patacchini , Yves Zenou, 09 April 2013

Economists know that your peers’ behaviour affects your economic and social outcomes. But what mechanisms are at work here? This column highlights the two major approaches that hope to explain ‘peer effects’: either people don’t want to deviate from social norms; or they are affected by a ‘social multiplier’, the influence of the sum of their peers’ behaviour. Using detailed data on friendship networks, evidence suggests that there are strong social-multiplier effects in criminal behaviour whereas, for education, social norms matter the most. A detailed understanding of peer effects will undoubtedly help policymakers better tackle social problems.

Alessandra Fogli, Laura Veldkamp, 21 October 2012

Does the pattern of social connections between individuals matter for macroeconomic outcomes? This paper uses network analysis tools to explore how different social structures affect technology diffusion and thereby a country’s rate of technological progress.

Sanjeev Goyal, 21 January 2011

Sanjeev Goyal of the University of Cambridge talks to Romesh Vaitilingam about his research on social networks. He describes the significance and potential downside of the ‘law of the few’, whereby social groups typically rely on information from a very small number of ‘opinion leaders’ to inform their economic decision-making. The interview was recorded at the annual congress of the European Economic Association in Glasgow in August 2010. [Also read the transcript]

Ginger Jin, Yuyu Chen, Yang Yue, 07 March 2010

What determines mass migration within countries? Examining data from China – the biggest internal migration experience in human history – this column finds that migrants from the same village tend to cluster at the same destination for the same occupation. This pattern is driven by social networks within villages that reduce the moving costs for future migrants, such as the risk of not finding a job.