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Economics and Policy of Networks

Economics and Policy of Networks


Professor Fabio Sabatini
Office: 6th floor, room 637
Email: fabio.sabatini@uniroma1.it

Text: Lecture notes, research papers, and textbook extracts will be provided as the course progresses.

All references (except textbooks) can be downloaded free of charge from this page.

Lectures

Wednesday (9-11), Thursday (16-18), Friday (9-11), Room 1 (6th Floor, "Ala B", Department of Economics and Law) starting from March 1, 2018.

Office hours

Every Wednesday and Friday by appointment.

Prerequisites

Although there are no formal prerequisites for attending the course, basic competences in essential Statistics for Economics and Econometrics are highly appreciated. Students needing review are encouraged to attend office hours. Schedule conflicts can be easily resolved by appointments.

Motivation

Networks pervade our social and economic lives. They play a central role in the transmission of information about job opportunities and are critical to trade. They are important in determining how diseases spread, which languages we speak, how we vote, as well as whether or not we decide to become criminals, how much education we obtain, which products we buy, and our likelihood of succeeding professionally.

The countless ways in which network structures affect well-being make it critical to understand how they impact our behavior, which network structures are likely to emerge in a society, and why we organize ourselves as we do.
 

Content

This course provides an overview and synthesis of research on social and economic networks, drawing on studies by economists, sociologists, psychologists, computer scientists, and mathematicians.

Lectures will also deal with the informal institutions stemming from networks that shape the economic activity: social norms, social structures, social pressures, shared beliefs, culture, etc.

We will consider how economic policy can influence such informal institutions to nudge individuals and networks to the purpose of increasing social welfare.

After a brief introduction to some basic concepts, lectures will be devoted to the presentation of a few seminal studies in the field and of a series of more recent original research papers.

During the course, students will give presentations of a selection of published papers.

In addition, small groups of students will be assigned a topic with the purpose of developing an original paper consisting in a review of the literature and/or in a an empirical analysis based on survey data.

Several lectures will consist entirely of student presentations. One goal of the course is to identify new research questions, which students will be invited to develop empirically and/or theoretically with the professor’s assistance.

Highlights

At the end of each lecture, students will be invited to devote 10 minutes to write the highlights of the lecture. Highlights will consist of 1 to 5 bullet points (max 85 characters each). Highlights will be subject to evaluation (consultation of teaching materials will be allowed).

Homeworks and assignments

Students attending the lectures will be invited to undertake one or more of the following assignments:

- Presentation of a paper to be picked up in a reading list provided during the course. Students can suggest alternative papers for the presentation. The paper must be a relevant academic work in the field of economics. Papers can be searched by following these guidelines.

- Development and presentation of an original paper on an assigned topic. Please follow the link to see examples of suggested topics.

Such a paper could consist, for example, in a simple empirical analysis on a dataset provided by the teacher and/or in a review of the existing economics literature on the topic. Relevant academic papers on the topic can be searched and selected by following these instructions.

 

Grades and Evaluation

A) Only for students attending the lectures

Students attending the lectures earn points for each assignment. The total number of points accumulated will determine the final evaluation.

Points will be assigned as follows:

- Paper presentation (to be picked among a reading list): up to 25 points

- Development and presentation of an original paper: up to 35 points

- Highlights: up to 10 points

Students will also have the possibility to earn further points through an optional written exam, according to the following criteria:

- Final written exam: up to 10 points (consultation of teaching materials is not allowed) or two Midterm exams covering smaller parts of the course's programme (up to 10 points each, and the final mark will be the average of the two marks). Only students who took the 1st midterm exam can take the second midterm one.

Points will not be weighted and will equally contribute to the final grade. By reaching the 35 points threshold students will earn the distinction (i.e. 30 cum laude).

B) For non-attending students

Students who are not attending the lectures will have to give just one final written exam at the end of the course (exam dates for the whole academic year are available on Infostud). The bibliographic references for such exam are the lecture notes posted in this website.

