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Money, Sociability and Happiness: Are Developed Countries Doomed to Social Erosion and Unhappiness?

Time-series Analysis of Social Capital and Subjective Well-being in Western Europe, Australia, Canada and Japan

Abstract

Discovering whether social capital endowments in modern societies have been subjected or not to a process of gradual erosion is one of the most debated topics in recent economic literature. Inaugurated by Putnam’s pioneering studies, the debate on social capital trends has been recently revived by Stevenson and Wolfers (2008) contending Easterlin’s assessment. Present work is aimed at finding evidence for the relationship between changes in social capital and subjective well-being in western Europe, Australia, Canada and Japan between 1980 and 2005. In particular, I would like to answer questions such as: (1) is social capital in western Europe, Canada, Australia and Japan declining? Is such erosion a general trend of modern and richer societies or is it a characteristic feature of the American one? (2) can social capital trend help explain subjective well-being trend? Therefore, present research considers three different set of proxies of social capital controlling for time and socio-demographic aspects using WVS-EVS data between 1980 and 2005. Present results are encouraging, showing evidence of positive correlation between several proxies of social capital and both happiness and life satisfaction. Furthermore, results show that during last twenty-five years people in some of the most modern and developed countries have persistently lost confidence in the judicial system, religious institutions, parliament and civil service.

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Notes

  1. Bartolini et al. (2008).

  2. Please, refer to Appendix 7 on page 22 for a discussion of the trends of SC in US using WVS data.

  3. OECD (2001b).

  4. For a review of the main theories proposed so far, please refer to Sarracino (2010a).

  5. Stevenson and Wolfers (2008, p. 16).

  6. Quoted in Schuller et al. (2000, p. 5).

  7. Quoted in S. Baron, J. Field and T. Schuller, Social capital: critical perspectives, Oxford University Press, Oxford, 2000, p. 6.

  8. OECD (2001b, p. 42)

  9. OECD (2001b, p. 42).

  10. Putnam et al. (1993, p. 56).

  11. Bartolini et al. (2008, p. 5).

  12. Bartolini et al. (2008, p. 5–6).

  13. Bartolini et al. (2008, p. 5–6).

  14. Please refer to Table 1 for a summarizing scheme.

    Table 1 Summarizing scheme of the different constituents of social capital
  15. Alesina et al. (2004, p. 2035).

  16. The five waves WVS data-set together with detailed instructions on how to integrate it with EVS data-set is freely available on-line. For more details, please refer to: http://www.wvsevsdb.com/wvs/WVSData.jsp.

  17. Bruni and Stanca (2008, p. 6).

  18. Aguiar and Hurst (2006).

  19. I am aware that marginal effects (MFX) estimated at the mean value of the independent variable are not the best tool to allow comparisons across time, countries and models. Average marginal effects (AME) would best accomplish this task by providing the effect over the dependent variable when the independent moves from its minimum to the maximum value. Still, a comparison between MFX and AME shows that MFX are a good approximation of AME for what concern both the significance and the magnitude of the coefficients (Mood 2010). The advantage in using MFX is that Stata provides a better framework to store and deal with these results.

  20. Detailed summary statistics for each considered country are available on request to the author.

  21. For a more detailed discussion on pattern of missingness and their implication for econometric analysis, please refer to Schafer (1997, 1999), Allison (2001).

  22. Present results are confirmed also by using different clustering algorithms such as the single and the complete linkage ones.

  23. For the detailed trends of the two proxies in each country, please refer to figures from 8 on page 24 to 37 on page 53 in the Appendix.

  24. Bartolini et al. (2008, p. 26).

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Acknowledgments

The author would like to thank Stefano Bartolini, Ennio Bilancini, Jaime Diez Medrano, Malgorzata Mikucka, Nizamul Islam and the VALCOS team for their advices, comments on every step of present work and data management support. The usual disclaimers apply.

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Correspondence to Francesco Sarracino.

Additional information

This research is part of the VALCOS project supported by the Luxembourg ‘Fonds National de la Recherche’ (contract FNR/VIVRE/06/01/09) and by core funding for CEPS/INSTEAD from the Ministry of Higher Education and Research of Luxembourg. Francesco Sarracino is supported by an AFR grant (contract PDR-09-075) by the National Research Fund, Luxembourg cofunded under the Marie Curie Actions of the European Commission (FP7-COFUND).

