Your Friends, Your Credit: Social Capital Measures Derived from Social Media and the Credit Market

Bricker, Jesse; Li, Geng

doi:10.17016/FEDS.2023.048

Working Paper

Your Friends, Your Credit: Social Capital Measures Derived from Social Media and the Credit Market

Abstract: Chetty et al. (2022a) introduced an array of social capital measures derived from Facebook friendships and found that one of these indicators, economic connectedness (EC), predicted upward income mobility well. Bricker and Li (2017) proposed the average credit score of a community's residents as an indicator of local social trust. We show in this paper that the average credit scores are robustly correlated with EC, negatively correlated with the friending-bias measure introduced in Chetty et al. (2022b), and predict economic mobility to a comparable extent after controlling for EC. The consistency and complementarity between these two indicators, despite being derived from individuals' activities in distinct contexts, underscore trust as a crucial component of social capital and provide insights that are useful for understanding the formation and accumulation of social capital.

Keywords: social trust; social capital; economic mobility; credit score;

JEL Classification: D14; G10; G41; G50;

https://doi.org/10.17016/FEDS.2023.048