Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes

Margherita Comola () and Silvia Prina ()
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Silvia Prina: Northeastern University

No 8641, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A large literature has studied how peers affect behavior by exploiting the preexisting social network structure only. What if networks rewire in response to changes in the economic environment, such as a randomized intervention? We exploit a unique panel dataset that contains detailed information on the network of informal financial transactions before and after a field experiment that randomized access to savings accounts in Nepal. First, we show that the intervention affects the structure of the network of informal financial transactions among households. Second, we estimate a panel model of peer effects in expenditure where the network may change endogenously, and we exploit the design of the randomized intervention to instrument for the observed network change. Our results suggest that disregarding the network change would underestimate both total peer effects and the overall impact of the intervention.

Keywords: networks; peer effects; financial access (search for similar items in EconPapers)
JEL-codes: C31 D85 G2 O16 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2014-11
New Economics Papers: this item is included in nep-iue, nep-mfd, nep-net and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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