Appendix: Is American social capital declining?

Appendix: Is American social capital declining?

EVS-WVS data-set allows to check whether claims about declining SC in US are confirmed.

Using Eqs. 3 and 4, I estimated trends of several proxies of SC in US. The investigated period is limited by data availability and ranges between 1982 and 2006. Regression coefficients are reported in the second column of Table 4. Coefficients are interpreted as average yearly variations of given proxy for the available years. Therefore, they are labelled “time trends”. The third columns of Table 4 reports standard errors.

Table 4 US Social capital trends between 1982 and 2006 using EVS-WVS data

Data suggests that US confidence in institutions declined steadily and significantly. In line with previous results from GSS studies, the only institution whose confidence has been increasing is the army (Bartolini et al. 2008).

Moreover, data document declining trends of trust in others. On the contrary, considered proxies of membership in groups and associations report positive coefficients. In other words, between 1982 and 2006 US participation in groups and associations has been increasing. This result is at odd with evidence from previous studies. Nonetheless, two aspects have to be taken in to account: the first one is that coefficients are very small, thus suggesting that the growth rate has been very modest and close to zero; the second one is that the US GSS data-set is a better tool to analyze US trends. In fact, the GSS is collected every year and for a longer time span. Therefore, the difference we are observing using EVS-WVS might be due to a different time period or to a smaller number of available waves. In the considered period, US data have been collected in five waves (1982, 1990, 1995, 1999 and 2006).

Concluding, present data support the US decline in SC although not as dramatically as found in earlier literature. Discrepancies arising for the proxies of membership in groups or associations must be considered carefully in the light of the limitations of EVS-WVS data-set. Nonetheless, magnitude of the coefficients suggest a modest increase over time.

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Relational social capital and subjective well-being trends for Canada from 1980 to 2005

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Non relational social capital trends for Canada from 1980 to 2005

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Relational social capital and subjective well-being trends for Australia from 1980 to 2005

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Non relational social capital trends for Australia from 1980 to 2005

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Relational social capital and subjective well-being trends for Great Britain from 1980 to 2005

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Non relational social capital trends for Great Britain from 1980 to 2005

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Relational social capital and subjective well-being trends for Denmark from 1980 to 2005

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Non relational social capital trends for Denmark from 1980 to 2005

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Relational social capital and subjective well-being trends for Norway from 1980 to 2005

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Non relational social capital trends for Norway from 1980 to 2005

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Relational social capital and subjective well-being trends for Sweden from 1980 to 2005

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Non relational social capital trends for Sweden from 1980 to 2005

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Relational social capital and subjective well-being trends for Finland from 1980 to 2005

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Non relational social capital trends for Finland from 1980 to 2005

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Relational social capital and subjective well-being trends for Belgium from 1980 to 2005

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Non relational social capital trends for Belgium from 1980 to 2005

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Relational social capital and subjective well-being trends for France from 1980 to 2005

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Non relational social capital trends for France from 1980 to 2005

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Relational social capital and subjective well-being trends for Japan from 1980 to 2005

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Non relational social capital trends for Japan from 1980 to 2005

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Relational social capital and subjective well-being trends for Italy from 1980 to 2005

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Non relational social capital trends for Italy from 1980 to 2005

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Relational social capital and subjective well-being trends for Netherlands from 1980 to 2005

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Non relational social capital trends for Netherlands from 1980 to 2005

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Relational social capital and subjective well-being trends for Ireland from 1980 to 2005

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Non relational social capital trends for Ireland from 1980 to 2005

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Relational social capital and subjective well-being trends for Spain from 1980 to 2005

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Non relational social capital trends for Spain from 1980 to 2005

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Relational social capital and subjective well-being trends for Germany from 1980 to 2005

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Non relational social capital trends for Germany from 1980 to 2005

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Sarracino, F. Money, Sociability and Happiness: Are Developed Countries Doomed to Social Erosion and Unhappiness? . Soc Indic Res 109, 135–188 (2012). https://doi.org/10.1007/s11205-011-9898-2

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Keywords

  • Subjective well-being
  • Social capital
  • Relational goods
  • Easterlin paradox
  • Time-series
  • Economic development
  • EVS
  • WVS