Social capital, economic growth and well-being
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Transcript of Social capital, economic growth and well-being
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Faculty of Economics - University of Siena
Social capital, economic growth and well-being
Francesco Sarracino
Population et emploiCEPS/Instead, Differdange
Luxembourg
03 May 2011
F. Sarracino Social capital, economic growth & well-being 03 May 2011 1 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Economists have always been interested in people’s well-being
but, how do we measure it?
GDP (under the belief that a higher income may not increaseindividual’s well-being, but it will not reduce it for sure)
promoting economic development became the main tool to raisewell-being
F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Economists have always been interested in people’s well-being
but, how do we measure it?
GDP (under the belief that a higher income may not increaseindividual’s well-being, but it will not reduce it for sure)
promoting economic development became the main tool to raisewell-being
F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Economists have always been interested in people’s well-being
but, how do we measure it?
GDP (under the belief that a higher income may not increaseindividual’s well-being, but it will not reduce it for sure)
promoting economic development became the main tool to raisewell-being
F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Economists have always been interested in people’s well-being
but, how do we measure it?
GDP (under the belief that a higher income may not increaseindividual’s well-being, but it will not reduce it for sure)
promoting economic development became the main tool to raisewell-being
F. Sarracino Social capital, economic growth & well-being 03 May 2011 2 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
but there are many aspects that strongly concern people’swell-being and that are only partially accounted for by GDP:
people declare themselves isolated and lonely;
unsafety of the social environment;
cities are polluted;
trust in others and honesty are declining;
it is more and more difficult to find a place to enjoy socialrelationship (unless mediated by commercial activities) (Dienerand Seligman, 2004; Frey and Stutzer, 2002b).
Is development missing to provide promised benefits?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 3 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Success in improving or not people’s well-being depends on the“quality” of development (Helliwell, 2008).
Present work sets in this debate supporting the idea that the socialquality of economic growth does matter a great deal forwell-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 4 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Introduction
Success in improving or not people’s well-being depends on the“quality” of development (Helliwell, 2008).
Present work sets in this debate supporting the idea that the socialquality of economic growth does matter a great deal forwell-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 4 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Three measures of well-being
Well-being can be proxied by:
happiness
life satisfaction
objective data: mental illnesses, suicides, alcoholism, drugsabuse, psychopharmaca, etc.
Happiness and life satisfaction are called subjective well-being(SWB)
Subjective well-being (SWB): individual’s evaluation of itsown life regarded as a whole (Helliwell, 2008)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 5 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Observing SWB (World Values Survey)
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 awhole these days?” Answers range on a 1 to 10 points scale:
1 “dissatisfied”...
10 “satisfied”
F. Sarracino Social capital, economic growth & well-being 03 May 2011 6 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Observing SWB (World Values Survey)
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 awhole these days?” Answers range on a 1 to 10 points scale:
1 “dissatisfied”...
10 “satisfied”
F. Sarracino Social capital, economic growth & well-being 03 May 2011 6 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Reliability of SWB
Reliability
data on SWB are:
consistent with more objective measures of well-being (heartrate, blood pressure, Duchenne smile, brain scanners, suicide)(Blanchflower and Oswald, 2008a; Van Reekum et al., 2007);
highly correlated with other proxies of SWB (Schwarz andStrack, 1999; Wanous and Hudy, 2001; Schimmack et al.,2009);
consistent with evaluations about the respondent’s happinessprovided by friends, relatives or clinical experts (Schneider andSchimmack, 2009; Kahneman and Krueger, 2006; Layard,2005).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 7 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The evolution over time of SWB
SWB data are easy and cheap to collect and proved to unveilinteresting and consistent patterns about modern societies
How far is general income growth likely to increase averagehappiness?
this is a question about time series relationships
F. Sarracino Social capital, economic growth & well-being 03 May 2011 8 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The evolution over time of SWB
SWB data are easy and cheap to collect and proved to unveilinteresting and consistent patterns about modern societies
How far is general income growth likely to increase averagehappiness?
this is a question about time series relationships
F. Sarracino Social capital, economic growth & well-being 03 May 2011 8 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
the Easterlin paradox
61
La fig. 1 illustra in modo didascalico il cuore del paradosso della felicità.
In essa sono confrontate la tendenze americane del reddito annuo pro-capite
e della percentuale di individui che si dichiarano molto felici, nel periodo
1946-1996.
Fig. 1 Reddito e felicità medi in USA, 1946-1996
Il grafico mostra che, a fronte di una forte tendenza crescente del
reddito medio, la percentuale di individui molto felici presenta una tendenza
alla diminuzione. La domanda che grafici come questo suscitano è: perchè in
una società che diviene sempre più ricca la gente si sente progressivamente
peggio?
