Skip to main content
SpringerLink
Log in

The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis

  • Research Paper
  • Published:
Journal of Happiness Studies Aims and scope Submit manuscript

Abstract

We investigate whether the correlation of income and social capital with well-being changes in times of economic crisis. Both subjective well-being and social capital may decline during a crisis, and their correlation can change: if social capital becomes a scarce good, it may correlate more with well-being. Alternatively, people may find that in times of crisis other things matter more for well-being and its association with social capital should decrease. To account for these possibilities, we apply a Blinder–Oaxaca decomposition and regression analysis with interaction effects to European Social Survey data from 2006 to 2012. Our findings indicate that, after accounting for the decline of social capital, its correlation with well-being does not change over time. On the contrary, income becomes only temporarily more important for well-being. We conclude that in times of crisis, when material concerns are urgent, policy makers targeting recovery should account for the policy impacts on social capital.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Note: We do not pool figures for the two groups of countries because previous literature documented that Western and Eastern European countries differ in both levels and trends of well-being (Skoglund 2017; Bartolini et al. 2017; Easterlin 2009). Data: European Social Survey

Fig. 2
Fig. 3

Note: Regressions use clustered standard errors and sample weights. Data: European Social Survey

Fig. 4

Note: Regressions use clustered standard errors and sample weights. Data: European Social Survey

Fig. 5

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table D.1 in the Online Appendix. Data: European Social Survey

Fig. 6

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table D.3 in the Online Appendix. Data: European Social Survey

Fig. 7

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table E.1 in the Online Appendix. Data: European Social Survey

Fig. 8

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table E.3 in the Online Appendix. Data: European Social Survey

Similar content being viewed by others

Notes

  1. Before creating the index, we performed a factor analysis to check that the factor loadings are comparable. More details are available in table A.1 in the Online Appendix.

  2. For more details see table A.2 in the Online Appendix.

  3. For more details see table A.3 in the Online Appendix.

  4. The last four columns of table 7 report the coefficients from equation 1 estimated using OLS (columns 6 and 7) and ordered probit (columns 8 and 9) models. The signs and significance of coefficients does not change across models.

  5. Marginal effects are computed after the results reported in table B.1 in the Online Appendix, where the full model of table 7 is applied to the Western and Eastern European samples respectively.

  6. For detailed results, refer to table D.1 and D.3 in the Online Appendix.

  7. Detailed results are available in table E.1 and E.3 in the Online Appendix.

References

  • Allison, P. (2001). Missing data. SAGE University Paper, 136.

  • Alpaslan, B. (2016). Are human and social capital linked? Evidence from India. Metroeconomica, 68(4), 859–881.

    Google Scholar 

  • Antoci, A., Sabatini, F., & Sodini, M. (2012). The Solaria syndrome: Social capital in a growing hyper-technological economy. Journal of Economic Behavior & Organization, 81(3), 802–814.

    Google Scholar 

  • Antoci, A., Sabatini, F., & Sodini, M. (2013). Economic growth, technological progress and social capital: The inverted U hypothesis. Metroeconomica, 64(3), 401–431.

    Google Scholar 

  • Arrow, K. (1972). Gifts and exchanges. Philosophy and Public Affairs, I, 343–362.

    Google Scholar 

  • Bartolini, S., & Bilancini, E. (2011). Social participation and hours worked. Department of Economics University of Siena 620, Department of Economics, University of Siena.

  • Bartolini, S., Bilancini, E., & Pugno, M. (2013a). Did the decline in social connections depress Americans’ happiness? Social Indicators Research, 110(3), 1033–1059.

    Google Scholar 

  • Bartolini, S., Bilancini, E., & Sarracino, F. (2013b). Predicting the trend of well-being in Germany: How much do comparisons, adaptation and sociability matter? Social Indicators Research, 3(114), 169–191.

    Google Scholar 

  • Bartolini, S., Bilancini, E., & Sarracino, F. (2016). Social capital predicts happiness: world-wide evidence from time series. In S. Bartolini, E. Bilancini, L. Bruni, & P. Porta (Eds.), Policies for Happiness (pp. 175–198). Oxford: Oxford University Press.

    Google Scholar 

  • Bartolini, S., & Bonatti, L. (2008). Endogenous growth, decline in social capital and expansion of market activities. Journal of Economic Behavior & Organization, 67(3), 917–926.

    Google Scholar 

  • Bartolini, S., Mikucka, M., & Sarracino, F. (2017). Money, trust and happiness in Transition countries: Evidence from time series. Social Indicators Research, 130(1), 87–106.

    Google Scholar 

  • Bartolini, S., & Sarracino, F. (2014). Happy for how long? How social capital and economic growth relate to happiness over time. Ecological Economics, 108, 242–256.

