Happy for How Long?

38th Annual Meeting of the EEA, Boston
Social capital, GDP
and well-being over
time

Introduction

Happy for How Long? How Social Capital and The (unanswered)
question

GDP relate to Happiness over Time Results
The long run
From the long to the
medium-term
From the medium to
the short-term
Conclusion

Stefano Bartolini Francesco Sarracino
University of Siena CEPS/INSTEAD
and
CEPS/INSTEAD Population et Emploi

9th of March 2012

Stefano Bartolini, Francesco Sarracino Social capital, GDP and well-being over time 9th of March 2012 1 / 36

GDP and SWB over time
Social capital, GDP
and well-being over
time

Much of the SWB literature focuses on the question: Introduction

The (unanswered)
“How far is general income growth (beyond question

Results

income levels already achieved) likely to The long run
medium-term
increase average happiness?” (Layard et al., 2009, p. 1) From the medium to
the short-term
Conclusion
This is a question about time series relationships


GDP and SWB over time
Social capital, GDP
and well-being over
time

Much of the SWB literature focuses on the question: Introduction

The (unanswered)
“How far is general income growth (beyond question

Results

income levels already achieved) likely to The long run
medium-term
increase average happiness?” (Layard et al., 2009, p. 1) From the medium to
the short-term
Conclusion
This is a question about time series relationships

The answer:
SWB does not increase as income grows
(the Easterlin Paradox)


Main explanations
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results

Aspirations: after a while people adapt to their living standard The long run
medium-term
by raising their aspirations. SWB is predicted by past income; From the medium to
the short-term
Conclusion
Social comparisons: people compare themselves with others
and set their aspirations accordingly. SWB is predicted by
reference income.


Is GDP on the wane?
Social capital, GDP
and well-being over
time

Introduction
All-in-all:
The (unanswered)
question

Easterlin paradox + Results
The long run
plausible explanatory theories + From the long to the
medium-term
robust empirical evidence = From the medium to
the short-term
Conclusion

GDP is on the wane

we should dedicate to “something else” the attention and the
policy eﬀorts that contemporary societies pour into economic
growth (i.e. social capital, social tolerance, political freedom,
religiosity and health).


Three new developments
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
1 SWB varies in the long run and it doesn’t vary in the same question

way in every country (Stevenson and Wolfers, 2008; Inglehart, 2009; Results
The long run
Sarracino, 2011.) From the long to the
medium-term
From the medium to
the short-term
Conclusion


Social capital, GDP
and well-being over
time

Introduction

The (unanswered)

The long run
medium-term
2 average SWB is positively correlated with average income over From the medium to
the short-term
time (Stevenson and Wolfers, 2008; and Sacks et al., 2010.) Conclusion


Social capital, GDP
and well-being over
time

Introduction

The (unanswered)

The long run
medium-term
2 average SWB is positively correlated with average income over From the medium to
the short-term
time (Stevenson and Wolfers, 2008; and Sacks et al., 2010.) Conclusion

3 before focusing on “something else” we need to be sure that
this something else is not subject to adaptation and social
comparisons as GDP (unemployment, marriage, divorce,
widowhood, the birth of the ﬁrst child, health, social capital
and religion).


or is GDP not on the wane?
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

trends of SWB show international variability + Results
The long run
GDP is a good predictor of this variability + From the long to the
medium-term
the alternatives to GDP have the same limitations = From the medium to
the short-term
Conclusion

GDP is not on the wane

we should not downsize the role of GDP as an indicator of
well-being.


the Easterlin paradox: a matter of time
Social capital, GDP
and well-being over
time

Introduction
The paradox exists! The (unanswered)
question
Stevenson et al. fail to distinguish between the short and Results
long-term relationship between SWB and GDP; The long run
medium-term
in the short term SWB and GDP are related, but unrelated in From the medium to
the short-term
the long run. Conclusion
Easterlin et al. (2008, 2010)


the Easterlin paradox: a matter of time
Social capital, GDP
and well-being over
time

Introduction
The paradox exists! The (unanswered)
question
Stevenson et al. fail to distinguish between the short and Results
long-term relationship between SWB and GDP; The long run
medium-term
in the short term SWB and GDP are related, but unrelated in From the medium to
the short-term
the long run. Conclusion
Easterlin et al. (2008, 2010)

It’s a matter of time spans!
The contrast is not methodological: they use the same bivariate
methodology with the variations over time of SWB regressed on
GDP variations.


