Proximity, Similarity, and Friendship Formation: Theory and Evidence

TL;DR

This paper develops a learning-driven model to examine how proximity influences friendship diversity, finding that proximity fosters more diverse social connections despite homophily in other traits, supported by empirical evidence from Peruvian boarding schools.

Contribution

It introduces a novel learning-based model of friendship formation that predicts increased diversity through proximity, contrasting with preference-driven models.

Findings

Proximity increases diversity of friendships among dissimilar individuals.

Social networks show homophily by achievement and poverty.

Empirical data supports the learning model's predictions.

Abstract

Can proximity make friendships more diverse? To address this question, we propose a learning-driven friendship formation model to study how proximity and similarity influence the likelihood of forming social connections. The model predicts that proximity affects more friendships between dissimilar than similar individuals, in opposition to a preference-driven version of the model. We use an experiment at selective boarding schools in Peru that generates random variation in the physical proximity between students to test these predictions. The empirical evidence is consistent with the learning model: while social networks exhibit homophily by academic achievement and poverty, proximity generates more diverse social connections.