    Google Scholar 

  • Bartolini, S., & Sarracino, F. (2015). The dark side of Chinese growth: Declining social capital and well-being in times of economic boom. World Development, 74, 333–351.

    Google Scholar 

  • Bartolini, S., & Sarracino, F. (2017). Twenty-five years of materialism: Do the US and Europe diverge? Social Indicators Research, 133(2), 787–817.

    Google Scholar 

  • Becchetti, L., Giachin Ricca, E., & Pelloni, A. (2009). The 60es turnaround as a test on the causal relationship between sociability and happiness. Econometica Working Papers wp07, Econometica.

  • Becchetti, L., Corrado, L., & Conzo, P. (2017). Sociability, altruism and well-being. Cambridge Journal of Economics, 41, 441–486.

    Google Scholar 

  • Becchetti, L., Massari, R., & Naticchioni, P. (2014). The drivers of happiness inequality: Suggestions for promoting social cohesion. Oxford Economic Papers, 66(2), 419–442.

    Google Scholar 

  • Becchetti, L., Trovato, G., & Bedoya, D. (2011). Income, relational goods and happiness. Applied Economics, 43(3), 273–290.

    Google Scholar 

  • Berkman, L., & Syme, S. (1979). Social networks, host resistance and mortality: A nine-year follow-up study of alameda country residents. American Journal of Epidemiology, 109, 186–204.

    Google Scholar 

  • Bilancini, E., & D’Alessandro, S. (2012). Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth. Ecological Economics, 84, 194–205.

    Google Scholar 

  • Bjørnskov, C. (2003). The happy few: cross-country evidence on social capital and life satisfaction. Kyklos, 56(1), 3–16.

    Google Scholar 

  • Bjørnskov, C. (2008). Social capital and happiness in the United States. Applied Research in Quality of Life, 3(1), 43–62.

    Google Scholar 

  • Blinder, A. (1973). Wage discrimination: Reduced-form and structural estimates. Journal of human resources, 8, 436–455.

    Google Scholar 

  • Brockmann, H., Delhey, J., Welzel, C., & Yuan, H. (2009). The China puzzle: Falling happiness in a rising economy. Journal of Happiness Studies, 10, 387–405.

    Google Scholar 

  • Clark, A. (2016). Happiness, habits, and high rank. In S. Bartolini, E. Bilancini, L. Bruni, & P. Porta (Eds.), Policies for happiness (pp. 62–94). Oxford: Oxford University Press.

    Google Scholar 

  • Clench-Aas, J., & Holte, A. (2017). The financial crisis in Europe: Impact on satisfaction with life. Scandinavian Journal of Public Health, 45(18–suppl), 30–40.

    Google Scholar 

  • Costa, D., & Kahn, M. (2003). Understanding the decline in social capital, 1952–1998. Kyklos, 56, 17–46.

    Google Scholar 

  • D’Ambrosio, C., & Frick, J. (2007). Income satisfaction and relative deprivation: An empirical link. Social Indicators Research, 81(3), 497–519.

    Google Scholar 

  • D’Ambrosio, C., & Frick, J. (2012). Individual well-being in a dynamic perspective. Economica, 79, 284–302.

    Google Scholar 

  • Danner, D. D., Snowdon, D. A., & Friesen, W. V. (2001). Positive emotions in early life and longevity: Findings from the nun study. Journal of personality and social psychology, 80(5), 804.

    Google Scholar 

  • Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research, 28, 195–223.

    Google Scholar 

  • Diener, E., & Seligman, M. (2004). Beyond money: Toward an economy of well-being. Psychological Science in the Public Interest, 5, 1–31.

    Google Scholar 

  • Diener, E., & Suh, E. (1997). Measuring quality of life: Economic, social and subjective indicators. Social indicators research, 40, 189–216.

    Google Scholar 

  • Dolan, P., Peasgood, T., & White, M. (2008). Do we really know what makes us happy? A review of the economic literature on the factors associated with subjective well-being. Journal of Economic Psychology, 29(1), 94–122.

    Google Scholar 

  • Easterlin, R. (2009). Lost in transition: Life satisfaction on the road to capitalism. Journal of Economic Behavior & Organization, 71(2), 130–145.

    Google Scholar 

  • Easterlin, R. (2017). Paradox lost? Review of Behavioral Economics, 4(4), 311–339.

    Google Scholar 

  • Easterlin, R. A., Angelescu, L., Switek, M., Sawangfa, O., & Zweig, J. S. (2010). The happiness-income paradox revisited. Proceedings of the National Academy of Sciences, 107(52), 1–6.

    Google Scholar 

  • Eurofound (2012a). Experiencing the economic crisis in the EU: changes in living standards, deprivation and trust. Publications Office of the European Union, Luxembourg.

