It is now generally accepted that social networks are import institutions that influence many economic decisions and outcomes. However, analyzing the causal effects of social networks is difficult because of endogenously problems. This doctoral dissertation research will use a unique data set from Uganda to investigate whether social networks impact household investment in human capital. The effect of the Ugandan insurgency on social networks varies with the ways that households were displaced. While some households maintained much of their original networks, others moved with very little of their former network into camps with people from different villages. Since the conditions of displacement was not by choice, this camp setting provides a natural experiment for analyzing the effect of social network quality on household human capital investment. This research will collect data on the variations in household displacement experiences, using household interviews and secondary sources regarding the history of camps and government displacement practices, to instrument for social network quality in analyzing the impact of social networks on human capital investment behavior. The data collection coincides with a randomized trial of a World Food Programme school-based feeding program that begins soon. This program represents an exogenous shock to household income, which households may use to invest in children's nutrition. Comparing preschooler's pre- and post-treatment anthropometric z-scores identifies which households make this human capital investment. The data on variations in social network quality and the data from the nutrition experiment allow the PI to exploit two sources of exogenous variation to identify the effects of social networks on human-capital-investment behavior.
Identifying a causal relationship between social networks and economic decision making is difficult because the quality of a household's social network is typically endogenous to household behavior. Moreover, the opportunity to identify household investment in human capital, rather than simply nutritional outcomes (a function of investment, income and genetics, among other things), is equally difficult. Being one of the first to examine how social networks impact nutritional investment behavior rather than simply networks' impact child on nutritional outcomes, this doctoral dissertation research will contribute significantly to economic science. The methodology developed in this research can be applied to the analysis of household investments in many settings where large numbers of families are displaced, as happened with hurricane Katrina. The result of this research also has implication for government displacement practices that aim to preserve social networks to curb long-term negative effects of displacement on household welfare. This project provides evidence of the contributions of social networks to investment behavior. The result of this research has development policy implications generally.
