Estimating Peer Effects Using Partial Network Data

Abstract: We study the estimation of peer effects through social networks when researchers do not observe the entire network structure. Special cases include sampled networks, censored networks, and misclassified links. We assume that researchers can obtain a consistent estimator of the distribution of the network. We show that this assumption is sufficient for estimating peer effects using a linear-in-means model. We provide an empirical application to the study of peer effects on students' academic achievement using the widely used Add Health database, and show that network data errors have a large downward bias on estimated peer effects.