The (unanswered) question
Social capital, GDP
and well-being over
time
If not GDP, what does correlate with the variations of SWB over
time? Introduction

The (unanswered)
question

Results
The long run
medium-term
From the medium to
the short-term
Conclusion


Social capital, GDP
and well-being over
time
time? Introduction

The (unanswered)
question
The aim of our work is to analyze the potential of the variations of
Results
SC to predict the variations of well-being and compare it with the The long run
predictive potential of the variations of GDP. From the long to the
medium-term
From the medium to
the short-term
Conclusion


Social capital, GDP
and well-being over
time
time? Introduction

The (unanswered)
question
Results
medium-term
From the medium to
the short-term
Since it’s a matter of time
Conclusion


Social capital, GDP
and well-being over
time
time? Introduction

The (unanswered)
question
Results
medium-term
From the medium to
the short-term
Since it’s a matter of time
Conclusion

We compare this relationship in the:
Long-term Medium-term Short-term


the long-term
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results
The long run
medium-term
From the medium to
the short-term
Conclusion


the Easterlin paradox: an example
Social capital, GDP
and well-being over
1

time
"argentina"
Y = −0.51 + −0.06 X
N = 27 Introduction
"south korea" The (unanswered)
"spain" question
"brazil"
Results
0

"mexico" "france"
"italy" "japan"
"norway"
"netherlands" The long run
"denmark"
"belgium" From the long to the
"ireland" medium-term
"iceland" britain"
"great
"finland" From the medium to
"canada" the short-term
"malta"
"germany""united states" Conclusion
"austria"
"portugal"
−1

"sweden"

"australia" "china"
"chile"

"south africa"
−2

−2 0 2 4
annual change of log GDP

annual change of life satisfaction Linear prediction

Figure: Life satisfaction and GDP over at least 15 years.


Life satisfaction and group membership over at
least 15 years
Social capital, GDP
and well-being over
1

time
"argentina"
Y = −0.63 + 0.30 X***
N = 27 Introduction
"south korea" The (unanswered)
"spain" question
"brazil"
0

"france" "mexico" Results
"norway" "japan"
"italy"
"netherlands" The long run
"denmark"
"belgium"
"ireland" From the long to the
medium-term
"iceland"
"great britain" "finland"
"canada" From the medium to
"malta" the short-term
"germany" "united states"
"austria"
"portugal"
−1

"sweden" Conclusion

"china" "australia"
"chile"

"south africa"
−2

−1 0 1 2 3
annual change of membership
in at least 1 group or association

annual change of life satisfaction Linear prediction

Figure: Correlations among long-term trends of life satisfaction and of
group membership.

Happiness and group membership over at least 15
years
Social capital, GDP
and well-being over
2

time
"brazil"
Y = −0.69 + 0.62 X*** Introduction
N = 27
The (unanswered)
"mexico"
1

question

"portugal" Results
"argentina" The long run
"canada"
"japan" From the long to the
"malta" medium-term
0

"south korea" From the medium to
"france"
"norway""denmark"
"netherlands" the short-term
"chile"
"italy"
"spain"
"united states"
"iceland" "belgium" "south africa" Conclusion
"great britain"
"ireland"
−1

"sweden" "finland"
"australia"
"austria"

"china" "germany"
−2

−1 0 1 2 3
annual change of membership
in at least 1 group or association

annual change of happiness Linear prediction

Figure: Correlations among long-term trends of happiness and of group
membership.

