Viola von Berlepsch (p), Andrés Rodríguez-Pose (p)

Hugh Shiplett

This paper explores whether the effect of social capital on personal income and individual well-being is dependent on the individual’s initial position on the income as well as the happiness distribution. It also
considers the role of different well-being levels in the relationship between social capital and income. The results point to an income enhancing effect of social capital which is highly dependent on the initial happiness level. Especially for individuals in the low well-being groups, social capital seems to barely display any income increasing effect at all. Most of the social capital indicators fail to reach significance. First positive and significant linkages of social capital to income begin at an level of average happiness. The happier a person is, the more she seems to be able to gain from additional social capital in monetary terms. When displaying an average or below average well-being level, social capital for example defined as informal social interaction, however, fails to show any significant impact at all. Enlarging social networks seems therefore to only lead to significant income related changes for above average happy people.
Shifting our focus on how the impact of social capital on happiness differs conditional on initial income levels, it appears as if income would not matter for social capital to be positively related to individual well-being. All three social capital dimensions (with the exception of formal associational activity) show highly significant and mostly positive results with respect to happiness for all five income levels. Hence, regardless of the personal income level, additional social capital – regardless of the measure chosen – always serves as a positively influencing factor for individual life satisfaction.
Lastly, we evaluate the impact of social capital on happiness conditional on different happiness quantiles. Our findings indicate that the positive association between social capital and happiness decreases for most social capital indicators when moving up the happiness distribution. Additional social capital in dimensions such as trust in mankind, trust in institutions, a firm belief in consistent norms and sanctions or strong social networks are particularly beneficial for those individuals with low levels of well-being. Within the highest happiness levels, social capital – no matter which feature – loses its significance altogether.

Camilla Lenzi, Giovanni Perucca (p)

Viola Von Berlepsch

See extended abstract

Hugh Shiplett (p), John Helliwell, Christopher Barrington-Leigh

Giovanni Perucca

See extended abstract