Examples of possible exam questions: https://goo.gl/F3pXZc
(valid for both the A and the B types of student)

Next exams dates

October 10, 2017
January 9, 2018
January 30, 2018

Learning outcomes

By the end of this course, students should have: 1) Knowledge and understanding of the current economic research on social and economic networks, with a specific focus on the role of networks in the economic activity – e.g. in the formation and development of entrepreneurial activities, consumption patterns, and social norms.  2) The ability to read research papers in this field. 3) The ability to present and critically discuss research papers in this field. 4) Sufficient understanding of open issues to formulate a new research question in this field.

Acquired skills

By the end of the course, students should have: 1) the ability to conduct bibliographic researches on specific topics in economics and other social sciences. 2) The ability to understand and critically review research papers in the field of networks from different disciplines (economics, but also sociology, computer science, and mathematics). 4) The ability to assess the strengths and weaknesses of an academic paper in the field. 3) The ability to present and discuss research papers. 4) The ability to formulate and develop a new research question in the field.

This course targets students that are interested in the academic literature in the field of networks, either because they plan to apply for a PhD in economics or other social sciences or because they would like to be able to understand with a critical view the articles and papers available in their area of specialization instead of simply reading journalistic summaries of scientific reports.

Lecture notes

1. Introduction to the course

2. Introduction to networks

3. Networks and social capital

4. Networks and human capital

5. Networks, norms, and the performance of institutions

6. The long term persistence of networks and some methodological issues concerning the identification of their economic outcomes

8. Networks and economic growth: recent studies and the frontier of research

Guide to bibliographic searches for the students of Economics & Policy of Networks

List of suggested readings for the in-class presentation

How to write a research paper, by Sami Solanki (Max Planck Institute for Solar System Research)


Syllabus
 

1. Course presentation.
 

Part A - Basic concepts. Networks, social interaction, relational goods, trust

 
2
. Brief introduction to networks.

Main references:

Jackson, M. O., Rogers, B., Zenou, Y. (2016). Networks: an economic perspective.  In R. Light and J. Moody (Eds.). The Oxford Handbook of Social Network Analysis. Oxford: Oxford University Press. Free download here: https://goo.gl/1c1LV4.

Jackson, M.O., Rogers, B.W. and Y. Zenou (2017). The economic consequences of social network structure. Journal of Economic Literature 55(1): 1-47. Free download here: https://goo.gl/Lt0hiF.
 

3. Networks as a form of capital.

Pierre Bourdieu: the critique to mainstream economics and a theory of social networks as social capital. 

Main references

Bourdieu, P. (1986). The forms of capital. In: Richardson, J. (Ed.), Handbook of Theory and Research for the Sociology of Education. Westport, CT: Greenwood: 241–58. Free download here: https://goo.gl/IHY7uD.

Christoforou, A., Lainé, M. (Eds.) (2014). Re-Thinking Economics: Exploring the Work of Pierre Bourdieu. London and New York: Routledge. Available in the Department’s library.
 

4. Networks and human capital.

Gary Becker: the approach of neoclassical economics and a theory of social networks as human capital.
James Coleman: the approach of rational choice sociology to social networks.
 

Main references

  Becker, G. (1974). A theory of social interactions. Journal of Political Economy 82(6), 1063-1093. Free download here: https://goo.gl/3EesDg.

Christoforou, A. (2013). On the identity of social capital and the social capital of identity. Cambridge Journal of Economics 37, 719–736. Free download here: https://goo.gl/V8ZriW.

Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. The American Journal of Sociology 94, S95-S120. Free download here: https://goo.gl/Fecje6.

Fine, B. (2001). Social Capital versus Social Theory. London and New York: Routledge. Available in the Department’s library (a Pdf copy for personal use can be provided by the professor by request).

 

Part B – Networks, norms and their economic outcomes
 

5. Networks and norms.

Robert Putnam and the “Italian job”. The study of networks enters the realm of economics. An introduction to the problems of defining and measuring networks (and some related concepts) in empirical studies. 

Main references

Putnam, R. D., Leonardi, R., Nanetti, R. Y. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press. Available in the Department’s library (a Pdf copy for personal use can be provided by the professor by request).

