Peer Effects and Social Network: The Case of Rural Diffusion in Central China

Abstract

We examine how adoption of a high-value crop diffuses through social networks, using detailed demographic, social network, and adoption data from ten villages in Central China. We develop a model of diffusion through a multiplex network that distinguishes the influence of sharing experiential resources by earlier adopters and that of externalities due to adoption behaviours. We find that the sharing of resources among family members and the production externalities arose between contiguous land plots both significantly influence farmers' adoption. Furthermore, the sharing of resources is more influential in the early stage of diffusion process, whereas the externalities mainly matter in the late stage. We also find that adopters give priority to those with a stronger kinship tie when deciding with whom to share their resources, and proximity in age can strengthen the kinship ties.