  • Eurofound,. (2012b). Third European Quality of Life Survey - Quality of life in Europe: impacts of the crisis. Publications Office of the European Union, Luxembourg.

  • Eurofound,. (2014). Third European Quality of Life Survey - Quality of life in Europe: families in the economic crisis. Publications Office of the European Union, Luxembourg.

  • Ferrer-i Carbonell, A., & Frijters, P. (2004). How important is methodology for the estimates of the determinants of happiness? The Economic Journal, 114(497), 641–659.

    Google Scholar 

  • Gallie, D. (2013b). Economic crisis, quality of work and social integration: Topline results from rounds 2 and 5 of the European Social Survey. ESS Topline Results Series, Issue 3. London: Centre for Comparative Social Surveys.

  • Gallie, D. (2013a). Economic crisis, quality of work, and social integration: the European experience. Oxford: Oxford University Press.

    Google Scholar 

  • Growiec, K., & Growiec, J. (2014). Trusting only whom you know, knowing only whom you trust: The joint impact of social capital and trust on happiness in CEE countries. Journal of Happiness Studies, 15(5), 1015–1040.

    Google Scholar 

  • Heikkinen, T. (2015). (De) growth and welfare in an equilibrium model with heterogeneous consumers. Ecological Economics, 116, 330–340.

    Google Scholar 

  • Helliwell, J. (2001). Social capital, the economy and wellbeing. In The Review of Economic Performance: The Longest Decade: Canada in the 1990s. Centre for the Study of Living Standards, Ottawa, Canada.

  • Helliwell, J. F., Aknin, L. B., Shiplett, H., Huang, H., & Wang, S. (2017). Social capital and prosocial behaviour as sources of well-being. Working Paper 23761, National Bureau of Economic Research.

  • Helliwell, J. (2006). Well-being, social capital and public policy: What’s new? The Economic Journal, 116(510), 34–45.

    Google Scholar 

  • Helliwell, J. (2007). Well-being and social capital: Does suicide pose a puzzle? Social Indicators Research, 81(3), 455–496.

    Google Scholar 

  • Helliwell, J., & Barrington-Leigh, C. (2010). Viewpoint: Measuring and understanding subjective well-being. Canadian Journal of Economics, 43, 729–753.

    Google Scholar 

  • Helliwell, J. F., Huang, H., & Wang, S. (2014). Social capital and well-being in times of crisis. Journal of Happiness Studies, 15(1), 145–162.

    Google Scholar 

  • Helliwell, J. F., & Putnam, R. D. (2004). The social context of well-being. Philosophical Transactions: Royal Society of London Series Biological Sciences, 359(1449), 1435–1446.

    Google Scholar 

  • Helliwell, J., & Wang, S. (2011). Trust and wellbeing. International Journal of Wellbeing, 1(1), 42–78.

    Google Scholar 

  • Hirsch, F. (1976). Social limits to growth. Cambridge, Mass: Harvard University Press.

    Google Scholar 

  • House, J. S., Robbins, C., & Metzner, H. L. (1982). The association of social relationships and activities with mortality: Prospective evidence from the tecumseh community health study. American Journal of Epidemiology, 116(1), 123–140.

    Google Scholar 

  • Jann, B. (2008). A Stata implementation of the Blinder-Oaxaca decomposition. Stata Journal, 8, 453–459.

    Google Scholar 

  • Kaiser, C., & Vendrik, M. (2019). How threatening are transformations of reported happiness to subjective wellbeing research?. Technical report, Center for Open Science.

  • Klein, C. (2013). Social capital or social cohesion: What matters for subjective well-being? Social Indicators Research, 110(3), 891–911.

    Google Scholar 

  • Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. The Quarterly Journal of Economics, 112(4), 1251–1288.

    Google Scholar 

  • Layard, R. (2005). Happiness: Lessons from a new science. New York: The Penguin Press.

    Google Scholar 

  • Lidström, M., & Giordano, G. (2016). The 2008 financial crisis: changes in social capital and its association with psychological wellbeing in the United Kingdom—A panel study. Social Science and Medicine, 153, 71–80.

    Google Scholar 

  • Mikucka, M., Sarracino, F., & Dubrow, J. K. (2017). When does economic growth improve life satisfaction? Multilevel analysis of the roles of social trust and income inequality in 46 countries, 1981–2012. World Development, 93, 447–459.

    Google Scholar 

  • Morgan, R. (2016). Labor market policy and subjective well-being during the Great Recession. In Four Essays on How Policy, the Labor Market, and Age Relate to Subjective Well-Being, chapter 4. PhD Thesis, University of Southern California.

  • Oaxaca, R. (1973). Male-female wage differentials in urban labor markets. International Economic Review, 14, 693–709.

    Google Scholar 

  • O’Connor, K. J. (2017). Who suffered most from the great recession? Happiness in the United States. The Russell Sage Foundation Journal of the Social Sciences.