Tri-variate regressions for long-term trends
Social capital, GDP
and well-being over
time

Table: Trivariate regressions of long-term trends of proxies of subjective Introduction
well-being over trends of SC and GDP (standardized variables). The (unanswered)
question

Results
happiness life satisfaction The long run
membership in group or association 0.608 ∗∗
0.330 ∗∗ medium-term
From the medium to
(2.19) (3.58) the short-term
Conclusion
log GDP −0.0100 0.0447
(−0.07) (0.35)
Constant −0.690∗∗∗ −0.634∗∗∗
(−3.88) (−6.87)
Observations 27 27
Adjusted R 2 0.302 0.087
t statistics in parentheses
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.001


From the long to the medium-term
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results
The long run
−→ From the long to the
medium-term
From the medium to
the short-term
Conclusion

What does happen if we shorten the time span? Will the
results about GDP and social capital change?


Happiness and GDP over the medium-term
Social capital, GDP
2 and well-being over
time
PL
annual change in trend of happiness

Y = −0.00 + 0.307 X* EE
SK Introduction
N = 24
ES IL
SI The (unanswered)
question
(standardized values)

GR
DKNO
DE CZ
0

CH SE FI Results
BE GBNL UA
FR AT The long run
PT IE HU From the long to the
medium-term
From the medium to
the short-term
−2

Conclusion

TR
−4

−1 0 1 2 3
annual change in trend of log GDP

trend of happiness Linear prediction

Figure: Correlations among medium-term trends of happiness and of the
log of GDP per capita.

Happiness and trust over the medium-term
Social capital, GDP
2 and well-being over
time
PL
annual change in trend of happiness

Y = −0.00 + 0.810 X*** SK
EE
Introduction
N = 24
ES IL
SI The (unanswered)
question

NO GR CZ
DK DE
0

FI CH
SE
NL GB Results
UA BE
FR AT The long run
PTIE HU From the long to the
medium-term
From the medium to
the short-term
−2

Conclusion

TR
−4

−3 −2 −1 0 1
annual change in index of social trust

trend of happiness Linear prediction

Figure: Correlations among medium-term trends of happiness and of the
index of trust.

Tri-variate regressions for medium-term trends
Social capital, GDP
and well-being over
time
Table: Trivariate regressions of trends of subjective well-being over
changes of the index of social trust and trends of GDP (standardized Introduction

variables). The (unanswered)
question

Results
(1) (2) The long run
happiness life satisfaction medium-term
From the medium to
the short-term
index of social trust 0.797∗∗∗ 0.731∗∗∗
Conclusion
(4.03) (8.06)
trend of log GDP 0.268∗∗ 0.323∗
(2.41) (2.02)
Constant −7.96e − 10 5.56e − 10
(−0.00) (0.00)
Observations 24 24
Adjusted R 2 0.702 0.630
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.001


From the medium to the short-term
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results
The long run
−→ From the long to the
medium-term
From the medium to
the short-term
Conclusion

What does happen if we further shorten the period? Will
the results about GDP and social capital change?


Happiness and GDP over the short-term
Social capital, GDP
and well-being over
EE time
Y = −0.00 + 0.591 X***
3
annual change in changes in happiness

N = 58
Introduction

The (unanswered)
2

ES PL question

SK
SI GR
PL Results
PL
DE UA The long run
1

SK medium-term
GB NL CZ HU
SI
DK CH NO NO CH SE
IE
FI From the medium to
ESPT ESNO DKFI
0

GB BE the short-term
DK
BE DE SI
FR FR
PT NL
AT SEFI Conclusion
SE
EE
AT BE
DENL CH
−1

FR HU
IE GB
IE
UA
−2

HU
PT

−2 0 2 4
annual change in changes in log GDP (2yrs)

changes in happiness Linear prediction

Figure: Correlations among short-term trends of happiness and of the
log of GDP per capita.

