Status or Power? Fragile Inference of Network Effects

• In Event: 378 - Open Refereed Roundtable Session II
  In Refereed Roundtable: B. Table 07. Communication and Information Technologies

Abstract

Power and status are two basic mechanisms through which networks generate inequality between actors. Although in theory different network structures characterize high power and high status positions, we argue that in reality actors who occupy high status positions will also have significant power. We simulate a variety of different networks and analyze many real-world networks to show that status and power scores, as captured by Bonacich’s (1987) centrality measure, are indeed highly correlated. This correlation makes it difficult to distinguish the effects of status from the effects of power, and can lead us to attribute observed inequality to status when it is in fact caused by power. We document these concerns in an empirical study in the venture capital industry and conclude that phenomena of status and power in networks should always be studied jointly.

Authors

• Daniel Malter, Harvard University

• Mikolaj Jan Piskorski, Harvard University