Thursday, May 04, 2006
The effect of internet on beliefs like tolerance
Description/Hypothesis:
The ideal experiment would be to randomly provide people with internet access and see how their beliefs changed. This, of course is not possible. The simple regression would be to regress beliefs on internet use, but this has large OVB problems: determinants of internet use could very likely be determinants of the beliefs we are looking at. Even after controlling for demographics, there could very well be some lurking variable that explains why people who use the internet also have certain beliefs. Thus, we turn to instrumental variables. Although internet access is not itself randomly assigned, there is a random element to the cost of internet access supply. In other words, access to broadband internet (which empirically is a strong determinant of internet use; people with broadband use the internet more frequently than people with dial-up) is determined in a large part by a factor called “last-mile” cost. This last-mile cost is essentially the marginal cost of extending broadband access to an area from a backbone. The location of these backbones is largely geographically determined, and there is reason to believe that the determinants of backbone locations are at least more random that the determinants of actual broadband access in an area. So, in terms of instrument erogeneity, last mile cost seems to be a decent instrument in that it may be fairly uncorrelated with the error term here.
We would thus use last mile cost as an instrument to regress beliefs of tolerance. Specifically, I would link a dataset which included both internet use, beliefs, demographics, and location to a dataset which included the last-mile-cost for internet access in that area. If this information was not available, broadband access availability (provided by the FCC) would be my instrument.
You have a good start here. I particularly like the relation to Glaeser's work. You should probably also look at Mobius and Rosenblat's "Getting Closer or Drifting Apart" paper (it is probably available on Prof. Mobius's website) for more ideas about how the internet affects interactions and perhaps beliefs.
As we discussed before, I think the IV is ok. The trick is finding the data we need. How is that going?
At the very least, did you chack out the social capital benchmarks study to see what info on beliefs it has?
You are on the right track, but you need to start getting the data assembled quickly, so you can start getting preliminary results and figure out what will need to be modified.
I think your idea is great. However, I have qualms with your instrument. While I agree that the instrument is probably relevant as people with broadband probably do use the internet more, I think that instrument exogeneity is difficult to ascertain. In your proposal you mention that the "last mile cost" is largely geographical. While geography might seem random, I would argue that where you live (rural or urban) makes a huge difference in your beliefs. Therefore individuals who face high "last mile costs" are not necassarily random and the causation towards their beliefs comes not from their ability to access the internet but instead from their geographic preference. Additionally, individiduals who do decide to pay this high "last mile cost" and gain internet access could skew your results. These individuals are likely to want to have internet and have high internet usage but also be richer. Therefore their beliefs could be caused by their income and not by their access to the internet.
I think that the instrument you propose is one of the best that can be thought of and performed feasibly in this experiment. Still, I just wanted to make you aware of some of the possible exogeneity issues that you might face.
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