Research Details

Abstract

We review the burgeoning literature on the economics of social media, which has become ubiquitous in the modern economy and fundamentally changed how peo- ple interact. We first define social media platforms and isolate the features that distinguish them from traditional media and other digital platforms. We then synthesize the main lessons from the empirical economics literature and organize them around the three stages of the life cycle of user-generated content: (1) pro- duction, (2) distribution, and (3) consumption. Under production, we discuss how incentives affect content produced on and off social media and how harmful content is moderated. Under distribution, we discuss the social network structure, algorithms, and targeted advertisements. Under consumption, we discuss how so- cial media affects individuals who consume its content and society at large, and discuss consumer substitution patterns across platforms. Throughout the review, we delve into case studies examining the deterrence of misinformation, segrega- tion, political advertisements, and the effects of social media on political outcomes. We conclude with a brief discussion on the future of social media.

Type

Working Paper

Author(s)

Guy Aridor, Rafael Jimenez-Duran, Ro'ee Levy, Lena Song

Date Published

2024

Citations

Aridor, Guy, Rafael Jimenez-Duran, Ro'ee Levy, and Lena Song. 2024. The Economics of Social Media.