Putnam, R. D. (2000). Bowling Alone: The Collapse and Revival of the American Community. New York: Simon & Schuster. Available in the Department’s library (a Pdf copy for personal use can be provided by the professor by request).
 

6. The long term effects of networks and some methodological issues.

The limitations of Putnam’s work. The issue of identifying networks’ effects on economic outcomes. Introduction to instrumental variables and natural experiments. 

Main references

Guiso, L., Sapienza, P., Zingales, L. (2010). Civic capital as the missing link. NBER Working paper 15845. Free download here: https://goo.gl/lMHt8s.

Guiso, L., Sapienza, P., Zingales, L. (2016). Long term persistence. Journal of the European Economic Association 14(6): 1401–1436. Free download here: https://goo.gl/x6ChvB.

Nunn N, Wantchekon L. (2011). The Slave Trade and the Origins of Mistrust in Africa. American Economic Review 101 (7): 3221-3252. Free download here: https://goo.gl/CWXcwz.

  Putnam, R. D., Leonardi, R., Nanetti, R. Y. (1993). Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press. Available in the Department’s library (a Pdf copy for personal use can be provided by the professor by request).

Tabellini, G. (2010). Culture and institutions: Economic Development in the Regions of Europe. Journal of the European Economic Association 8(4), 677–716. Free download here: https://goo.gl/d0Y1tR.

Econometric suggestions (not part of the course’s bibliography).

• Angrist, J. D., Pischke, J. S. (2008). Mostly Harmless Econometrics: An Empiricists                          Companion.
Chapter 4: 83-164.

Greene, W. H. (2003). Econometric Analysis. Upper Saddle River: Prentice Hall.
Chapter 5: 65-90.


Stock, J. H., Watson, M. W. (2011). Introduction to Econometrics. Boston: Pearson.
Chapter 10: 331-366.


Wooldridge, J. M. (2002). Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press.
Chapter 8: 183-205.

 

7. Networks, culture and growth, seminal studies

Presentation of two seminal studies assessing the relationship between networks – and some related phenomena, such as trust – and growth. 

Main references

Helliwell, J., Putnam, R. D. (1995). Economic growth and social capital in Italy. Eastern Economic Journal 21(3): 295-307. Free download here: https://goo.gl/P0x5Fu.

Knack, P., Keefer, P. (1997). Does social capital have an economic payoff? Quarterly Journal of Economics 112 (4): 1251-1288. Free download here: https://goo.gl/zz6sSV.


8. Networks, culture and growth, recent studies

Presentation of the current frontier of the empirical research on networks and growth.

Main references

Acemoglu, D., Johnson, S., Robinson, J. A. (2001). The colonial origins of comparative development: an empirical investigation. American Economic Review 91: 1369-1401. Free download here: https://goo.gl/5R8RVj.

Algann, Y., Cahuc, P. (2010). Inherited Trust and Growth. American Economic Review 100(5): 2060–92. Free download here: https://goo.gl/EV7o0B.

Algan, Y., Cahuc, P. (2014). Trust, Growth and Well-being: New Evidence and Policy Implications. IZA Discussion Paper No. 7464. Free download here: https://goo.gl/pXTpXy.

Akçomak, S., ter Weel, B. (2009). Social capital, innovation and growth: Evidence from Europe. European Economic Review, 53 (5), 544-567. Free download here: https://goo.gl/kMHk0A.

• Berggren, N., Elinder, T. (2012). Is tolerance good or bad for growth? Publich Choice 150(1): 283-308. Free download here:  https://goo.gl/s52X9D.

Beugelsdijk, S., Van Schaik, T. (2005). Social capital and growth in European regions: an empirical test. European Journal of Political Economy 21 (2), 301-324. Free download here: https://goo.gl/WpKsO3.

Guiso, L., Sapienza, P., Zingales, L. (2016). Long term persistence. Journal of the European Economic Association 14-6, 1401–1436. Free download here: https://goo.gl/MT2UjG.