Happiness and trust over the short-term
Social capital, GDP
and well-being over
EE time
Y = −0.00 + 0.308 X**
3
annual change in changes in happiness

N = 58
Introduction

The (unanswered)
2

PL ES question

SK
SI GR PL Results
PL
UA DE The long run
1

SK medium-term
NO HU DK CZ SI NLCHGB
CH NO SE IE From the medium to
FI GB ES NOFI DK
0

PTES the short-term
DK BE DE BE SI
SE NL FR
AT FR SE PTFI Conclusion
AT BE
EE
DE NL
CH
−1

FR HU
GB IE
IE

HU UA
−2

PT

−3 −2 −1 0 1 2
annual change in index of social trust

changes in happiness Linear prediction

Figure: Correlations among short-term trends of happiness and of the
index of trust.

Tri-variate regressions for short-term trends
Social capital, GDP
and well-being over
time
Table: Trivariate regressions of trends of subjective well-being over
Introduction
changes of the index of social trust and trends of GDP (standardized
The (unanswered)
variables). question

Results
The long run
happiness life satisfaction From the long to the
medium-term
index of social trust 0.255∗∗ 0.214 From the medium to
the short-term
(2.18) (1.58) Conclusion

changes in log GDP (2yrs) 0.568∗∗∗ 0.525∗∗∗
(4.69) (4.73)
Constant −3.27e − 09 1.76e − 09
(−0.00) (0.00)
Observations 58 58
Adjusted R 2 0.393 0.318
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.001


Medium and short run compared
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results
happiness life satisfaction happiness life satisfaction The long run
index of social trust 2.713∗∗∗ 2.681∗∗∗ index of social trust 0.569∗∗ 0.563 From the long to the
medium-term
(4.03) (8.06) (2.18) (1.58)
From the medium to
log of GDP 1.209∗∗ 1.574∗ log of GDP 2.092∗∗∗ 2.286∗∗∗ the short-term
(2.41) (2.02) (4.69) (4.73) Conclusion
Constant −0.121∗∗∗ −0.111∗∗ Constant −0.108∗∗∗ −0.094∗∗∗
(−3.98) (−2.55) (−4.45) (−3.51)
Observations 24 24 Observations 58 58
Adjusted R 2 0.702 0.630 Adjusted R 2 0.393 0.318
t statistics in parentheses t statistics in parentheses
∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.001 ∗ p < 0.10, ∗∗ p < 0.05, ∗∗∗ p < 0.001

Table: Medium-term Table: Short-term


Summarizing... GDP
Social capital, GDP
and well-being over
time

Introduction

GDP: The (unanswered)
question

does not matter for SWB in the long run; Results
The long run
medium-term
it begins to be important in the medium-term; From the medium to
the short-term
Conclusion

its importance increases as the period shortens:
short run coefficients are greater and more significant than
medium run coefficients.


Summarizing... GDP
Social capital, GDP
and well-being over
time

Introduction

GDP: The (unanswered)
question

does not matter for SWB in the long run; Results
The long run
medium-term
it begins to be important in the medium-term; From the medium to
the short-term
Conclusion

its importance increases as the period shortens:
short run coefficients are greater and more significant than
medium run coefficients.

Easterlin seems to be right: the time span matters!


Summarizing... social capital
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question
Social capital: Results
The long run
is strongly correlated to SWB in the long and the From the long to the
medium-term
medium-term; From the medium to
the short-term
Conclusion

this correlation tends to evaporate in the short run:
the coeﬃcients are much smaller and less signiﬁcant than the
medium-term ones.


Possible policy implications
Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question
at least for rich countries: Results
The long run
do we want a quick eﬀect on happiness which tends to get lost From the long to the
medium-term
as time goes by? From the medium to
the short-term
We should persist being obsessed by economic growth; Conclusion

do we want an eﬀect on happiness which is slow and durable?
Policies should target social capital.


