The Northern Ireland Longitudinal Study (NILS) as a resource for investigating neighbourhood peer effects: A case study using natural experiment(s) in fertility and labour market participation

Our neighbours can potentially influence our behaviour. For instance, poor health behaviours amongst neighbours may normalise and reinforce our poor health behaviours. This is an example of a peer effect. Imitative behaviour can cause small initial changes in individual behaviour to spread amongst their social networks and result in a social multiplier effect. Understanding the size and mechanisms behind the social multiplier effect allows for more effective health interventions. It also helps us understand why persistent health inequalities exist across different neighbourhoods and social groups.In an ideal experiment, we would randomly allocate people into treatment and control groups and change the behaviours of persons A in the treatment group (directly or through incentives). Then we would observe the effects of changes in person A's behaviour on their neighbour person B. This ideal experiment is practically and (possibly) ethically unfeasible. Furthermore, data on a large enough sample of people and their neighbours is very expensive to collect.Instead of a normal experiment, we can use natural experiments which change person A's behaviour. In this paper, we use a well-known natural experiment that affects women's fertility and, indirectly, their labour market participation. Furthermore, data on people and their neighbours are available from the Northern Ireland Longitudinal Study (NILS).The Northern Ireland Longitudinal Study (NILS) is a longitudinal study consisting of 28% of the NI census and roughly 50% of all households. The NILS is linked to a database of all addressable properties in NI which include the coordinates of residences. In theory, NILS contains a large sample of households in NI and their close neighbours that can be used for studying peer effects.This project is a proof of concept for studying peer effects using NILS. If any random intervention exists (e.g. natural, quasi- or actual randomised trial) then NILS can always be used to study peer effects (amongst neighbours). This is significant because peer effects are notoriously hard to study due data limitations and a large number of credible natural experiments exist in health research. This project's contribution is the discovery that NILS almost uniquely placed as resource for studying peer effects in the UK.

Thy Neighbor’s Misfortune: Peer Effect on Consumption

Using a large, representative sample of credit and debit card transactions in Singapore, this paper studies the consumption response of individuals whose same-building neighbors experienced personal bankruptcy. The unique bankruptcy rules in Singapore suggest liquidity shocks drive personal bankruptcy decisions, leading to a substantial drop in consumption for the bankrupt. Peers’ monthly card consumption decreases by 3.4 percent over the 1-year postbankruptcy period. There exists no consumption decrease among individuals in immediately adjacent buildings nor for consumers with diminished postevent social ties with the bankrupt. The findings imply a significant social multiplier effect of 2.8 times the original consumption shock. (JEL E21, G51, K35)

Peer effects in the valuation and practices of food safety: findings from the study of dairy consumers in India

Purpose Information is often available to consumers through their social networks. Focusing on dairy consumers in India, this paper aims to present evidence of peer effects in consumers’ attitudes towards various food safety attributes and food safety practices. Design/methodology/approach Unobserved individual heterogeneities are crucial confounders in the identification of social (endogenous) effects. The identification is based on exploiting within-consumer variation across different aspects of attitude (or practices) related to food safety. Findings This paper uses a novel identification strategy that allows for average effects across attributes and practices to be estimated. Using the strategy, though this paper cannot estimate endogenous effects in each attribute or practice, this paper is able to identify such effects averaged over attributes or practices. Research limitations/implications Cross-sectional study, caste affiliation is not defined at the right level of granularity. Practical implications The results suggest that information campaigns aimed at creating awareness about food safety can have social multiplier effects, and this also translates into changes in the practices followed to mitigate food safety risks. Social implications In health-related awareness and practices, there are well-established cases of multiplier effects. The most significant example of this is the Pulse Polio campaign in India, where an awareness drives through social multiplier effects had such a significant impact that in 2012 India was declared polio-free. Perhaps, a similar campaign in matters related to food safety could be very fruitful. Originality/value The methodology and the issue are unique. Little exists in assessing social networks in the context of food safety.

Social multipliers and the Covid-19 epidemic: Analysis through constrained maximum entropy modeling

Social multipliers occur when individuals’ actions influence other individuals’ actions so as to lead to amplified aggregate effects. Epidemic infections offer a dramatic example of this phenomenon since individual actions such as social distancing and masking that have small effects on individual risk can have very large effects in reducing rates of infection when they are widely adopted. This paper uses the info-metric method of constrained maximum entropy modeling to estimate the impact of social multiplier effects in the Covid-19 epidemic with a model that infers the length of infection, the rate of mortality, the base infection factor, and reductions in the infection factor due to changes in social behavior from data on daily infections and deaths. When the model takes account of the rate of reporting of infections, it produces two scenarios of epidemic dynamics: one in which reporting is low, under 10%, the estimated infection is correspondingly large, and immunity effects play a significant role in stabilizing the epidemic; and a second where reporting rates are close to 100%, and the epidemic is controlled mostly by changes in social behavior.

