Abstract:

Students of social inequality have noted the presence of mechanisms militating toward cumulative advantage and increasing inequality. Social scientists have established that in-­‐ dividuals’ choices are influenced by those of their network peers in many social domains. We suggest that the ubiquity of network effects and tendencies towards cumulative advant-­‐ age are related. Inequality is exacerbated when effects of individual differences are multi-­‐ plied by social networks: when persons must decide whether to adopt beneficial practices; network externalities, social learning, or normative pressure influence adoption decisions; and networks are homophilous with respect to individual characteristics that predict such decisions. We review evidence from literatures on network effects on technology, labor markets, education, demography, and health; identify several mechanisms through which networks may generate higher levels of inequality than one would expect based on dif-­‐ ferences in initial endowments alone; consider cases where network effects may amelior-­‐ ate inequality; and describe research priorities.

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