Social Structure, Segregation, and Economic Behavior

Abstract

I discuss a fundamental and pervasive aspect of social networks that has a signfii…cant impact on behavior: "homophily. "Homophily refers to the tendency of individuals to associate with others who have similar characteristics as themselves. This tendency has been observed across a variety of dimensions including ethnicity, age, gender, profession, and education level, among others. Given that our opinions, behaviors, and decisions are infl‡uenced by those we are in contact with, having a thorough grasp of homophily and how it shapes our social networks and ultimately translates into our behaviors becomes imperative.

This lecture proceeds in three parts. It begins with background on homophily, providing some illustrations and a very brief look at some empirical studies on homophily. It then proceeds to the impact of homophily, discussing the effects of homophily on three different things: how information diffuses through a society, how individuals make education decisions, and social mobility. After discussing the impact of homophily on these different behaviors, I conclude with a discussion of a model of homophily and what we might learn about what leads to homophily.

Keywords: homophily, diffusion, social mobility, segregation, networks, social networks

JEL Classification: D85, C72, L14, Z13, J15, J71