DRAFT

Ulric B. and Evelyn L. Bray Social Sciences Seminar

Wednesday, October 5, 2022
4:00pm to 5:00pm
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Baxter Lecture Hall
Estimating Social Network Models with Missing Links
Arthur Lewbel, Barbara A. and Patrick E. Roche Professor of Economics, Boston College,

Abstract: We propose an adjusted 2SLS estimator for social network models when existing network links are missing from the sample at random (due, e.g., to recall errors by survey respondents, or lapses in data input). In the feasible structural form, missing links make all covariates endogenous and add a new source of correlation between the errors and endogenous peer outcomes (in addition to simultaneity), thus invalidating conventional estimators used in the literature. We resolve these issues by rescaling peer outcomes with estimates of missing rates and constructing instruments that exploit properties of the noisy network measures. We apply our method to study peer effects in household decisions to participate in a microfinance program in Indian villages. We find that ignoring missing links and applying conventional instruments would result in a sizeable upward bias in peer effect estimates.

For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at letty.diaz@caltech.edu.