Social networks in microfinance

Finally Banerjee, Duflo and Jackson (and a 4th co-author I don't know) have came out with a version of their paper about networks in diffusion of microfinance in Indian villages:

We exploit arguably exogenous variation in the importance (in a network sense) of the people who were first informed about the program. We first show that the eventual take-up of microfinance in a village is higher when the first people to be informed have higher eigenvector centrality, a recursive measure of importance in a network. Next, we estimate several structural models of diffusion through the networks to determine the relative roles of simple information transmission versus other forms of peer influence. We find that participants are significantly more likely to pass information on to friends and acquaintances than informed non-participants, but that once informed an individual’s decision is not significantly affected by the participation of her acquaintances. This specific model of information diffusion fits the data better than a model where people’s decisions are simply correlated with what their network neighbors do and does a very good job in replicating the aggregate patterns found in the data.

They have information for 43 villages, so I think nobody has yet more village-level data about networks than the one we had collected in Gambia! (of course, villages in India are in average much more bigger than in West Africa)

ht: Julien Labonne