Social capital: exploring the theory and empirical divide

Social capital is an expanding research theme in economics, but it remains a controversial concept and its use as an analytical tool has been questioned. The criticisms are exacerbated by a mismatch between theoretical coverage of the concept and empirical work. We demonstrate, using a large European survey of older people, that social capital is multi-dimensional, and explore the extent to which these latent dimensions coincide with its theoretical constructs. We use the association between social capital and health to demonstrate the importance of accounting for the multi-dimensionality in empirical work. We show that all the dimensions of social capital are associated with health, but while in general this association is positive, close household ties are inversely related to health and well-being. This potential ‘dark side’ of social capital has been largely neglected to date but is important if social capital is to be a useful analytical tool.