Social capital, GDP
and well-being over
time

Introduction

The (unanswered)
question

Results
The long run
medium-term
From the medium to
the short-term
Thanks for your kind attention! Conclusion


Data
Social capital, GDP
and well-being over
time

The countries included in our sample depends on the availability of
internationally comparable time series on social capital variables.

WVS/EVS data
collected in 6 waves between 1981 and 2009
all available countries with at least 15 years and 3
obs. in time
no transition economies
27 countries
169000 obs


list of associations mentioned in the WVS/EVS
Social capital, GDP
and well-being over
time

Social Capital:
Long-term: share of the population participating in at least one
group or association.
Respondents were asked to mention whether they belonged or were
performing unpaid voluntary work for any of the following groups
or associations:
social welfare service for elderly; animal rights;
religious organization; professional associations;
education, arts, music or cultural activities; youth work;
labour unions; sports or recreation;
political parties; women’s group;
local political actions; peace movement;
human rights; organization concerned with health;
conservation, the environment, ecology; consumer groups;
other groups.


Data
Social capital, GDP
and well-being over
time

ESS data
collected in 4 waves between 2002 and 2008
every 2 years
all available countries
24 countries and 58 intervals
162000 obs


Our variables
Social capital, GDP
and well-being over
time
Social Capital:
Medium and Short-term: index of social trust using the following 3
items:

Most people can be trusted
“Would you say that most people can be trusted?”

Most people are helpful
“Would you say that most of the time people try to be helpful?”

Most people are unfair
“Do you think that most people would try to take advantage of you if
they got the chance, or would they try to be fair?”

Given the similarities among these 3 questions, we group them to
proxy one latent concept.


Three measures of well-being
Social capital, GDP
and well-being over
time

Well-being can be proxied by:
happiness
life satisfaction
objective data: mental illnesses, suicides, alcoholism, drugs
abuse, psychopharmaca, etc.

Happiness and life satisfaction are called subjective well-being
(SWB)
Subjective well-being (SWB): individual’s evaluation of its
own life regarded as a whole (Helliwell, 2008)


Observing SWB (WVS/EVS)
Social capital, GDP
and well-being over
time
Happiness:
“Taking all things together, would you say you are:”
1 “very happy”
2 “quite happy”
3 “not very happy”
4 “not at all happy”


Observing SWB (WVS/EVS)
Social capital, GDP
and well-being over
time
Happiness:
“Taking all things together, would you say you are:”
1 “very happy”
2 “quite happy”
3 “not very happy”
4 “not at all happy”

Life satisfaction:
“All things considered, how satisfied are you with your life as a
whole these days?” Answers range on a 1 to 10 points scale:

1 “dissatisfied”
.
.
.
10 “satisfied”


Reliability of SWB
Social capital, GDP
and well-being over
time

Reliability

data on SWB are:
consistent with more objective measures of well-being (heart
rate, blood pressure, Duchenne smile, brain scanners, suicide)
(Blanchﬂower and Oswald, 2008a; Van Reekum et al., 2007);
highly correlated with other proxies of SWB (Schwarz and
Strack, 1999; Wanous and Hudy, 2001; Schimmack et al.,
2009);
consistent with evaluations about the respondent’s happiness
provided by friends, relatives or clinical experts (Schneider and
Schimmack, 2009; Kahneman and Krueger, 2006; Layard,
2005).


China 1990 - 2007, an ongoing work...
Social capital, GDP
and well-being over
time
SWB in China

2000
7.4

average GDP p.c. (2000 US $)
7.2
average life satisfaction

1500
7

1000
6.8 6.6

500
1990 1995 2000 2005 2010
year survey

average life satisfaction
average GDP p.c. (2000 US $)


Evidence from within country studies: China
Social capital, GDP
and well-being over
time
Explained part
.1
.05
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−.05
−.1
−.15

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parameter estimate 90% conf. interval


Happy for How Long?

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