Dati oggettivi
Figure: Income and happiness in US 1946 - 1996. Source: Layard, 2003
F. Sarracino Social capital, economic growth & well-being 03 May 2011 9 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Health
F. Sarracino Social capital, economic growth & well-being 03 May 2011 10 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Information technologies
F. Sarracino Social capital, economic growth & well-being 03 May 2011 11 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Travels
F. Sarracino Social capital, economic growth & well-being 03 May 2011 12 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
But...
F. Sarracino Social capital, economic growth & well-being 03 May 2011 13 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
economic growth seems to be associated to undesirable side-effectson well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 14 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Well-being trends across countries
There are international differences in long-term trends of SWB
for instance: SWB slightly increased in several EU countries anddecreased in the US in the last 30 years.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 15 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Declining trends in US happinessUS declining happinessUS declining happiness
Source: Stevenson and Wolfers 2008, GSS dataFigure: Source: Stevenson and Wolfers, 2008 (GSS data).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 16 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Declining trends in US happiness
Figure: Source: Stevenson and Wolfers, 2008 (GSS data).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 17 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What does predict international differences in the trends ofwell-being?
GDP trends do not!
people do not become happier when a country’s income increases.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 18 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What does predict international differences in the trends ofwell-being?
GDP trends do not!
people do not become happier when a country’s income increases.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 18 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Easterlin paradox
The trends of happiness and income are unrelated in the long runin:
developed countries;
developing countries;
all countries together.
Easterlin and Angelescu (2009)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 19 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Easterlin paradox
Easterlin and Angelescu (2009)
Figure: Source: Easterlin and Angelescu, 2009
F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Easterlin paradox
Easterlin and Angelescu (2009)g ( )
Figure: Source: Easterlin and Angelescu, 2009
F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Easterlin paradox
Easterlin and Angelescu (2009)
Figure: Source: Easterlin and Angelescu, 2009
F. Sarracino Social capital, economic growth & well-being 03 May 2011 20 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conventional explanations
Aspirations: after a while people adapt to their living standardby raising their aspirations. SWB is predicted by past income;
Social comparisons: people compare themselves with othersand set their aspirations accordingly. SWB is predicted byreference income.
two problems arise:
1 SWB varies in the long run and it doesn’t vary in the sameway in every country (Stevenson and Wolfers, 2008; Inglehart,2009; Chap. 3.
2 trends of GDP and SWB are unrelated in the long run(Easterlin and Angelescu, 2009).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 21 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conventional explanations
Aspirations: after a while people adapt to their living standardby raising their aspirations. SWB is predicted by past income;
Social comparisons: people compare themselves with othersand set their aspirations accordingly. SWB is predicted byreference income.
two problems arise:
1 SWB varies in the long run and it doesn’t vary in the sameway in every country (Stevenson and Wolfers, 2008; Inglehart,2009; Chap. 3.
2 trends of GDP and SWB are unrelated in the long run(Easterlin and Angelescu, 2009).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 21 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conventional explanations
Aspirations: after a while people adapt to their living standardby raising their aspirations. SWB is predicted by past income;
Social comparisons: people compare themselves with othersand set their aspirations accordingly. SWB is predicted byreference income.
two problems arise:
1 SWB varies in the long run and it doesn’t vary in the sameway in every country (Stevenson and Wolfers, 2008; Inglehart,2009; Chap. 3.
2 trends of GDP and SWB are unrelated in the long run(Easterlin and Angelescu, 2009).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 21 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conventional explanations
Aspirations: after a while people adapt to their living standardby raising their aspirations. SWB is predicted by past income;
Social comparisons: people compare themselves with othersand set their aspirations accordingly. SWB is predicted byreference income.
two problems arise:
1 SWB varies in the long run and it doesn’t vary in the sameway in every country (Stevenson and Wolfers, 2008; Inglehart,2009; Chap. 3.
