Social capital, economic growth and well-being

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Slides of the first part of the course of Social Economics, University of Siena, May 2011

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Social capital, economic growth and well-being

  1. 1. Faculty of Economics - University of Siena Social capital, economic growth & well-being Introduction Subjective well-being the evolution over Social capital, economic growth and well-being time of SWB International differences in well-being the Easterlin paradox Francesco Sarracino Social capital and Subjective well-being Population et emploi Social capital predicts CEPS/Instead, Differdange happiness Luxembourg SC as a predictor of SWB trends at francesco.sarracino@ceps.lu micro-level US work hours 03 May 2011 NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 1 / 97
  2. 2. Introduction Social capital, economic growth & well-being Introduction Subjective well-beingEconomists have always been interested in people’s well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
  3. 3. Introduction Social capital, economic growth & well-being Introduction Subjective well-beingEconomists have always been interested in people’s well-being the evolution over time of SWB International differences inbut, how do we measure it? well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
  4. 4. Introduction Social capital, economic growth & well-being Introduction Subjective well-beingEconomists have always been interested in people’s well-being the evolution over time of SWB International differences inbut, how do we measure it? well-being the Easterlin paradox GDP (under the belief that a higher income may not increase Social capital and individual’s well-being, but it will not reduce it for sure) Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
  5. 5. Introduction Social capital, economic growth & well-being Introduction Subjective well-beingEconomists have always been interested in people’s well-being the evolution over time of SWB International differences inbut, how do we measure it? well-being the Easterlin paradox GDP (under the belief that a higher income may not increase Social capital and individual’s well-being, but it will not reduce it for sure) Subjective well-being Social capital predicts happinesspromoting economic development became the main tool to raise SC as a predictor of SWB trends atwell-being micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
  6. 6. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  7. 7. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  8. 8. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International unsafety of the social environment; differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  9. 9. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International unsafety of the social environment; differences in well-being cities are polluted; the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  10. 10. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International unsafety of the social environment; differences in well-being cities are polluted; the Easterlin paradox trust in others and honesty are declining; Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  11. 11. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International unsafety of the social environment; differences in well-being cities are polluted; the Easterlin paradox trust in others and honesty are declining; Social capital and Subjective well-being it is more and more difficult to find a place to enjoy social Social capital predicts happiness relationship (unless mediated by commercial activities) (Diener SC as a predictor of and Seligman, 2004; Frey and Stutzer, 2002b). SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  12. 12. Introduction Social capital, economic growth & well-beingbut there are many aspects that strongly concern people’s Introductionwell-being and that are only partially accounted for by GDP: Subjective well-being the evolution over people declare themselves isolated and lonely; time of SWB International unsafety of the social environment; differences in well-being cities are polluted; the Easterlin paradox trust in others and honesty are declining; Social capital and Subjective well-being it is more and more difficult to find a place to enjoy social Social capital predicts happiness relationship (unless mediated by commercial activities) (Diener SC as a predictor of and Seligman, 2004; Frey and Stutzer, 2002b). SWB trends at micro-level US work hoursIs development missing to provide promised benefits? NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
  13. 13. Introduction Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWBSuccess in improving or not people’s well-being depends on the International differences in“quality” of development (Helliwell, 2008). well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 4 / 97
  14. 14. Introduction Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWBSuccess in improving or not people’s well-being depends on the International differences in“quality” of development (Helliwell, 2008). well-being the Easterlin paradox Social capital andPresent work sets in this debate supporting the idea that the social Subjective well-beingquality of economic growth does matter a great deal for Social capital predicts happinesswell-being. SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 4 / 97
  15. 15. Three measures of well-being Social capital, economic growth & well-being IntroductionWell-being can be proxied by: Subjective well-being happiness the evolution over time of SWB life satisfaction International differences in objective data: mental illnesses, suicides, alcoholism, drugs well-being abuse, psychopharmaca, etc. the Easterlin paradox Social capital and Subjective well-being Social capital predicts happinessHappiness and life satisfaction are called subjective well-being SC as a predictor of SWB trends at(SWB) micro-level US work hours Subjective well-being (SWB): individual’s evaluation of its NEG model own life regarded as a whole (Helliwell, 2008) An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 5 / 97
  16. 16. Observing SWB (World Values Survey) Social capital, economic growth & well-beingHappiness: Introduction“Taking all things together, would you say you are:” Subjective well-being 1 “very happy” the evolution over time of SWB 2 “quite happy” International differences in 3 “not very happy” well-being the Easterlin paradox 4 “not at all happy” Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 6 / 97
  17. 17. Observing SWB (World Values Survey) Social capital, economic growth & well-beingHappiness: Introduction“Taking all things together, would you say you are:” Subjective well-being 1 “very happy” the evolution over time of SWB 2 “quite happy” International differences in 3 “not very happy” well-being the Easterlin paradox 4 “not at all happy” Social capital and Subjective well-being Social capital predictsLife satisfaction: happiness“All things considered, how satisfied are you with your life as a SC as a predictor of SWB trends atwhole these days?” Answers range on a 1 to 10 points scale: micro-level US work hours 1 “dissatisfied” NEG model . . An example: guard . labor testing NEG model 10 “satisfied” Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 6 / 97
