Social multiplier effect

Last updated

The social multiplier effect is a term used in economics, economic geography, sociology, public health and other academic disciplines to describe certain social externalities. It is based on the principle that high levels of one attribute amongst one's peers can have spillover effects on an individual. "This social multiplier can also be thought of as a ratio ∆P/∆I where ∆I is the average response of an individual action to an exogenous parameter (that affects only that person) and ∆P is the (per capita) response of the peer group to a change in the same parameter that affects the entire peer group." [1] In other words, it is the ratio of an individual action to an exogenous parameter to the aggregate effect of the same parameter on the individual's peers.

Contents

For example, we know that health outcomes strongly correlate with education level. Given the social multiplier effect, we know that in the aggregate, if a poorly educated individual moves into a highly educated area they will experience some of the positive health effects associated with being more educated. [2] It is important however to distinguish between 1) a local-average model or social norms, whereby certain attributes are adopted based on them being the socially normal behavior, and 2) a local-aggregate model or social multiplier effect whereby "peer effects are captured by the sum of friends' efforts in some activity." [3] In the former an individual pays a price for deviating from a norm. In the latter, as an individual gains more peers who have a certain attribute, they will experience greater utility for adopting this attribute as well. The following are some examples of research on the social multiplier effect.

Examples

Researchers Scott E. Carrell, Mark L. Hoekstra, and James E. West have shown that one's friends' fitness affects one's own fitness. They find that "each out-of-shape individual creates two additional out-of-shape individuals through their social interactions." [4] Another researcher Jeffery Fletcher has found that a 10 percent increase in the number of students who smoke at a high school increases the chances another student will smoke by about 3 percent. [5] Xiaodong Liu et al. have found that there is a multiplier effect for juvenile delinquency in schools. [3] Additionally, in another article Carrell, West, and Frederick V. Malmstrom find that peer cheating increases the likelihood that an individual will cheat. [6]

The social multiplier effect is of particular concern to researchers in economic geography. It is well documented that factors like income and education have strong positive correlations with many aspects of health. This is important because the geographic distribution of income and education is becoming increasingly stratified. [7] For example, since 1980, on average, cities that had high levels of college educated workers are becoming increasingly college educated whereas those who had low levels are becoming increasingly less educated. The same trend applies to income. [8] Consequently, as the distribution of income and education level becomes more disparate, many low income regions lose out on the social multiplier benefits they once enjoyed.

Measurement challenges

Using only observational data, a researcher may find it impossible to disentangle social interactions within a group from other types of similarities within a group. This challenge to the identifiability of social multiplier effects is known in econometrics as the "reflection problem", following an influential 1993 paper by Charles F. Manski. Manski considers three types of hypotheses to explain why members of a group might behave similarly to each other:

The three effects cannot be distinguished if the researcher does not know how groups are constructed, but only endogenous effects can produce social multipliers. Though Manski wrote that the reflection problem can only be overcome if the researcher has information on how individuals enter into groups, such as in an experimental setting, [9] [10] more recent work has highlighted alternative ways of overcoming the problem in common settings. [11]

See also

Related Research Articles

Peer pressure is the direct or indirect influence on peers, i.e., members of social groups with similar interests, experiences, or social statuses. Members of a peer group are more likely to influence a person's beliefs, values, and behavior. A group or individual may be encouraged and want to follow their peers by changing their attitudes, values or behaviors to conform to those of the influencing group or individual. For the individual affected by peer pressure, this can have both a positive or negative effect on them.

<span class="mw-page-title-main">Institution</span> Structure or mechanism of social order

An institution is a humanly devised structure of rules and norms that shape and constrain individual behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Institutions vary in their level of formality and informality.

In sociology, social distance describes the distance between individuals or social groups in society, including dimensions such as social class, race/ethnicity, gender or sexuality. Members of different groups mix less than members of the same group. It is the measure of nearness or intimacy that an individual or group feels towards another individual or group in a social network or the level of trust one group has for another and the extent of perceived likeness of beliefs.

<span class="mw-page-title-main">Endogenous growth theory</span> Economic theory

Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth. The theory also focuses on positive externalities and spillover effects of a knowledge-based economy which will lead to economic development. The endogenous growth theory primarily holds that the long run growth rate of an economy depends on policy measures. For example, subsidies for research and development or education increase the growth rate in some endogenous growth models by increasing the incentive for innovation.

<span class="mw-page-title-main">Veblen good</span> Luxury good for which the demand increases as the price increases

A Veblen good is a type of luxury good for which the demand increases as the price increases, in apparent contradiction of the law of demand, resulting in an upward-sloping demand curve. The higher prices of Veblen goods may make them desirable as a status symbol in the practices of conspicuous consumption and conspicuous leisure. A product may be a Veblen good because it is a positional good, something few others can own.