2 trends of GDP and SWB are unrelated in the long run(Easterlin and Angelescu, 2009).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 21 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
If it is not GDP, what does explain SWB trends and its differencesacross countries?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 22 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Social capital and Subjective well-being
SC plays a major role in determining people’s well-being.In particular, the quality of the relationships among people has apredominant impact on their well-being.(Helliwell and Putnam, 2004; Helliwell, 2006; Bruni and Stanca,2008; Becchetti et al., 2008)
Social capital (SC) is “features of social life - networks, norms andtrust - that enable participants to act together more effectively topursue shared objectives.” (Putnam, 1993)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 23 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Social capital and Subjective well-being
SC plays a major role in determining people’s well-being.In particular, the quality of the relationships among people has apredominant impact on their well-being.(Helliwell and Putnam, 2004; Helliwell, 2006; Bruni and Stanca,2008; Becchetti et al., 2008)
Social capital (SC) is “features of social life - networks, norms andtrust - that enable participants to act together more effectively topursue shared objectives.” (Putnam, 1993)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 23 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Operationalizing social capital
4 groups of proxies for SC
Non market relations (RSC)
Putnam’s & Olson’s groupsKnack (2003)Knack (2003)
Beliefs concerningBeliefs concerning institutions (non-RSC)
Figure: Costituents of social capital. Source: author’s own elaboration.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 24 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
In the long run social capital predicts happiness
What happens in this kind of regressions when income issubstituted for social capital as the independent variable?(Bartolini, Bilancini and Sarracino, 2009)
The measure of social capital: share of the population member inat least one group or association
Data: World Values Survey, waves 1 - 5, 1980 - 2005.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 25 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
In the long run social capital predicts happiness
What happens in this kind of regressions when income issubstituted for social capital as the independent variable?(Bartolini, Bilancini and Sarracino, 2009)
The measure of social capital: share of the population member inat least one group or association
Data: World Values Survey, waves 1 - 5, 1980 - 2005.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 25 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Groups and associations
social welfare service forelderly people;
religious organizations;
education, arts or culturalactivities;
labour unions;
political parties;
human rights;
conservation, theenvironment, ecology andanimal rights;
youth work;
professional associations;
sports or recreation;
women’s group;
peace movement;
organizations concerned withhealth;
consumer groups;
other groups.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 26 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Happiness and social capital
Happiness & Social Capital Developed countries (15 years)
Jap
FinCan
008
Developed countries (15 years)N = 14
It
Fr
DenFin
.006
.0
ppin
ess
1 - 4
sca
le)
4R2 = 0.60
Y = 0.0012 + 0.381X
SweBel
.004
hang
e in
hap
mou
nt o
n a
1
(2.40) (7.40)
t‐stat in parentheses
ukEsp
NetUSA
.002
annu
al c
h(a
bsol
ute
am
Ger Ire0(
-.005 0 .005 .01 .015 .02l h i b hiannual change in group membership
Ehapr Linear prediction
dependent ariable a era e ro th rate of happinessdependent variable = average growth rate of happinessindependent variable = average growth rate of membership in associationsunit of observation = countrytime span= at least 4 waves
Figure: Happiness and social capital in Developed Countries (15 years).Source: author’s own elaboration.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 27 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Happiness and social capital
Happiness & Social Capital Developing countries (15 years)
Mex
04
Developing countries (15 years)N = 5R 68
.03
.0
appi
ness
1 - 4
sca
le) R2 = 0.68
Y = 0.0047 + 0.890X
(1.29) (2.44)
1.0
2
chan
ge in
hap
mou
nt o
n a
1 ( 9) ( 44)
t‐stat in parentheses
Arg
ChileKorRep
Chi
0.0
1
annu
al c
h(a
bsol
ute
am
China
-.01
-.02 -.01 0 .01 .02 .03annual change in group membershipannual change in group membership
Ehapr Linear prediction
dependent ariable a era e ro th rate of happinessdependent variable = average growth rate of happinessindependent variable = average growth rate of membership in associationsunit of observation = countrytime span= at least 4 waves
Figure: Happiness and social capital in Developing Countries (15 years).Source: author’s own elaboration.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 27 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Happiness and social capital
Happiness & Social Capital All countries
Mex
04
All countries N = 19
.03
.04
pine
ss- 4
sca
le) R2 = 0.53
Y = 0.0001 + 0.740X
(0 09) (2 30)
.02
ange
in h
app
ount
on
a 1 (0.09) (2.30)
t‐stat in parentheses
It
uk
FrSweEsp NetUSA
Jap
Ger
DenFin
Ire
Bel
Can Arg
ChileKorRep
0.0
1
annu
al c
haab
solu
te a
mo
China
-.01
(a
- 02 - 01 0 01 02 03.02 .01 0 .01 .02 .03annual change in group membership
Ehapr Linear prediction
dependent ariable a era e ro th rate of happinessdependent variable = average growth rate of happinessindependent variable = average growth rate of membership in associationsunit of observation = countrytime span= at least 4 wavesFigure: Happiness and social capital in Developed and DevelopingCountries (15 years). Source: author’s own elaboration.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 27 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Results
World-wide evidence:
Happiness and GDP are unrelated in the long run, while happinessand sociability are strongly and positively related.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 28 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Evidence from within-countries data
Can within-countries data give us a more detailed picture of whatdetermines the changes in well-being over time?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 29 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Declining trend in US Happiness: WHY?
Bartolini, Bilancini and Pugno (2009) try to answer using datafrom the US General social survey (1975 - 2004).
