First day of the Econometric society World Congress meeting. Interesting paper by Helmers and Patnam this morning. The paper tries to disentangle peer effect of and common (covariate) effects on children’s reading and writing achievements. The paper was interesting because it was using networks to disentangle these effects and not through the usual experimental framework. It is a neat idea. Using the Young Lives survey from Andhra Pradesh, the paper maps spatial (strictly geographic networks). Then it uses the networks to identify the the clusters. Certain individuals have multiple links within the clusters whereas certain other individuals are linked to the cluster through just one link. This variation allows the authors to identify the peer effect. They also look at the insurance component of the peer group. For this, in a really neat trick, they use idiosyncratic shocks are IVs.
The paper is very useful and shows us that we can use observation data and social network maps to disentangle various effects. Of course, it takes the spatial network as given. It may (may not be) be a reasonable assumption. After all, there may be some strategic relocation by the household. The other caveat is that it does not map the network completely. The network mapped (or the information available) is only for the children’s spatial peer network. The paper is not able to distinguish the effects that run through the children’s peer network from the effects that run through the adult’s network. In spite of these caveats, I really like the paper, not for what it is right now, but more for what it maybe lead to.
Looking forward to John Moore’s presidential address this afternoon. The title of the talk is contagious iliquidity. Very topical and may have a flavour of his credit cycles paper. I am sure it is vintage John Moore stuff. Entertaining with lots of stories involving red and blue stuff. More on Moore later on in the evening.
Christian Helmers and Manasa Patnam. Does the Rotten Child Spoil His Companion? Spatial Peer Effects Among Children in Rural India