9. Networks, culture, entrepreneurship and organization

How networks work at the micro level. Presentation of empirical studies on their effects on entrepreneurship and organization. 

Main references

Guiso, L., Sapienza, P-, Zingales, L. (2006). Does Culture Affect Economic Outcomes? Journal of Economic Perspectives 20(2): 23-48. Free download here: https://goo.gl/6MxYUn.

Guiso, L. Sapienza, P., Zingales, L. (2009). Cultural biases in Economic Exchange? Quarterly Journal of Economics 124 (3): 1095-1131. Free download here: https://goo.gl/WKDurW.

Guiso, L., Sapienza, P., Zingales, L. (2015). The value of corporate culture. Journal of Financial Economics 117(1): 60-76. Free download here: https://goo.gl/IcB8Oq.


10. Research seminar - Marianna Belloc (Sapienza University of Rome and CESifo): Culture, religion, and institutions. 

Reference: Belloc, M., Drago, F., Galbiati, R. (2016). Earthquakes, Religion, and Transition to Self-Government in Italian Cities. Quarterly Journal of Economics 131 (4): 1875-1926. Free download here: https://goo.gl/KMdQ8H.

11. Research seminar - Mauro Rota (Sapienza University of Rome): Culture, justice, and development.

Reference: Rota, M., Palestini, A., Bramati, M. C. (2017). Hey judge: how cultural traits affect efficiency of justice and development across regions. Sapienza University of Rome, mimeo. Free download here:
https://goo.gl/AYXjns.

12. Networks and the labour market

The effect of social networks on labour market regulation and employment.

Main references

Alesina, A., Giuliano, P. (2014). Family ties. In S. Durlauf and P. Aghion (Eds). Handbook of Economic Growth. Amsterdam: Elsevier. Free download here: https://goo.gl/FMvCxL.

Alesina, A., Algan, Y., Cahuc, P., Giuliano, P. (2015). Family values and the regulation of labor. Journal of the European Economic Association 13(4), 599-630. Free download here: https://goo.gl/U1sAEi.

Bauernschuster, S., Falck, O., Heblich, S. (2010). Social capital access and entrepreneurship.  Journal of Economic Behavior & Organization 76(3): 821–833. Free download here:
https://goo.gl/aNeqH7.

Bowles, S., Carpenter, J., Gintis, H., Sung-Ha, H. (2009). Strong Reciprocity and Team Production: Theory and Evidence. Journal of Economic Behavior & Organization 71(2): 221-232. Free download here: https://goo.gl/IB1Un0.

Calvo-Armengol, A., Jackson, M. O. (
2004). The Effects of Social Networks on Employment and Inequality. American Economic Review 94(3): 426-454. Free download here: https://goo.gl/Yn6CeH.

• Cingano, F., Rosolia, A. (2012). People I Know: Job Search and Social Networks. Journal of Labor Economics 30(2): 291-332. Free download here: https://goo.gl/cu9IPt.

Kunze, L., Suppa, N. (2017). Bowling alone or bowling at all? The effect of unemployment on social participation. Journal of Economic Behavior & Organization 133: 213–235. Free download here: https://goo.gl/0OkYle.
 

13. Research seminar - Emanuele Felice (University of Chieti-Pescara): Human capital, social capital and regional imbalances in Italy. 

Reference: Felice, E. (2011). The determinants of Italy’s regional imbalances in the long run: the role of human and social capital. University of Oxford Discussion Papers in Economic and Social History, N. 88/2011. Free download here: https://goo.gl/85XkaN.
 

14. Research seminar - Nicola Lacetera (University of Toronto and NBER): to be announced.
 

15. Networks, culture, and redistribution

How networks and culture shape citizens’ support for income redistribution and the welfare state. Theory and evidence. 

Main references

Alesina, A., Angeletos, G. M. (2005). Fairness and redistribution. American Economic Review 95(4): 960-980. Free download here: https://goo.gl/Df7OSF.

Algan, Y., Cahuc, P., Sangnier, M. (2016). Trust and the Welfare State: The Twin Peaks Curve. The Economic Journal, 126(593): 861-883. Free download here: https://goo.gl/nIj4Cf.