The GSS started in 1972 and has been carried out mostly everytwo years, covering large representative samples of the Americanpopulation.
The GSS contains an happiness question and several question onsocial capital. Unfortunately, it is not a panel.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 30 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Declining trend in US Happiness: WHY?
The trend of US happiness is predicted by 4 forces that drivesuch a trends in opposite directions:
absolute income growth;
adaptation;
social comparisons;
social capital.
Relational goods and trust in institutions: components of social capital
F. Sarracino Social capital, economic growth & well-being 03 May 2011 31 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Social comparisons
Mrs. Jones compares what she owns with what is owned by otherpersons, said reference groups.
Having a lot may seem little to Mrs. Jones if those she comparesherself to, have more.
An increase in income has a positive impact on the well-being ofMrs. Jones but an increase of the same size in the income of herreference group, offsets about 2/3 of such an impact.
Growth raises happiness if what matters for happiness is to have abigger car, not if what matters is to have a bigger car than yourneighbour.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 32 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The decline in relational goods
The trends of the various indicators document:
An increase in: loneliness, sense of isolation, instability of families,generational cleavages, mistrust.
A decrese in: social contacts, honesty, solidarity, socialparticipation, civic engagement.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 33 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The decline of relational goods and of trust ininstitutions
Figure: Source: Bartolini et al., 2009.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 34 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The impact of socio-demographics on happiness
Figure: Source: Bartolini et al., 2009.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 35 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The impact of relational goods on happiness
Figure: Source: Bartolini et al., 2009.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 36 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The impact of trust in institutions on happiness
Figure: Source: Bartolini et al., 2009.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 37 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Accounting for the happiness trend
Computing the predicted impact on happiness of each variable overthe period 1975-2004
∆H = α(X2004 − X1975)
For each regressor α is the coefficient of the happiness regression,while X2004 and X1975 contain the average values of the regressor inyear 2004 and 1975.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 38 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Accounting for the happiness trend
Figure: Source: Bartolini et al., 2009.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 39 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Predictors of the decline in US happiness
The predicted negative impact of:
social comparisons;
decline of relational goods;
decline of trust in institutions.
more than offset the predicted positive impact of the increase inincome.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 40 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Relational goods matter
If relational goods had remained at its 1975 level, happiness mighthave substantially increased.
About 10%!
this is the growth rate of household income needed to compensatefor the happiness loss due to the decline in relational goods.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 41 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Relational goods matter
If relational goods had remained at its 1975 level, happiness mighthave substantially increased.
About 10%!
this is the growth rate of household income needed to compensatefor the happiness loss due to the decline in relational goods.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 41 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Given the relational decay...
...not even 30 years of economic growth at a Chinese pace wouldhave increased the US happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 42 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Lessons for measuring well-being
1 The purchasing power, measured by GDP, is one componentof well-being but is not all that matters;
2 The quality of relational experience cannot be purchased butis important for well-being;
3 A credible indicator of well-being must also take into accountsocial capital.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 43 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Lessons for measuring well-being
1 The purchasing power, measured by GDP, is one componentof well-being but is not all that matters;
2 The quality of relational experience cannot be purchased butis important for well-being;
3 A credible indicator of well-being must also take into accountsocial capital.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 43 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Lessons for measuring well-being
1 The purchasing power, measured by GDP, is one componentof well-being but is not all that matters;
2 The quality of relational experience cannot be purchased butis important for well-being;
3 A credible indicator of well-being must also take into accountsocial capital.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 43 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Lessons for measuring well-being
1 The purchasing power, measured by GDP, is one componentof well-being but is not all that matters;
2 The quality of relational experience cannot be purchased butis important for well-being;
3 A credible indicator of well-being must also take into accountsocial capital.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 43 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Moreover...
Figure: US work hours increased in the last decades.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 44 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
...
F. Sarracino Social capital, economic growth & well-being 03 May 2011 45 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
A sharp disappointment
F. Sarracino Social capital, economic growth & well-being 03 May 2011 46 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Easterlin paradox becomes more paradoxical
Why do Americans work more if more money does not make themhappier?
why does industrialism tend to produce goods rather than sparetime?
F. Sarracino Social capital, economic growth & well-being 03 May 2011 47 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Why do Americans work more?
Bartolini & Bilancini (2009) show that:
Being poor in relational goods causes longer work hours. Relational
poverty pushes people to longer working hours. Those who arepoorer in relational terms are also more captured by work and aremore interested in money.
The reason is that individuals turn to work and money tocompensate for poor relational conditions.
Those poor in time develop poor relations.