  • OECD. (2001). The evidence on social capital. The well-being of nations: The role of human and social capital (pp. 39–63). Paris: OECD.

    Google Scholar 

  • OECD. (2013). Guidelines on measuring subjective well-being. Paris: OECD.

    Google Scholar 

  • Oishi, S., & Kesebir, S. (2015). Income inequality explains why economic growth does not always translate to an increase in happiness. Psychological science, 26(10), 1630–1638.

    Google Scholar 

  • Paxton, P. (1999). Is social capital declining in the United States? A multiple indicator assessment. American Journal of Sociology, 105(1), 88–127.

    Google Scholar 

  • Polanyi, K. (1968). The great transformation. Boston: Beacon.

    Google Scholar 

  • Polavieja, J. (2013). Economic crisis, political legitimacy, and social cohesion. In D. Gallie (Ed.), Economic crisis, quality of work, and social integration: The European experience, chapter 10 (pp. 256–278). Oxford: Oxford University Press.

    Google Scholar 

  • Powdthavee, N. (2010). The happiness equation: The surprising economics of our most valuable asset. London: Icon Books.

    Google Scholar 

  • Putnam, R. (2000). Bowling alone: The collapse and revival of American community. New York: Simon and Schuster.

    Google Scholar 

  • Rodríguez-Pose, A., & Berlepsch, V. (2014). Social capital and individual happiness in Europe. Journal of Happiness Studies, 15(2), 357–386.

    Google Scholar 

  • Russell, H. (2013). Work-family conflict and economic change. In D. Gallie (Ed.), Economic crisis, quality of work, and social integration: The European experience, chapter 7 (pp. 169–194). Oxford: Oxford University Press.

    Google Scholar 

  • Sarracino, F., & Mikucka, M. (2017). Social capital in Europe from 1990 to 2012: Trends and convergence. Social Indicators Research, 131(1), 407–432.

    Google Scholar 

  • Schafer, J. (1997). Analysis of incomplete multivariate data. Boca Raton: Chapman and Hall/CRC Press Company.

    Google Scholar 

  • Schafer, J. (1999). Multiple imputation: A primer. Statistical methods in medical research, 8, 3–15.

    Google Scholar 

  • Skoglund, E. (2017). The happiness gap between transition and non-transition countries. IZA World of Labor,. https://doi.org/10.15185/izawol.357.

    Article  Google Scholar 

  • Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin Paradox. Brookings Papers on Economic Activity, 1, 1–87.

    Google Scholar 

  • Welsch, H., & Kühling, J. (2016). How has the crisis of 2008–09 affected subjective well-being? Evidence from 25 OECD countries. Bulletin of Economic Research, 68(1), 34–54.

    Google Scholar 

  • Wilson, R. S., Krueger, K. R., Arnold, S. E., Schneider, J. A., Kelly, J. F., Barnes, L. L., et al. (2007). Loneliness and risk of Alzheimer disease. Archives of General Psychiatry, 64(2), 234.

    Google Scholar 

  • Winkelmann, R. (2009). Unemployment, social capital and subjective well-being. Journal of Happiness Studies, 10(4), 421–430.

    Google Scholar 

Download references

Acknowledgements

The authors are thankful to Stefano Bartolini, Ennio Bilancini, Kelsey O’Connor, Ronald Inglehart, Chris Welzel, Eduard Ponarin, the participants to the Laboratory for Comparative Social Research of the Higher School of Economics, and the participants to the Warszawska Szkola Analizy Danych, University of Warsaw and Interuniversity Center for Social Science Theory and Methodology. Views and opinions expressed in this article are those of the author(s) and do not refect those of STATEC and funding partners. The author(s) gratefully acknowledge the support of the Observatoire de la Compétitivité, Ministére de l’Economie, DG Compétitivité, Luxembourg, and STATEC, the National Statistical Office of Luxembourg. The usual disclaimers apply.

Author information

Authors and Affiliations

  1. Research Division, Institut national de la statistique et des études économiques du Grand-Duché du Luxembourg (STATEC), 13, rue Erasme, 2013, Luxembourg, Luxembourg

    Francesco Sarracino

  2. LCSR National Research University Higher School of Economics, Moscow, Russian Federation

    Francesco Sarracino

  3. University of Siena, Siena, Italy

    Marcin Piekałkiewicz

Authors
  1. Francesco Sarracino
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Marcin Piekałkiewicz
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Francesco Sarracino.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (pdf 100 KB)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Sarracino, F., Piekałkiewicz, M. The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis. J Happiness Stud 22, 1583–1610 (2021). https://doi.org/10.1007/s10902-020-00285-x

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10902-020-00285-x

Keywords

JEL Classification

Search

Navigation