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Social network analysis of non-economic rules

   | 01. Jan. 2008



Working definitions

Goals of social network analysis

Three examples of SNA:

Social exclusion from financial services

Binge drinking behaviours

Technological webs vs. social communities

Conclusion & implications

Working Definition of Culture

Culture is an emergent characteristic of a group of agents and is determined by the agents’ rules of behaviours for acting in their social environment and for interacting with each other. Cultural rules are socially transmitted and learned. (Beinhocker 2007)


Hayek: social structure emerges from the laws (“nomos") governing the relations between individuals

Potts/Dopfer: cultural rules can be economic and noneconomic, are carried by individuals, diffuse as meso trajectories

Goals of SNA

Determine most likely structure of relevant social network


Difference in structure → difference in dynamics

Can tell us about vulnerability to epidemics, speed of diffusion, fragility


‘Friends of friends’

Individuals typically influenced only by close associates

In general, no single individual will influence everybody

Small world network

Ideas need to be quite contagious to spread

Most vulnerable to ‘epidemics’

Why? A small number of highly connected individuals

Small probability but high impact

No critical level of contagiousness needed for idea to spread

Scale free network

Putting SNA into practice

Usually SNA requires vast data sets on every node and connection – to map the network in detail

But Ormerod (2007)* provides an alternative technique to infer the network structure using very small data sets

Relatively cheap (e.g. just 388 respondents provides representation for entire UK population)

Use modelling to assess likely diffusion patterns

* Extracting Deep Information from Limited Observations on an Evolved Social Networks, Physica A

(1) Social Exclusion from Financial Services

Almost one in 10 adults in Britain do not use mainstream financial services. Most of these are not in paid employment.

However, most people without paid work have bank accounts.

Two hypotheses have been put forward to account for the behaviour of the minority without accounts:

reluctance by financial institutions to serve low-income customers; and,

information failure on the part of non-consumers.

First, we can show that having an account is highly correlated with having more f&f who also have accounts:

Use of accounts by friends and family Proportion of pepole who have accounts Proportion of pepole who do not have accounts
All or most have accounts 87 38
Some have accounts 6 26
Few or none have accounts 2 14
Don't know 6 21
TOTAL 100 100

Source: ONS Omnibus Survey March/April 2000

Logistic regression shows that social network info is a more powerful predictor of non-usage than all the usualattributes: age, gender, ethnic origin, housing tenure, employment status, income or family circumstances

Why would this be so?

In many complex social and economic contexts, decision makers often pay attention to each other

use the behaviour of others as a decision rule when choosing between alternative courses of action


limited information about the problem itself and/or

limited ability to process even the information that is available

The decision to use a back account appears to be this type of problem

Still leaves the question:

What type of social network best describes individual’s decision to use a bank account?

Using survey data from the ONS and network modelling, we have shown that a small world best describes the network in this case.

Recall that small worlds are relatively impervious to epidemics (spread of behaviour change)

This supports the information failure hypothesis.

(2) Binge drinking behaviours

Data on alcohol consumption is fraught with measurement problems

Some series suggest a sharp rise in binge drinking, especially amongst the young, some suggest a drop since 2002

Strong media/public/policy consensus that ‘booze Britain’ is a real and worsening phenomenon

Many traditional econometric studies of alcohol consumption over time and relating changes to factors such as disposable income, price and advertising

All are inconclusive and cannot clearly separate correlation from causation

What if binge drinking is a social network phenomenon?

Precedence: NEJM (2007) quant analysis of the the person-to-person spread of obesity as a possible factor contributing to the obesity epidemic

Using data on 12,000 people monitored from 1971 – 2003

Found that social influence is very powerful: the chance of any individual being obese increases by 57% if s/he has a friend who becomes obese

We are currently applying this approach to answering the question: is binge drinking a social network phenomenon?

Simple survey of ~500 young people

Their own drinking behaviours

Drinking behaviours of family, friends and colleagues

We are currently assessing the most likely network structure: expect small-world

Potentially major policy implications for UK and Europe

Most physical/technology-based nets are scale-free e.g. internet, power grids, air routes

Protein interaction network

However they differ from social networks in one important respect:

highly connected nodes tend to be connected to less well-connected nodes

(3) Technological webs vs. social communities

By contrast, in social networks, highly connected nodes tend to be connected to other highly connected nodes

This gives rise to community structure (assortative networks)

Nodes with high ‘betweenness’ are the most interesting in community-based networks

Recap and Conclusion

SNA a powerful analytical technique for uncovering structure emerging from many types of rules/ behaviours

Usually possible to infer the network structure with small amount of data:

Info on the overall frequency of the rule in the population (e.g. what proportion of people UK-wide have a bank account)

Sample data on rule usage by people in the social network

Some evidence on the clustering coefficient (for people-based networks can generally safely assume it is considerably greater than zero)

Is using SNA a way to unpack/formalise phenomena usually referred to as ‘cultural’?

the culture of not using bank accounts

the culture of booze Britain

the culture of collaboration within an organisation

At the very least it shows that structure matters for emergent properties that evolve over time

And provides a very accessible technique when small survey samples and network modelling are combined