Abstract: Low levels of social interaction across class lines have generated widespread concern and are associated with worse outcomes, such as lower rates of upward income mobility. Here we analyse the determinants of cross-class interaction using data from Facebook, building on the analysis in our companion paper. We show that about half of the social disconnection across socioeconomic lines—measured as the difference in the share of high-socioeconomic status (SES) friends between people with low and high SES—is explained by differences in exposure to people with high SES in groups such as schools and religious organizations. The other half is explained by friending bias—the tendency for people with low SES to befriend people with high SES at lower rates even conditional on exposure. Friending bias is shaped by the structure of the groups in which people interact. For example, friending bias is higher in larger and more diverse groups and lower in religious organizations than in schools and workplaces. Distinguishing exposure from friending bias is helpful for identifying interventions to increase cross-SES friendships (economic connectedness). Using fluctuations in the share of students with high SES across high school cohorts, we show that increases in high-SES exposure lead low-SES people to form more friendships with high-SES people in schools that exhibit low levels of friending bias. Thus, socioeconomic integration can increase economic connectedness in communities in which friending bias is low. By contrast, when friending bias is high, increasing cross-SES interactions among existing members may be necessary to increase economic connectedness. To support such efforts, we release privacy-protected statistics on economic connectedness, exposure and friending bias for each ZIP (postal) code, high school and college in the United States at https://www.socialcapital.org.

Co-authors: Raj Chetty, Matthew O. Jackson, Theresa Kuchler, Johannes Stroebel, Nathaniel Hendren, Robert Fluegge, Sara Gong, Federico Gonzalez, Armelle Grondin, Matthew Jacob, Martin Koenen, Eduardo Laguna-Muggenburg, Tom Rutter, Nicolaj Thor, Wilbur Townsend, Ruby Zhang, Mike Bailey, Pablo Barberá, Monica Bhole, Nils Wernerfelt. 

 Abstract: Social capital—the strength of an individual’s social network and community—has been identified as a potential determinant of outcomes ranging from education to health. However, efforts to understand what types of social capital matter for these outcomes have been hindered by a lack of social network data. Here, in the first of a pair of papers9, we use data on 21 billion friendships from Facebook to study social capital. We measure and analyse three types of social capital by ZIP (postal) code in the United States: (1) connectedness between different types of people, such as those with low versus high socioeconomic status (SES); (2) social cohesion, such as the extent of cliques in friendship networks; and (3) civic engagement, such as rates of volunteering. These measures vary substantially across areas, but are not highly correlated with each other. We demonstrate the importance of distinguishing these forms of social capital by analysing their associations with economic mobility across areas. The share of high-SES friends among individuals with low SES—which we term economic connectedness—is among the strongest predictors of upward income mobility identified to date. Other social capital measures are not strongly associated with economic mobility. If children with low-SES parents were to grow up in counties with economic connectedness comparable to that of the average child with high-SES parents, their incomes in adulthood would increase by 20% on average. Differences in economic connectedness can explain well-known relationships between upward income mobility and racial segregation, poverty rates, and inequality. To support further research and policy interventions, we publicly release privacy-protected statistics on social capital by ZIP code at https://www.socialcapital.org.

Co-authors: Raj Chetty, Matthew O. Jackson, Theresa Kuchler, Johannes Stroebel, Nathaniel Hendren, Robert Fluegge, Sara Gong, Federico Gonzalez, Armelle Grondin, Matthew Jacob, Martin Koenen, Eduardo Laguna-Muggenburg, Tom Rutter, Nicolaj Thor, Wilbur Townsend, Ruby Zhang, Mike Bailey, Pablo Barberá, Monica Bhole, Nils Wernerfelt.

Abstract: coming soon

Abstract: We revisit DeGroot learning to examine the robustness of social learning outcomes in dynamic networks—networks that evolve randomly over time. Randomness stems from multiple sources such as random matching and strategic network formation.  Our main contribution is that random dynamics have double-edged effects depending on social structure: while they can foster consensus and boost collective intelligence, they can have adverse effects such as slowing down the speed of learning and causing long-term disagreement.  Collective intelligence in dynamic networks requires balancing people's average influence with their average trust as society grows. We also find that the initial social structure of a dynamic network plays a central role in shaping long-term beliefs.

Abstract: This paper proposes a simple framework to study the effect of correlation neglect on social learning and welfare in games with social incentives. It examines statistical learners (frequentists, Bayesians, etc.) who make decisions based on their peers' actions but overlook the correlation between the actions they observe. A novel solution concept called correlated sampling equilibrium with statistical inference (CoSESI) reveals that correlation neglect affects strategic behavior through persistent overprecision, which leads to polarization and information cascades. CoSESI always exists and differs from existing concepts. It captures the fact that naive beliefs are overly sensitive to correlations, which causes failures of social learning. Applications of CoSESI in matching markets, monopoly pricing, and financial markets demonstrate that correlation neglect bears significant economic consequences.