30 March 2021

Economics of Social Ties

The effect of social ties is at the core of Yanming Kan’s PhD thesis in Development Economics. In this interview, he presents two of his doctoral chapters, one on the peer effect on restaurant reviews, and the other on the relationship between migration and educational expectations for the child of migrants.

Why are you especially interested in the effects of social ties?

From the micro-perspective, social interactions and social norms can be understood as effects of reference groups. One of my previous papers is about the effect of the consumption level on social activities and in my thesis I wanted to go one step further. There were a few options available, and my main consideration was data accessibility Regarding the analysis of restaurant ratings, it may not be very common to use user-generated contents from business websites at the Institute, but the idea is not rare in development practices. Sometimes, the imitation and competition in consumption may push families away from a beneficial route. 

Concerning migration, the Spring Festival travel rush is a typical phenomenon in China and maybe the largest migration in the world. Therefore, I am interested in how temporary migration affects the migrant family. We know that migration can bring extra income for these families, and we also know that extra income is far from enough to pull families. It is more important to change the thoughts of families. I hoped that educational expectations would be one pathway in that direction. The inspiration came from the stylised facts about the emphasis on education within East Asian families

Can you describe your chapter on restaurant reviews?

In this chapter, which is titled “Observational Learning and Peer Effects in Restaurant Visits: Evidence from User-Generated Contents”, I attempt to evaluate the effects of existing social networks on giving restaurant ratings. On the website, customers can observe ratings from others and they would have their own weights over these ratings. I collect all the reviews of a specific time period in a neighbourhood in Beijing and the profiles of the corresponding visitors. The main challenge is that networks and reference groups grow with time, which complicates the analysis of these effects. To address this issue, I try to follow the model suggested by previous studies to estimate the relationships of network formations and social effects simultaneously. It is found that when the process of network formation is properly explained, social effects increase by more than 50%.

What social ties do you focus on in your chapter on migration?

In this chapter, which is titled “Inter-Provincial Migration and Child Educational Expectations: Evidence from China”, the social norm I am interested in is the educational expectations for the child. While there have been discussions on the effect of migration on educational attainments, my study deals with the potential in education attainments. It is measured by parents’ expectations regarding the degree obtained by their child. There are concerns that educational expectations may also affect migration decisions. I utilise the fluency of oral Mandarin to respond to the issue, applying various econometric tests to evaluate the effect. It is found that migrated fathers have positive effects in improving educational expectations. When understanding the effect marginally, I find that the effect of migrated fathers is only kept at a moderate migration rate. 

What could be the social and/or political implications of these chapters?

While the situation might be too novel at first sight, the result from the restaurant reviews may provide a sketch for further research on the methodological aggregation of personal views. The collection and application of online data may also be an asset for researchers willing to discover the multi-stage learning process in a rather short period. How to deal with too much data with noises rather than too little data will also be an important issue in the near future. Generally, this will be the trend for economics as well as other social sciences.

The chapter on migration may have important implications for reflecting on migration policies. Migration income may play an important role in improving the livelihoods of families, but it can also be costly for both host regions and families themselves. The change in social norms, like patterns of consumption and saving, can be made through other local policies. Also, the study provides evidence for the importance of fathers, which has its values in policy planning. 

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Yanming Kan defended his PhD thesis in Development Economics in March 2021. Professor Martina Viarengo presided the committee, which included Professor Jean-Louis Arcand, thesis Director, and Associate Professor Stuart McDonald, Faculty of Humanities and Social Sciences, University of Nottingham Ningbo, China.

Full citation of the PhD thesis:
Kan, Yanming. “Economics of Social Ties, Migration and Development.” PhD thesis, Graduate Institute of International and Development Studies, Geneva, 2021.

Good to know: members of the Graduate Institute can download Dr Yanming’s PhD thesis from this page of the Institute’s repository.

Interview by Nathalie Tanner, Research Office.
Banner picture: excerpt from an image by Andrii Yalanskyi/