Kroll, Christian

Social Capital and the Happiness of Nations. The Importance of Trust and Networks for Life Satisfaction in a Cross-National Perspective. Book published in 2008 by Peter Lang Publishing (Bruxelles/Frankfurt a.M./New York/Oxford).

Abstract Background: The concepts of social capital and subjective well-being (SWB) have gained prominence in the social sciences over the past two decades. Especially given the decreasing explanatory power of GDP for the happiness of richer nations, factors like social capital need to be studied in this respect. Aim: This book reviews the existing evidence on cross-national differences in SWB. Empirical investigations test in how far social capital is associated with SWB at the crossnational level. Additionally, rich versus middle-income and poor countries are examined separately given the decreasing marginal utility of income for SWB at the cross-national level. Method: Aggregate social capital and life satisfaction scores for 72 countries from the World Values Survey are examined in bivariate and multivariate regression analyses, controlling for GDP per capita, unemployment rate, inflation and inequality. A distinction is made between structural (i.e. membership), cognitive (i.e. generalised trust), and linking (i.e. trust in institutions) social capital. Results: As predicted, structural and cognitive social capital are positively associated with SWB at the cross-national level. There is no significant association, however, for linking social capital. The relationship is stronger in the sub-sample of rich countries, while economic factors still have a strong influence on SWB in poorer nations. The compensating income differential (GDP per capita) that is necessary to match the potential rise in life satisfaction from an increase in average membership from 1 to 3 associations in a rich country equals 24,167 US-$. In a similar way, the life satisfaction bonus from an increase of 20 % in generalised trust in a country from the same sample would also require a GDP per capita growth of 15,652 US-$. Conclusions: Social capital plays a particularly prominent role for the happiness of rich nations where basic economic needs are met. Future policies here should more strongly aim at the improvement of social capital instead of only economic growth. But also in poor countries social capital can be expected to become increasingly important as countries develop economically.

Keywords: social capital, subjective well-being (SWB), cross-national analysis, life satisfaction, World Values Survey Contact the author by e-mail: c.kroll [at] lse.ac.uk Website: http://personal.lse.ac.uk/Kroll