This is a vicious circle. Relational poverty causes time povertyand the latter causes relational poverty.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 48 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Why do Americans work more? An Answer
The increase in hours worked in the past 30 years has beeninfluenced by the decline of relational goods. In turn, these latterhas been influenced by the increase in hours worked.
Unhappiness and stress have a common root: the worsening ofsocial relationships.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 49 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Social poverty vs. economic prosperity?
The average American is increasingly poor in relations, time, trustin institutions and well-being. These data are the symptom of asocial crisis.
However the growth rate of US GDP has been the highest in 1980- 2000 among the big western countries (UK excluded).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 50 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Social poverty vs. economic prosperity?
The average American is increasingly poor in relations, time, trustin institutions and well-being. These data are the symptom of asocial crisis.
However the growth rate of US GDP has been the highest in 1980- 2000 among the big western countries (UK excluded).
F. Sarracino Social capital, economic growth & well-being 03 May 2011 50 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Negative Endogenous Growth (NEG)
Relational poverty can be a cause of economic growth
(Bartolini and Bonatti JE 2003 and JEBO 2008)
These models are based on 3 hypothesis:
1 existence of free goods: goods that we can’t buy and that arevery important for well-being;
2 the market supplies expensive substitutes to free goods;
3 economic growth constraints the availability of free goods.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 51 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Negative Endogenous Growth (NEG)
we can defend ourselves from the deterioration of relationaland environmental goods by purchasing some goods(defensive expenditures).
To finance these defensive expenditures we must work, produce andconsume more. Therefore defending ourselves from the decay offree goods increases the GDP.
The decay produces economic growth!
F. Sarracino Social capital, economic growth & well-being 03 May 2011 52 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The Negative Endogenous Growth (NEG)
The third hypothesis: economic growth causes the deterioration ofrelational and environmental goods (the free goods).
NEG is a self-reinforcing vicious circle: environmental andrelational deterioration fuel economic growth which in turnfeeds deterioration. People compensate the social andenvironmental decay with private opulence !
Economic growth works as a substitution process destroyingnon-marketable goods and providing economic (expensive)substitutes.
Growth is fueled by its own erosive power!
NEG is undesirable from the viewpoint of well-being. Privatewealth is fueled by the deterioration of the common goods.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 53 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
NEG: the key equations
NEG models insert some key equations in traditional endogenous(or exogenous) growth models:
Ut = U(Xt ;C2t ; Lt),UX > 0,UC > 0,UL > 0;
Xt = Rt + δC1t , δ > 0;
The resource Rt is subject to negative externalities:
Rt+1 = F (Yt ,Rt),FY < 0,FR > 0;
where:
R : common;
C1: defensive expenditure: substitutes for the common;
C2: part of consumption aimed at satisfying other needs:does not substitute for the common;
L : leisure;
Y : aggregate output.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 54 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Private wealth
F. Sarracino Social capital, economic growth & well-being 03 May 2011 55 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Common poverty
F. Sarracino Social capital, economic growth & well-being 03 May 2011 56 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
NEG models: conclusion
This kind of economic growth has disappointing effects overwell-being. The negative impact of social and environmental decayand of the compression of spare time on well-being counterbalancethe positive effects of income growth.
the importance of money grows up in a society in which all thatyou can do without money is reducing. Money is the way out fromthe deterioration of all that people have in common. This is whyeconomic prosperity does not lead to higher well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 57 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Relational goods and models of production
The relational decay does not affect only our consumptionpatterns. It also affects our way of working: the erosion of trust, ofshared social norms, of honesty and business ethics make marketrelationships much more complicated.
The substitution process between free and expensive goods affectsnot only our consumption models but also our production models.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 58 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The “guard labor”
The guard labor is a measure of the disciplinary apparatus of asociety.
It counts labor resources allocated to preventing, controlling,punishing indesirable behaviours by others.
Examples: work monitors, police, private security guards, militarypersonnel, etc.
Guard labor is a typical defensive expenditure. It is mainly aresponse to declining trust.
Bowles and Jayadev, JDE 2006.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 59 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Why GDP may grow?
Figure: Evolution of guard labor in US. Source: Bowles and Jayadev,2006.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 60 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Guard labor: international comparisons
Figure: Guard labor international comparisons. Source: Bowles andJayadev, 2006.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 61 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conclusion: NEG and GDP
There are many signs that economic growth has been fed by socialdegradation.
To use GDP as an indicator of well-being can seem particularlyabsurd if an increase in GDP can be the consequence and thecause of social and environmental decay.
It can work in the short run, but in the long term it appears to bebiased.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 62 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conclusion: NEG and GDP
There are many signs that economic growth has been fed by socialdegradation.
To use GDP as an indicator of well-being can seem particularlyabsurd if an increase in GDP can be the consequence and thecause of social and environmental decay.