  18. 18. Reliability of SWB Social capital, economic growth & well-being Reliability Introduction Subjective well-being the evolution overdata on SWB are: time of SWB International consistent with more objective measures of well-being (heart differences in well-being rate, blood pressure, Duchenne smile, brain scanners, suicide) the Easterlin paradox (Blanchflower and Oswald, 2008a; Van Reekum et al., 2007); Social capital and Subjective well-being highly correlated with other proxies of SWB (Schwarz and Social capital predicts Strack, 1999; Wanous and Hudy, 2001; Schimmack et al., happiness 2009); SC as a predictor of SWB trends at micro-level consistent with evaluations about the respondent’s happiness US work hours provided by friends, relatives or clinical experts (Schneider and NEG model Schimmack, 2009; Kahneman and Krueger, 2006; Layard, An example: guard 2005). labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 7 / 97
  19. 19. The evolution over time of SWB Social capital, economic growth & well-being Introduction Subjective well-being the evolution overSWB data are easy and cheap to collect and proved to unveil time of SWBinteresting and consistent patterns about modern societies International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 8 / 97
  20. 20. The evolution over time of SWB Social capital, economic growth & well-being Introduction Subjective well-being the evolution overSWB data are easy and cheap to collect and proved to unveil time of SWBinteresting and consistent patterns about modern societies International differences in well-being the Easterlin paradoxHow far is general income growth likely to increase average Social capital and Subjective well-beinghappiness? Social capital predicts happiness SC as a predictor of SWB trends at micro-levelthis is a question about time series relationships US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 8 / 97
  21. 21. e della percentuale di individui che si dichiarano molto felici, nel periodothe Easterlin paradox 1946-1996. Fig. 1 Reddito e felicità medi in USA, 1946-1996 Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor Figure: Income and happiness in US 1946 - 1996. Source: Layard, 2003 testing NEG model Il grafico mostra che, a fronte di una forte tendenza crescente del Buying alone reddito medio, la percentuale di individui molto felici presenta una tendenza alla F. Sarracino diminuzione. La domanda che grafici come questo & well-being è: perchè in May 2011 Social capital, economic growth suscitano 03 9 / 97
  22. 22. Health Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 10 / 97
  23. 23. Information technologies Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 11 / 97
  24. 24. Travels Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 12 / 97
  25. 25. But... Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 13 / 97
  26. 26. Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard laboreconomic growth seems to be associated to undesirable side-effects testing NEG model Buying aloneon well-being. F. Sarracino Social capital, economic growth & well-being 03 May 2011 14 / 97
  27. 27. Well-being trends across countries Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences inThere are international differences in long-term trends of SWB well-being the Easterlin paradoxfor instance: SWB slightly increased in several EU countries and Social capital anddecreased in the US in the last 30 years. Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 15 / 97
  28. 28. Declining trends in US happiness US declining happiness Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard Source: Stevenson and Wolfers 2008, GSS data labor testing NEG model Figure: Source: Stevenson and Wolfers, 2008 (GSS data). Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 16 / 97
  29. 29. Declining trends in US happiness Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Figure: Source: Stevenson and Wolfers, 2008 (GSS data). Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 17 / 97
  30. 30. Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWBWhat does predict international differences in the trends of International differences inwell-being? well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 18 / 97
  31. 31. Social capital, economic growth & well-being Introduction Subjective well-being the evolution over time of SWBWhat does predict international differences in the trends of International differences inwell-being? well-being the Easterlin paradox Social capital and GDP trends do not! Subjective well-being Social capital predicts happinesspeople do not become happier when a country’s income increases. SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 18 / 97
  32. 32. The Easterlin paradox Social capital, economic growth & well-being Introduction Subjective well-beingThe trends of happiness and income are unrelated in the long run the evolution over time of SWBin: International differences in developed countries; well-being developing countries; the Easterlin paradox Social capital and all countries together. Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends atEasterlin and Angelescu (2009) micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 19 / 97
  33. 33. The Easterlin paradox Social capital, economic growth & well-being Easterlin and Angelescu (2009) Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Figure: Source: Easterlin and Angelescu, 2009 Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
  34. 34. The Easterlin paradox Social capital, economic growth & Easterlin and Angelescu (2009) g ( ) well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Figure: Source: Easterlin and Angelescu, 2009 Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
  35. 35. The Easterlin paradox Social capital, economic growth & Easterlin and Angelescu (2009) well-being Introduction Subjective well-being the evolution over time of SWB International differences in well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone Figure: Source: Easterlin and Angelescu, 2009 F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
  36. 36. Conventional explanations Social capital, economic growth & well-being Aspirations: after a while people adapt to their living standard Introduction by raising their aspirations. SWB is predicted by past income; Subjective well-being the evolution over Social comparisons: people compare themselves with others time of SWB and set their aspirations accordingly. SWB is predicted by International differences in reference income. well-being the Easterlin paradox Social capital and Subjective well-being Social capital predicts happiness SC as a predictor of SWB trends at micro-level US work hours NEG model An example: guard labor testing NEG model Buying alone F. Sarracino Social capital, economic growth & well-being 03 May 2011 21 / 97

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