Network Effects & Social Inequality: How do Mechanisms Matter?

Network Effects and Social Inequality:
How Do Mechanisms Matter?

Filiz Garip (Cornell)

Several bodies of research suggest that under many conditions social networks amplify ineq­ual­ity in access to or adoption of practices that contribute to actors’ welfare.  Most of this work has remained suggestive, however, due to two prob­lems.  First, inattention to, and lack of con­sensus about, mechanisms of influ­ence impedes interpretation of results and cumulation of knowledge. Second, few data sets have the required detail --- over-time measure­ment of com­p­lete social networks and member behaviors – to draw confident conclus­ions.  In this paper we address both of these questions.   First, we argue that network effects operate through three major families of mechanisms – network externalities, social facilitation, and normative influ­ence – each of which can best be expressed through a distinctive set of related functional forms.   Second, to explore the implication of these different mechanisms (in the absence of suitably fine-grained data), we use computational models of the diffusion of practices through social networks given varying levels of homophily to explore the implication of each mechanism for overall and group-specific diffusion rates and equilibrium adoption levels, and for inter­group inequality in rates and levels of adoption.