It can work in the short run, but in the long term it appears to bebiased.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 62 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Conclusion: GDP and social models
To question GDP is to challenge an economic and social modelseen by many as the example to follow: the US.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 63 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What’s going on in Europe?
NEG models predict:
The worse is the trend of relational goods
the higher will be the growth rate of GDP;
the worse will be the trend of hours worked;
the worse will be the trend of well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 64 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What’s going on in Europe?
NEG models predict:
The worse is the trend of relational goods
the higher will be the growth rate of GDP;
the worse will be the trend of hours worked;
the worse will be the trend of well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 64 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What’s going on in Europe?
NEG models predict:
The worse is the trend of relational goods
the higher will be the growth rate of GDP;
the worse will be the trend of hours worked;
the worse will be the trend of well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 64 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
What’s going on in Europe?
NEG models predict:
The worse is the trend of relational goods
the higher will be the growth rate of GDP;
the worse will be the trend of hours worked;
the worse will be the trend of well-being.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 64 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Comparing European countries and US
US (and UK) compared to continental Europe exhibit:
more economic growth;
increasing vs. decreasing hours worked;
what happened to happiness and relational goods in Europe?
Sarracino (JSE, 2009) provides an answer using WVS data.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 65 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Comparing European countries and US
US (and UK) compared to continental Europe exhibit:
more economic growth;
increasing vs. decreasing hours worked;
what happened to happiness and relational goods in Europe?
Sarracino (JSE, 2009) provides an answer using WVS data.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 65 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Comparing European countries and US
US (and UK) compared to continental Europe exhibit:
more economic growth;
increasing vs. decreasing hours worked;
what happened to happiness and relational goods in Europe?
Sarracino (JSE, 2009) provides an answer using WVS data.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 65 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Comparing European countries and US
US (and UK) compared to continental Europe exhibit:
more economic growth;
increasing vs. decreasing hours worked;
what happened to happiness and relational goods in Europe?
Sarracino (JSE, 2009) provides an answer using WVS data.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 65 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Comparing European countries and US
US (and UK) compared to continental Europe exhibit:
more economic growth;
increasing vs. decreasing hours worked;
what happened to happiness and relational goods in Europe?
Sarracino (JSE, 2009) provides an answer using WVS data.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 65 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:GERMANY
−.0
4−
.02
0.0
2.0
4.0
6pe
r w
ave
grow
th
.34
.35
.36
.37
.38
.39
aver
age
annu
al g
row
th
1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 66 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:GERMANY
−.1
0.1
.2.3
per
wav
e gr
owth
.54
.56
.58
.6.6
2
aver
age
annu
al g
row
th
1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 66 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:GERMANY
−.0
50
.05
.1pe
r w
ave
grow
th
33.
013.
023.
033.
043.
05
aver
age
annu
al g
row
th
1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 66 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: ITALY
−.0
50
.05
.1.1
5pe
r w
ave
grow
th
.28
.3.3
2.3
4.3
6
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 67 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: ITALY
0.1
.2.3
.4.5
per
wav
e gr
owth
.1.2
.3.4
.5
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 67 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: ITALY
0.1
.2.3
per
wav
e gr
owth
2.85
2.9
2.95
33.
05
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 67 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: FRANCE
−.0
8−
.06
−.0
4−
.02
0.0
2pe
r w
ave
grow
th
.18
.2.2
2.2
4.2
6
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 68 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: FRANCE
0.1
.2.3
.4.5
per
wav
e gr
owth
.1.2
.3.4
.5
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 68 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: FRANCE
0.0
5.1
.15
.2.2
5pe
r w
ave
grow
th
3.05
3.1
3.15
3.2
3.25
3.3
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 68 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: SWEDEN
0.0
5.1
.15
per
wav
e gr
owth
.55
.6.6
5.7
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 69 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: SWEDEN
0.1
.2.3
.4pe
r w
ave
grow
th
.2.4
.6.8
1
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 69 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: SWEDEN
0.0
5.1
.15
.2.2
5pe
r w
ave
grow
th
3.25
3.3
3.35
3.4
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 69 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: NORWAY
0.0
5.1
.15
per
wav
e gr
owth
.6.6
5.7
.75
aver
age
annu
al g
row
th
1980 1990 2000 2010year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 70 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: NORWAY
0.1
.2.3
.4pe
r w
ave
grow
th
.4.5
.6.7
.8.9
aver
age
annu
al g
row
th
1980 1990 2000 2010year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 70 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: NORWAY
−.0
50
.05
.1.1
5.2
per
wav
e gr
owth
3.15
3.2
3.25
3.3
3.35
aver
age
annu
al g
row
th
1980 1990 2000 2010year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 70 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:DENMARK
0.0
5.1
.15
.2pe
r w
ave
grow
th
.5.5
5.6
.65
.7