Learning Spillovers in Conditional Welfare Programmes: Evidence from Brazil

We study spillovers in learning about the enforcement of Bolsa Familia, a programme conditioning benefits on children’s school attendance. Using original administrative data, we find that individuals’ compliance responds to penalties incurred by their classmates and by siblings’ classmates (in other grades/schools). As the severity of penalties increases with repeated noncompliance, the response is larger when peers are punished for ‘higher stages' than the family’s, consistent with learning. Individuals also respond to penalties experienced by neighbours who are exogenously scheduled to receive notices on the same day. Our results point to social multiplier effects of enforcement via learning.

Financial Literacy Externalities

We use unique administrative data and a quasi-field experiment of exogenous allocation in Sweden to estimate medium- and longer-run effects of peoples’ exposure to financially literate neighbors on their financial behavior. We contribute evidence of (1) a causal impact of exposure and of a social multiplier of financial knowledge and (2) unfavorable distributional aspects of externalities. Exposure promotes saving in private retirement accounts and stockholding, especially when neighbors have economics or business education, but only for educated households and for substantial interaction possibilities. Findings point to a transfer of knowledge rather than mere imitation or effects through labor, education, or mobility channels. Received October 25, 2017; editorial decision December 24, 2018 by Editor Lauren Cohen. Authors have furnished code/data/an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

“Peer effects” in capital structure decision of Chinese firms-empirical investigation based on Chinese a-share listed firms

Purpose The purpose of this paper is to identify if peer firms’ capital structure decision plays a role in determining focal firms’ capital structure decision, despite the fact that correlated effects can also lead to co-movement of financing behavior among firms from the same industry (i.e. industry-specific capital structure). Design/methodology/approach Instead of using relative measurement (of individual outcome variable over industry variable) as in previous work, this paper borrows the linear-in-means model and, after controlling for potential endogeneity problems, directly identifies the existence of peer effects with coefficient estimation. To deal with correlated effects, additional empirical investigations such as test of heterogeneity in direction and scale, social multiplier identification test and instrumental regression test based on another instrumental variable (that is less influenced by correlated effects) are performed. Findings Using data from Chinese listed firms, this paper, for the first time, identifies the presence of peer effects in capital structure and debt maturity decision. Further investigations show that first, focal firms react asymmetrically to peer firms’ debt adjustment of different direction and scale. Second, social multiplier, a unique attribute of peer effects, is identified in the leverage choices. Third, the significant correlation of capital structure decision remains even if we use another “correlated effects-immune” instrument. All these results point to the fact that peer effects, rather than correlated effects, play a significant role in determining capital structure. Practical implications The empirical results of this paper provide strong evidence that firms, driven by motivations such as either learning or competition, will actively react to peers’ financial decisions. As the bridge between individual firms and the industry, social multiplier can be fully taken advantage of to induce positive spillover of good management practices and prohibit inefficient decisions from spreading. Originality/value This paper theoretically and empirically introduces peer effects – a well-acknowledged social concept – into capital structure decision of Chinese listed firms, thus both complementing the traditional capital structure theory and providing an empirical paradigm for peer effects research.

The role of internet in stock market participation: just a matter of habit?

Purpose The purpose of this paper is to adopt a behavioural approach to explain how the internet use influences stock market participation (SMP) decisions. Design/methodology/approach Drawing on the literature on sociability and SMP, this paper analyses whether virtual sociability affects SMP decision in a sample of 34,715 individuals in 14 European countries. Findings The results show that internet users are more likely to be stockowners. However, the obtained evidence does not support either an informational effect or a social multiplier effect of the virtual sociability. After controlling by the country’s SMP rates, a positive effect of internet usage on SMP decision remains, suggesting that contextual factors matter rather than internet usage per se. Thus, in countries where individuals are “used” to being stockholders, the habit of using internet increases SMP, but the “breeding ground” is a necessary condition. Originality/value The massive use of the internet provides a valuable opportunity to find evidence of the frictional costs which would act as inhibitors of the SMP, as economic theory hypothesised. After some promising results, the differences in the evolution of both the SMP and internet usage rates have not confirmed the initial enthusiasm. In addition, the question of why the SMP rates systematically differ across countries still remains open.