The Econometrics Seminar:
Time:12.15 – 13.30
Date: 19th of January 2022
Room 3001

Zheng Wang (EUI Florence) “The linking effect: causal identification and estimation of the effect of peer relationship”

Abstract : The endogeneity of network formation has been a major obstacle to the study of peer influence. This paper proposes a causal identification solution in the potential outcome framework. Combining results from multiple causal inference and statistical network analysis, I show that confounding can be addressed by inferring propensity scores of network link formation from the adjacency matrix. This identification strategy imposes minimum restrictions on the data-generating process and, unlike existing econometric solutions, does not rely on any parametric modelling. As an application, I estimate the effect of high school friendships on bachelor’s degree attainment. While previous literature finds that exposure to more high-achieving boys makes girls less likely to obtain a bachelor’s degree, I show that if the girls consider the boys as friends, their interactions induce a positive impact instead. Since friendship endogeneity has been addressed, the estimated effect is causal.

Organizer:
Arne UHLENDORFF (CREST)

Sponsors:
CREST