<span class="mw-page-title-main">Socioeconomics</span> Social science that studies how economic activity affects and is shaped by social processes

Socioeconomics is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern societies progress, stagnate, or regress because of their local or regional economy, or the global economy.

In a variety of contexts, exogeny or exogeneity is the fact of an action or object originating externally. It contrasts with endogeneity or endogeny, the fact of being influenced within a system.

<span class="mw-page-title-main">Ripple effect</span> Disturbance that propagates through a system

A ripple effect occurs when an initial disturbance to a system propagates outward to disturb an increasingly larger portion of the system, like ripples expanding across the water when an object is dropped into it.

In statistics, econometrics, epidemiology and related disciplines, the method of instrumental variables (IV) is used to estimate causal relationships when controlled experiments are not feasible or when a treatment is not successfully delivered to every unit in a randomized experiment. Intuitively, IVs are used when an explanatory variable of interest is correlated with the error term, in which case ordinary least squares and ANOVA give biased results. A valid instrument induces changes in the explanatory variable but has no independent effect on the dependent variable, allowing a researcher to uncover the causal effect of the explanatory variable on the dependent variable.

The local multiplier effect is the additional economic benefit accrued to an area from money being spent in the local economy. The concept has been taken up by advocates for "spend local" campaigns in addition to more formal treatments in the area of regional economic development.

<span class="mw-page-title-main">Social rejection</span> Deliberate exclusion of an individual from social relationship or social interaction

Social rejection occurs when an individual is deliberately excluded from a social relationship or social interaction. The topic includes interpersonal rejection, romantic rejection and familial estrangement. A person can be rejected or shunned by individuals or an entire group of people. Furthermore, rejection can be either active, by bullying, teasing, or ridiculing, or passive, by ignoring a person, or giving the "silent treatment". The experience of being rejected is subjective for the recipient, and it can be perceived when it is not actually present. The word "ostracism" is also commonly used to denote a process of social exclusion.

Personality development encompasses the dynamic construction and deconstruction of integrative characteristics that distinguish an individual in terms of interpersonal behavioral traits. Personality development is ever-changing and subject to contextual factors and life-altering experiences. Personality development is also dimensional in description and subjective in nature. That is, personality development can be seen as a continuum varying in degrees of intensity and change. It is subjective in nature because its conceptualization is rooted in social norms of expected behavior, self-expression, and personal growth. The dominant viewpoint in personality psychology indicates that personality emerges early and continues to develop across one's lifespan. Adult personality traits are believed to have a basis in infant temperament, meaning that individual differences in disposition and behavior appear early in life, potentially before language of conscious self-representation develop. The Five Factor Model of personality maps onto the dimensions of childhood temperament. This suggests that individual differences in levels of the corresponding personality traits are present from young ages.

<span class="mw-page-title-main">Socioeconomic status</span> Economic and social measure of a persons affluence and/or influence

Socioeconomic status (SES) is an economic and sociological combined total measure of a person's work experience and of an individual's or family's economic access to resources and social position in relation to others. When analyzing a family's SES, the household income, earners' education, and occupation are examined, as well as combined income, whereas for an individual's SES only their own attributes are assessed. Recently, research has revealed a lesser recognized attribute of SES as perceived financial stress, as it defines the "balance between income and necessary expenses". Perceived financial stress can be tested by deciphering whether a person at the end of each month has more than enough, just enough, or not enough money or resources. However, SES is more commonly used to depict an economic difference in society as a whole.

<span class="mw-page-title-main">Multiplier (economics)</span>

In macroeconomics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in some exogenous variable.

The Review of Economic Studies is a quarterly peer-reviewed academic journal covering economics. It was established in 1933 by a group of economists based in Britain and the United States. The original editorial team consisted of Abba P. Lerner, Paul Sweezy, and Ursula Kathleen Hicks. It is published by Oxford University Press. The journal is widely considered one of the top 5 journals in economics. It is managed by the editorial board currently chaired by Nicola Fuchs-Schündeln. The current joint managing editors are Thomas Chaney, Andrea Galeotti, Nicola Gennaioli, Veronica Guerrieri, Kurt Mitman, Francesca Molinari, Uta Schönberg, and Adam Szeidl. According to the Journal Citation Reports, the journal has a 2020 impact factor of 6.345.

Charles Frederick Manski, is Professor of Economics at Northwestern University, an econometrician in the realm of rational choice theory, and an innovator in the arena of parameter identification. His research spans econometrics, judgment and decision, and the analysis of social policy. A specialist in prediction and decision, he is known within the economics field for landmark work on partial identification, identification of discrete choice models, and identification of social interactions. He has also performed substantial empirical research on measurement of expectations in surveys.