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 71 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:DENMARK
0.1
.2.3
.4pe
r w
ave
grow
th
.2.3
.4.5
.6
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 71 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:DENMARK
0.0
5.1
.15
.2.2
5pe
r w
ave
grow
th
3.25
3.3
3.35
3.4
3.45
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 71 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: BELGIUM
0.0
5.1
per
wav
e gr
owth
.29
.3.3
1.3
2.3
3.3
4
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 72 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: BELGIUM
0.1
.2.3
.4pe
r w
ave
grow
th
.2.3
.4.5
.6
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 72 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: BELGIUM
0.0
5.1
.15
.2pe
r w
ave
grow
th
3.2
3.25
3.3
3.35
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 72 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:NETHERLANDS
−.0
50
.05
.1.1
5.2
per
wav
e gr
owth
.45
.5.5
5
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 73 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:NETHERLANDS
0.1
.2.3
.4pe
r w
ave
grow
th
.5.6
.7.8
.9
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 73 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005:NETHERLANDS
0.0
5.1
.15
.2.2
5pe
r w
ave
grow
th
3.3
3.35
3.4
3.45
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 73 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: GREATBRITAIN
−.2
−.1
5−
.1−
.05
0.0
5pe
r w
ave
grow
th
.25
.3.3
5.4
.45
.5
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of trust in other people
Figure: Trend of trust in others.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 74 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: GREATBRITAIN
−.2
0.2
.4pe
r w
ave
grow
th
.2.3
.4.5
.6
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of membership in putnamian groups
Figure: Trend of participation in groups and associations.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 74 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Trends of relational goods 1980-2005: GREATBRITAIN
−.2
−.1
0.1
.2pe
r w
ave
grow
th
3.26
3.28
3.3
3.32
3.34
3.36
aver
age
annu
al g
row
th
1980 1985 1990 1995 2000 2005year survey
overall trend 90% CI
trend by wave confidence interval
trend by wave (controls) confidence interval (controls)
trend of feeling of happiness
Figure: Trend of happiness.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 74 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Does the NEG process matter in US growth?
Summarizing: US (and UK) compared to continental Europeexhibit:
more economic growth;
increasing vs. decreasing hours worked;
decreasing vs. increasing relational goods;
decreasing vs. increasing happiness.
Conclusion: this picture is consistent with NEG.Prudence is required: descriptive statistics and scarcity of comparable data on relational
goods.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 75 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
NEG models, Europe and US
In Europe NEG mechanisms seem weaker. This is consistent withthe evidence that the only European country with very similartrends in terms of economic growth, working hours and happinessto US ones is UK.
In this framework the weaker European economic growth is not asnegative as many analysts claim: It does not suggest that the USmodel is better. It is the outcome of a higher social andenvironmental compatibility of the European model.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 76 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Buying alone
The Making of the American Consumer as the Prologue to theCurrent Crisis
The economic crisis that started in 2007 is the outcome of theNEG consumerism.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 77 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The answered question
Many analyses try to answer the question:
Why did an initially small and localized default crisis (sub-primemortgages in US) become a dramatic global financial crisis?
The answers generally focus on credit supply:
The abundance of capitals inflows in the US coming fromabroad which determined a credit bubble and financed aconsumption boom.
The lack of transparency of the default risk implicit instructured assets derived from the securization of mortgagesand loans.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 78 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The growth of toxic assets
Figure: Securization of mortgages: growth in structured assets (1980 US$ per household). (Source: Jagannagath et a., 2009.)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 79 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The premises of the crisis: the formidable USconsumerism
During last decades US consumers have been consuming at fasterpace absorbing a large amount of goods coming from Europe andfrom large part of Asia, mainly from China.The American consumer has been the engine of the world economyin the last two decades.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 80 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
How is it possible?
The consumption possibilities of the US economy had to bedeclining!!!
increasing income inequalities
relatively slow wage increase
shrinking of the middle class
The engine of mass consumption is the middle-class.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 81 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
How is it possible?
The consumption possibilities of the US economy had to bedeclining!!!
increasing income inequalities
relatively slow wage increase
shrinking of the middle class
The engine of mass consumption is the middle-class.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 81 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Something, somewhere went wrong!
F. Sarracino Social capital, economic growth & well-being 03 May 2011 82 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Consumption excess
Figure: Private consumption and wages. (Source: Jagannagath et a.,2009.)
US consumption grew up faster than the growth of wages.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 83 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
How is it possible?
They got indebted!
F. Sarracino Social capital, economic growth & well-being 03 May 2011 84 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
How did Americans finance their expenditures?
