Germs, Social Networks and Growth

Abstract:

Does the pattern of social connections between individuals matter for macroeconomic outcomes? If so, how does this effect operate and how large is it? Using network analysis tools, we explore how different social network structures affect technology diffusion and thereby a country’s rate of technological progress. The network model also explains why societies with a high prevalence of contagious disease might evolve toward growth-inhibiting social institutions and how small initial differences can produce large divergence in incomes. Empirical work uses differences in the prevalence of diseases spread by human contact and the prevalence of other diseases as an instrument to identify the effect of social structure on technology diffusion.