On the Directionality Test of Peer Effects in Social Networks

One interesting idea in social network analysis is the directionality test that utilizes the directions of social ties to help identify peer effects. The null hypothesis of the test is that if contextual factors are the only force that affects peer outcomes, the estimated peer effects should not differ, if the directions of social ties are reversed. In this article, I statistically formalize this test and investigate its properties under various scenarios. In particular, I point out the validity of the test is contingent on the presence of peer selection, sampling error, and simultaneity bias. I also outline several meth-ods that can help provide causal estimates of peer effects in social networks