A Framework for the Study of Individual Behavior and Social Interactions

Recent work in economics has begun to integrate sociological ideas onto the modelling of individual behavior. In particular, this new approach emphasizes how social context and social interdependences influence the ways in which individuals make choices. This paper provides an overview of an approach to integrating theoretical and empirical analysis of such environments. The analysis is based on a framework due to Brock and Durlauf (2000a, 2000b). Empirical evidence on behalf of this perspective is assessed and some policy implications are explored.

The Memberships Theory of Poverty: The Role of Group Affiliations in Determining Socioeconomic Outcomes

This paper describes a particular perspective on the causes of poverty: a memberships based theory. The idea of this theory is that an individual's socioeconomic prospects are strongly influenced by the groups to which he is attached over the course of his life. Such groups may be endogenous; examples include residential neighborhoods, schools and firms. Other groups are exogenous, including ethnicity and gender. I describe the main ideas of the memberships theory, characterize the empirical evidence in its support, and remark on its implications for anti-poverty policy.

Rural-urban migration in d-dimensional lattices

The rural-urban migration phenomenon is analyzed by using an agent-based computational model. Agents are placed on lattices which dimensions varying from d=2 up to d=7. The localization of the agents in the lattice define their social neighborhood (rural or urban) not being related to their spatial distribution. The effect of the dimension of lattice is studied by analyzing the variation of the main parameters that characterizes the migratory process. The dynamics displays strong effects even for around one million of sites, in higher dimensions (d=6, 7).Comment: 9 pages, 7 figures, to be published in International Journal of Modern Physics C 1

Testing the Positive Theory of Government Finance

Researchers characterizing optimal tax policies for dynamic economies have reasoned that optimally chosen tax rates should approximately follow a random walk. We conduct a frequency-domain examination of the properties of the tax rate series and conclude that while there is a substantial smoothing role for debt, one rejects the hypothesis that the first difference in the series is white noise. This conclusion follows both from an analysis of the entire spectral distribution function of tax changes as well as from the behavior of individual frequencies. The source of the rejection is pronounced activity of tax changes at an eight year cycle which is suggestive of an electoral component to tax changes. Regression analysis confirms the finding that there is a cyclical component to tax changes corresponding to changes in political party administration. The results suggest that the positive theory of government finance needs to be refined to incorporate features of political equilibrium.

Universal features in the growth dynamics of complex organizations

We analyze the fluctuations in the gross domestic product (GDP) of 152 countries for the period 1950--1992. We find that (i) the distribution of annual growth rates for countries of a given GDP decays with ``fatter'' tails than for a Gaussian, and (ii) the width of the distribution scales as a power law of GDP with a scaling exponent $\beta \approx 0.15$. Both findings are in surprising agreement with results on firm growth. These results are consistent with the hypothesis that the evolution of organizations with complex structure is governed by similar growth mechanisms.Comment: 4 pages, 7 ps figures, using Latex2e with epsf rotate and multicol style files. Submitted to PR

Living apart, losing sympathy? How neighbourhood context affects attitudes to redistribution and to welfare recipients

Rising levels of income inequality have been directly linked to rising levels of spatial segregation. In this paper, we explore whether rising segregation may in turn erode support for the redistributive policies of the welfare state, further increasing levels of inequality – a form of positive feedback. The role of the neighbourhood has been neglected in attitudes research but, building on both political geography and ‘neighbourhood effects’ literatures, we theorise that neighbourhood context may shape attitudes through the transmission of attitudes directly and through the accumulation of relevant knowledge. We test this through multilevel modelling of data from England on individual attitudes to redistribution in general and to welfare benefit recipients in particular. We show that the individual factors shaping these attitudes are quite different and that the influence of neighbourhood context also varies as a result. The findings support the idea that neighbourhood context shapes attitudes, with the knowledge accumulation mechanism likely to be the more important. Rising spatial segregation would appear to erode support for redistribution but to increase support for welfare recipients – at least in a context where the dominant media discourse presents such a stigmatising image of those on welfare benefits

Phenomenological Models of Socio-Economic Network Dynamics

We study a general set of models of social network evolution and dynamics. The models consist of both a dynamics on the network and evolution of the network. Links are formed preferentially between 'similar' nodes, where the similarity is defined by the particular process taking place on the network. The interplay between the two processes produces phase transitions and hysteresis, as seen using numerical simulations for three specific processes. We obtain analytic results using mean field approximations, and for a particular case we derive an exact solution for the network. In common with real-world social networks, we find coexistence of high and low connectivity phases and history dependence.Comment: 11 pages, 8 figure

The World-Trade Web: Topological Properties, Dynamics, and Evolution

This paper studies the statistical properties of the web of import-export relationships among world countries using a weighted-network approach. We analyze how the distributions of the most important network statistics measuring connectivity, assortativity, clustering and centrality have co-evolved over time. We show that all node-statistic distributions and their correlation structure have remained surprisingly stable in the last 20 years -- and are likely to do so in the future. Conversely, the distribution of (positive) link weights is slowly moving from a log-normal density towards a power law. We also characterize the autoregressive properties of network-statistics dynamics. We find that network-statistics growth rates are well-proxied by fat-tailed densities like the Laplace or the asymmetric exponential-power. Finally, we find that all our results are reasonably robust to a few alternative, economically-meaningful, weighting schemes.Comment: 44 pages, 39 eps figure

Statistical mechanics of spatial evolutionary games

We discuss the long-run behavior of stochastic dynamics of many interacting players in spatial evolutionary games. In particular, we investigate the effect of the number of players and the noise level on the stochastic stability of Nash equilibria. We discuss similarities and differences between systems of interacting players maximizing their individual payoffs and particles minimizing their interaction energy. We use concepts and techniques of statistical mechanics to study game-theoretic models. In order to obtain results in the case of the so-called potential games, we analyze the thermodynamic limit of the appropriate models of interacting particles.Comment: 19 pages, to appear in J. Phys.