Chapter 12 - User-Generated Content and Social Media

Abstract

This chapter documents what economists have learned about user-generated content (UGC) and social media. A growing body of evidence suggests that UGC on platforms ranging from Yelp to Facebook has a large causal impact on economic and social outcomes ranging from restaurant decisions to voting behavior. These findings often leverage unique datasets and methods ranging from regression discontinuity to field experiments, and researchers often work directly with the companies they study. I then survey the factors that influence the quality of UGC. Quality is influenced by factors including promotional content, peer effects between contributors, biases of contributors, and self-selection into the decision to contribute. Non-pecuniary incentives, such as “badges” and social status on a platform, are often used to encourage and steer contributions. I then discuss other issues including business models, network effects, and privacy. Throughout the chapter, I discuss open questions in this area.