Social preferences describe the human tendency to not only care about one's own material payoff, but also the reference group's payoff or/and the intention that leads to the payoff. Social preferences are studied extensively in behavioral and experimental economics and social psychology. Types of social preferences include altruism, fairness, reciprocity, and inequity aversion. The field of economics originally assumed that humans were rational economic actors, and as it became apparent that this was not the case, the field began to change. The research of social preferences in economics started with lab experiments in 1980, where experimental economists found subjects' behavior deviated systematically from self-interest behavior in economic games such as ultimatum game and dictator game. These experimental findings then inspired various new economic models to characterize agent's altruism, fairness and reciprocity concern between 1990 and 2010. More recently, there are growing amounts of field experiments that study the shaping of social preference and its applications throughout society.

Behavioral plasticity refers to a change in an organism's behavior that results from exposure to stimuli, such as changing environmental conditions. Behavior can change more rapidly in response to changes in internal or external stimuli than is the case for most morphological traits and many physiological traits. As a result, when organisms are confronted by new conditions, behavioral changes often occur in advance of physiological or morphological changes. For instance, larval amphibians changed their antipredator behavior within an hour after a change in cues from predators, but morphological changes in body and tail shape in response to the same cues required a week to complete.

Enrico Moretti is an Italian economist and the Michael Peevey and Donald Vial Professor of Economics at the University of California, Berkeley. He is also a research associate at the National Bureau of Economic Research (Cambridge), and a research fellow at the Centre for Economic Policy Research (London) and the Institute for the Study of Labor (Bonn). Prior to joining the Berkeley faculty in 2004, he has taught at UCLA.

Eleonora Patacchini is an economist specializing in applied economics and applied statistics who grew up in Italy with her mother who was also a professor. She is a professor and associate department chair at Cornell University in the Department of Economics. Her research focuses on the empirical analysis of behavioral models of strategic interactions for decision making. Patacchini is an associate editor at Journal of Urban Economics and Statistical Methods & Applications. She is a columnist at the VOX CEPR Policy Portal where research-based policy analysis and commentary from leading economists are published frequently. She is also a co-editor of E-journal Economics and associate editor of the Journal of Urban Economics.

References

  1. ↑ Sheinkman, José. Social Interactions. Princeton. Retrieved on 25 February 2016. https://www.princeton.edu/~joses/wp/socialinteractions.pdf
  2. ↑ Moretti, Enrico. The New Geography of Jobs. Houghton Mifflin Harcourt: 2012. p. 101.
  3. 1 2 Xiandong Liu et al. "Social Multiplier versus Social Norms: What Matters Most for Outcomes?" Center For Economic Policy Research: 2013. Retrieved on 25 February 2016. http://www.voxeu.org/article/social-multiplier-versus-social-norms-what-matters-most-outcomes.
  4. ↑ Carrell, Scott E.; Hoekstra, Mark; West, James E. (2011). "Is poor fitness contagious?". Journal of Public Economics. Elsevier BV. 95 (7–8): 657–663. CiteSeerX   10.1.1.296.5005 . doi:10.1016/j.jpubeco.2010.12.005. ISSN   0047-2727.
  5. ↑ Fletcher, JM (2010). "Social interactions and smoking: evidence using multiple student cohorts, instrumental variables, and school fixed effects". Health Econ. 19 (4): 466–484. doi: 10.1002/hec.1488 . PMID   19382102.
  6. ↑ Carrell, Scott E.; Malmstrom, Frederick V.; West, James E. (2008). "Peer Effects in Academic Cheating". Journal of Human Resources. University of Wisconsin Press. 43 (1): 173–207. doi: 10.3368/jhr.43.1.173 . ISSN   0022-166X. SSRN   842224.
  7. ↑ Moretti, Enrico. The New Geography of Jobs. Houghton Mifflin Harcourt: 2012. p. 101–102.
  8. ↑ Moretti, Enrico. The New Geography of Jobs. Houghton Mifflin Harcourt: 2012. p. 102.
  9. ↑ Ramrattan, Lall; Szenberg, Michael. "Reflection Problem". International Encyclopedia of the Social Sciences .
  10. ↑ Manski, Charles F. (1993). "Identification of Endogenous Social Effects: The Reflection Problem". The Review of Economic Studies. Oxford University Press (OUP). 60 (3): 531–542. doi:10.2307/2298123. ISSN   0034-6527. JSTOR   2298123. S2CID   154470582.
  11. ↑ Goldsmith-Pinkham, Paul; Imbens, Guido W. (2013). "Social Networks and the Identification of Peer Effects". Journal of Business & Economic Statistics. Informa UK Limited. 31 (3): 253–264. doi:10.1080/07350015.2013.801251. ISSN   0735-0015. S2CID   2493467.

Further reading

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.