Figure: Ratio of debt (mortgage and total) to wages. (Source:Jagannagath et a., 2009.)
F. Sarracino Social capital, economic growth & well-being 03 May 2011 85 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
How did Americans finance their expenditures?
Figure: Household debt increases while CAB worsens, US $ perhousehold. (Source: Jagannagath et a., 2009.)
The huge american private debt is the starting point of theeconomic crisis. All the rest: the crash of the financial system, theeffects on the rest of the world, the credit crunch concern only thespreading of a disease that comes from the US private debt.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 86 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
US consumption
Americans lived for a quarter of a century beyond their possibilities.
Mortgages and credit cards were the way Americans bought biggerand nicer houses, and more consumption goods, than those thatthey could have afforded
F. Sarracino Social capital, economic growth & well-being 03 May 2011 87 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The UNanswered question
what has driven the high credit demand in the US?
What have driven Americans to accumulate an enormous debt, inorder to finance their consumption, which was already the mostaffluent of the world?What drives individuals to consumption bulimia, sacrificingcollective infrastructure, environmental and social assets, humanrelations, leisure, in economies that grow ever more affluent andproductive?More than that: this consumption bulimia was financed by goingdeeply into debt, namely sacrificing future living standards
F. Sarracino Social capital, economic growth & well-being 03 May 2011 88 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The UNanswered question
These are not naive questions: where is this rush for consumptioncoming from?
We are speaking about the richest consumers in the world.
The richest consumers in the world were financingconsumption that they can not afford.
Strong pushes to reduce consumption.
Credit demand has been driven by consumption demand.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 89 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The UNanswered question
These are not naive questions: where is this rush for consumptioncoming from?
We are speaking about the richest consumers in the world.
The richest consumers in the world were financingconsumption that they can not afford.
Strong pushes to reduce consumption.
Credit demand has been driven by consumption demand.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 89 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
The question is:
what has been pushing the richest consumers in the world to getindebted to buy even more of what they could already havewithout credit?
If we want to understand the current economic crisis and its origin,we must start from explaining this consumption bulimia.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 90 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
GUESS THE ANSWER
The debt is the answer to the incredible emphasis that thesocio-economic structure and the US culture give to consumption.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 91 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
GUESS THE ANSWER
The debt is the answer to the incredible emphasis that thesocio-economic structure and the US culture give to consumption.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 91 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
the NEG answer
NEG describes consumerism as an answer to the decline incommon goods.The formidable american consumerism can be be driven by thedecline in relational goods.
In a society of lonely people, comsumption provides a form ofidentity: “I buy hence I am”
F. Sarracino Social capital, economic growth & well-being 03 May 2011 92 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
the NEG perspective
In the post Bretton Woods era, the international freedom ofmovement of capital allowed for a concentration of investments inthe largest and most reliable market of the world.Over the last 10 years, this large amount of international resourceshas been addressed towards the financing of the US middle-class.
The world was financing US consumption
The US financial system was lending money to US citizensborrowing assets from the rest of the world.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 93 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
the NEG perspective
the global financial system is characterized by:
high international demand for US bonds;
high supply of US bonds, thanks to financial engineering.
In this way Wall Street attracted a large part of the availableinternational assets, even from Developing countries: the extremeinequality in terms of international financial reliability amongcountries allowed the financing of the US consumption.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 94 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
the Credit crunch
The crisis of sub-prime mortgages shows to the whole world thatUS citizens are unable to give back the money they borrowed.Some banks and insurance companies failed.The international financial system explodes: high interest ratesreveal that banks do not trust each other (impossibility todistinguish good from bad assets).Credit crunch: the financial crisis affects the real economy.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 95 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Another overlooked aspect
Since the end of ’90s, the US economy is involved in economic andfinancial scandals. (Enron, WorldCom are only some examples.)The US system is affected by a crisis of trust, of legality, of values,business ethics and responsibility.These aspects hold also in this case:
1 every manager knew that their bonds were filled in withunreliable assets;
2 those in charge of controlling the system and check thereliability of firms were corrupted.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 96 / 97
Social capital,economic growth &
well-being
Introduction
Subjective well-being
the evolution overtime of SWB
Internationaldifferences inwell-being
the Easterlin paradox
Social capital andSubjective well-being
Social capital predictshappiness
SC as a predictor ofSWB trends atmicro-level
US work hours
NEG model
An example: guardlabor
testing NEG model
Buying alone
Not even a perfect market system - based on pursuing privateinterests - can work without ethics.
No institutional design can solve such conflicts of interest betweenindividual interests and social utility.There is a selection problem: people selected by the system arethose who miss any kind of ethics.We need people that are motivated to act in a different way.
F. Sarracino Social capital, economic growth & well-being 03 May 2011 97 / 97