Social Disconnection and the Missing Market

Amanda Pallais, Robert C. Waggoner Professor of Economics, Harvard University

Abstract: Amidst what the U.S. Surgeon general calls a “loneliness epidemic,” we propose that an inefficiency exacerbates social disconnection. People who want more friends are often advised to join an organization like a church, volunteer organization, or sports team. Meanwhile, most lonely people report having friends who they would like to introduce them to others. We argue that being introduced through mutual friends is more likely to lead to lasting relationships, but that difficulty in paying friends to organize get-togethers leads to inefficiently few connections. A field experiment shows that incentivizing individuals to connect their friends generates lasting relationships, while similarly introducing unconnected individuals does not. We then discuss how organizations can ameliorate this inefficiency by doing what individuals can’t, for example, by acting as a financial intermediary. Mimicking social movements, they can also show connectors how much organizing benefits others (which lonely people think their friends underestimate), introduce connectors to each other as a reward for organizing, and reduce organizing costs. (Co-authored with Jenna Anders)

Amanda Pallais is the Robert C. Waggoner Professor of Economics at Harvard University. Her research studies the labor market performance and educational investment decisions of disadvantaged and socially excluded groups. Her research has shown how manager bias can depress the job performance of minorities, how the cost of developing a reputation can make it difficult for young workers to enter the labor market, how marriage market concerns can lead women to invest less in labor market success, and how financial aid can increase the educational attainment of low-income students. Pallais received her B.A. in Economics and Mathematics from the University of Virginia in 2006 and her Ph.D. in Economics from MIT in 2011.