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

47 Pages Posted: 22 Nov 2014

See all articles by Margherita Comola

Margherita Comola

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne

Silvia Prina

Case Western Reserve University - Weatherhead School of Management - Department of Economics

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

JEL Classification: C31, D85, G2, O16

Suggested Citation

Comola, Margherita and Prina, Silvia, Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes. IZA Discussion Paper No. 8641, Available at SSRN: https://ssrn.com/abstract=2529350

Margherita Comola (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Silvia Prina

Case Western Reserve University - Weatherhead School of Management - Department of Economics ( email )

Cleveland, OH 44106
United States

HOME PAGE: http://faculty.weatherhead.case.edu/prina/

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