The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis

Abstract

We investigate whether the correlation of income and social capital with well-being changes in times of economic crisis. Both subjective well-being and social capital may decline during a crisis, and their correlation can change: if social capital becomes a scarce good, it may correlate more with well-being. Alternatively, people may find that in times of crisis other things matter more for well-being and its association with social capital should decrease. To account for these possibilities, we apply a Blinder–Oaxaca decomposition and regression analysis with interaction effects to European Social Survey data from 2006 to 2012. Our findings indicate that, after accounting for the decline of social capital, its correlation with well-being does not change over time. On the contrary, income becomes only temporarily more important for well-being. We conclude that in times of crisis, when material concerns are urgent, policy makers targeting recovery should account for the policy impacts on social capital.

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Fig. 1

Note: We do not pool figures for the two groups of countries because previous literature documented that Western and Eastern European countries differ in both levels and trends of well-being (Skoglund 2017; Bartolini et al. 2017; Easterlin 2009). Data: European Social Survey

Fig. 2
Fig. 3

Note: Regressions use clustered standard errors and sample weights. Data: European Social Survey

Fig. 4

Note: Regressions use clustered standard errors and sample weights. Data: European Social Survey

Fig. 5

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table D.1 in the Online Appendix. Data: European Social Survey

Fig. 6

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table D.3 in the Online Appendix. Data: European Social Survey

Fig. 7

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table E.1 in the Online Appendix. Data: European Social Survey

Fig. 8

Note: The height of the bars indicate the size of the life satisfaction change for each explanatory variable. Estimates use clustered standard errors and sample weights. The detailed set of results is available in Table E.3 in the Online Appendix. Data: European Social Survey

Notes

  1. 1.

    Before creating the index, we performed a factor analysis to check that the factor loadings are comparable. More details are available in table A.1 in the Online Appendix.

  2. 2.

    For more details see table A.2 in the Online Appendix.

  3. 3.

    For more details see table A.3 in the Online Appendix.

  4. 4.

    The last four columns of table 7 report the coefficients from equation 1 estimated using OLS (columns 6 and 7) and ordered probit (columns 8 and 9) models. The signs and significance of coefficients does not change across models.

  5. 5.

    Marginal effects are computed after the results reported in table B.1 in the Online Appendix, where the full model of table 7 is applied to the Western and Eastern European samples respectively.

  6. 6.

    For detailed results, refer to table D.1 and D.3 in the Online Appendix.

  7. 7.

    Detailed results are available in table E.1 and E.3 in the Online Appendix.

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Acknowledgements

The authors are thankful to Stefano Bartolini, Ennio Bilancini, Kelsey O’Connor, Ronald Inglehart, Chris Welzel, Eduard Ponarin, the participants to the Laboratory for Comparative Social Research of the Higher School of Economics, and the participants to the Warszawska Szkola Analizy Danych, University of Warsaw and Interuniversity Center for Social Science Theory and Methodology. Views and opinions expressed in this article are those of the author(s) and do not refect those of STATEC and funding partners. The author(s) gratefully acknowledge the support of the Observatoire de la Compétitivité, Ministére de l’Economie, DG Compétitivité, Luxembourg, and STATEC, the National Statistical Office of Luxembourg. The usual disclaimers apply.

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Sarracino, F., Piekałkiewicz, M. The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis. J Happiness Stud (2020). https://doi.org/10.1007/s10902-020-00285-x

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Keywords

  • Economic crisis
  • life satisfaction
  • Social capital
  • Income
  • Decomposition
  • Europe

JEL Classification

  • D03
  • I31
  • Z13