Benabou, R., Ok, E. A. (2001). Social mobility and the demand for redistribution. Quarterly Journal of Economics 116 (2): 447-487. Free download here: https://goo.gl/smphUr.

Cerqueti, R., Sabatini, F., Ventura, M. (2016). Civic capital and support for the welfare state. MPRA Paper 71566. Free download here: https://goo.gl/C3BRzj.


Sabatini, F., Ventura, M., Yamamura, E., Zamparelli, L. (2017). Civic capital and redistribution. Sapienza University of Rome, mimeo.

Yamamura, E. (2012). Social capital, household income, and preferences for income redistribution. European Journal of Political Economy, 28(4), 498-511. Free download here: https://goo.gl/TuV1QB.
 

16. Networks and well-being: Health

The empirical studies assessing the role of networks and culture in individual health 

Main references

Costa, D. L., Kahn, M. (2007). Surviving Andersonville: The Benefits of Social Networks in POW  Camps. American Economic Review 97(4): 1467-1489. Free download here: https://goo.gl/lxpjFk.

Costa, D., L. Kahn, M., Roudiez, C., Wilson, S. (2016). Persistent Social Networks: Civil War Veterans who Fought Together Co-Locate in Later Life. NBER Working Paper No. 22397. Free download here: https://goo.gl/PWxkwF.

D’Hombres R., Rocco L., Shurcke M., Mckee M., (2010). Does social capital determine health? Evidence from eight transition countries. Health Economics 19, 56-74. Free download here: https://goo.gl/Y32m8U.

Fumagalli, E., Rocco, L., Shurcke M. (2014). From Social Capital to Health - and Back. Health Economics 23(5): 586–605. Free download here: https://goo.gl/24eXfX.
 

17. Networks and well-being: happiness

The empirical studies assessing the role of networks in subjective well-being. 

Main references

Bartolini, S. and Sarracino, F. (2015). The dark side of Chinese growth: declining social capital and well-being in times of economic boom. World Development 74: 333-351. Free download here: https://goo.gl/o0DMuw.

Becchetti, L., Pelloni, A., Rossetti, F. (2008). Relational Goods, Sociability, and Happiness. Kyklos 61 (3), 343-363. Free download here: https://goo.gl/7P6lz7.

Bruni, L., Stanca, L. (2008). Watching alone: Relational goods, television and happiness. Journal of Economic Behavior and Organization 65 (3-4), 506-528. Free download here: https://goo.gl/YqCjx3.

Diener, E., Heliwell, J. F., Kanheman, D. (2010). International Differences in Well-Being. New York: Oxford University Press. (a Pdf copy for personal use can be provided by the professor by request).
 

18. Research seminars – Arsen Palestini (Sapienza University of Rome):

- Random Graph-Based Models of Networks.

- Graph models of Economic Inequality.

References: to be defined.
 

19. Research seminar – Marcella Nicolini (University of Pavia): Investigating terrorist networks.

Part C - Online networks
 

20. Online networks and political participation

The role of the Internet and online social networks in political participation and voting behavior. 

Main references

Campante, F. R., Durante, R., and Sobbrio, F. (2013). Politics 2.0: The multifaceted effect of broadband Internet on political participation. NBER Working Paper w19029. Free download here: https://goo.gl/PM8xMr.

Czernich, N. (2012). Broadband Internet and political participation: Evidence for Germany. Kyklos, 65(1): 35–52. Free download here: https://goo.gl/CjZJ7g.

Falck, O., Gold, R., and Heblich, S. (2014). E-lections: Voting behavior and the Internet. American Economic Review 104 (7): 2238-2265. Free download here: https://goo.gl/fYF4GN.
 

21. Online networks and trust

How online networks can destroy and create trust: empirical and experimental studies. 

Main references

Antoci, A., Delfino, A., Paglieri, F., Panebianco, F., Sabatini, F. (2016). Civility vs. Incivility in Online Social Interactions: An Evolutionary Approach. PLoS ONE 11(11): e0164286. Free download here: https://goo.gl/197mY9.

Sabatini, F., Antoci, A., Paglieri, F., Reggiani, T., Bonelli, L. (2015). The effects of online interaction on trust. An experimental study with Facebook primes. Proceedings of the Conference “Language, Cognition, Society”, Genova, Italy, December 10, 2015.

Sabatini, F., Sarracino, F. (2015). Online social networks and trust. MPRA Paper 62506.

Valenzuela, S., Park, N., Kee, K. F. (2009). Is There Social Capital in a Social Network Site?: Facebook Use and College Students' Life Satisfaction, Trust, and Participation. Journal of Computer-Mediated Communication 4 (4): 875-901. Free download here: https://goo.gl/iYKomA.
 

22. Online networks and social participation

Theoretical and empirical studies on the role of online networks in social participation and social isolation. 

Antoci, A., Sabatini, F., Sodini, M. (2012). The Solaria Syndrome: Social Capital in a Hypertechnological Growing Economy. Journal of Economic Behavior and Organization 81 (3), 802-814. Free download here: https://goo.gl/sToluM.

Antoci, A., Sabatini, F., Sodini, M. (2015). Online and offline social participation and social povert traps. Journal of Mathematical Sociology 39 (4), 229-256. Free download here: https://goo.gl/E2M2Jp.

Bauernschuster, S., Falck, O., Wößmann, L. (2014), Surfing Alone? The Internet and Social Capital: Quasi-Experimental Evidence from an Unforeseeable Technological Mistake. Journal of Public Economics 117, 73-89. Free download here: https://goo.gl/fPA9z0.

Sabatini, F., Sarracino, F. (2014). E-participation: Social Capital and the Internet. FEEM Working Paper 2014.081. Free download here: https://goo.gl/ztEwqe.
 

23. Online networks, relative deprivation and well-being

Empirical studies investigating how online networks can boost social comparisons causing dissatisfaction with income in their members. 

Main references

Lohmann, S. (2015). Information technologies and subjective well-being: does the Internet raise material aspirations? Oxford Economic Papers 67(3): 740-759. Free download here: https://goo.gl/o9QTA8.

Sabatini, F., Sarracino, F. (2016). Keeping up with the e-Joneses: Do Online Social Networks Raise Social Comparisons? FEEM Working Paper 2016.32. Free download here: https://goo.gl/EMs1wd.

Sabatini, F., Sarracino, F. (2017). Online networks and well-being. Kyklos, forthcoming.
 

24. Online networks and misinformation

Online networks allow for the rapid dissemination of unsubstantiated rumors and conspiracy theories that often elicit rapid, large, but naive social responses. A presentation of some experimental studies. 

Main references

Bessi, A., Zollo, F., Del Vicario, M., Scala, A., Caldarelli, G., Quattrociocchi, W. (2015) Trend of Narratives in the Age of Misinformation. PLoS ONE 10(8): e0134641. Free download here: https://goo.gl/52cjFP.

Del Vicario, M., Bessi, A., Zollo, F., Petroni, F., Scala, A., Caldarelli, G. Stanley, H. E., Quattrociocchi, W. (2016). The spreading of misinformation online. Proceedings of the National Academy of Science 113(3): 554–559. Free download here: https://goo.gl/z9huyN.

Quattrociocchi, W., Caldarelli, G., Scala, A. (2014). Opinion dynamics on interacting networks: media competition and social influence. Scientific Reports 4, Article number: 4938. Free download here: https://goo.gl/0arraE.
 

Part D – Students’ presentations


Dissertations

I am glad to supervise theses on the following topics:

- The socio-economic determinants of terrorism

- The socio-economic causes and determinants of the refugees’ crises

- Migration, discrimination and segregation dynamics

- Tolerance, creativity and economic growth

- Socio-economic effects of broadband accessibility

- Socio-economic effects of the use of online social networks

- Networks, opinions and political participation

- The roots of trust and empathy

- The behavioral and political consequences of natural disasters

- The behavioral and political consequences of terrorism
 
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