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The Compensating Income Variation of Social Capital

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  • Wim Groot
  • Henriette Maassen van den Brink
  • Bernard M.S. van Praag

Abstract

There is a small but growing literature on the determinants of social capital. Most of these studies use a measure of trust to define social capital empirically. In this paper we use three different measures of social capital: the size of the individual’s social network, the extent of their social safety net and membership of unions or associations. A second contribution to the literature is that we analyze what social capital contributes to our well-being. Based on this, we calculate the compensating income variation of social capital. We find differences in social capital when we differentiate according to individual characteristics such as education, age, place of residence, household composition, and health. Household income generally has a statistically significant effect. We find a significant effect of social capital on life satisfaction. Consequently, the compensating income variation of social capital is substantial.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1889.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1889

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Keywords: social capital; life satisfaction;

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References

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  1. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2001. "The Economic Approach to Social Capital," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1916, Harvard - Institute of Economic Research.
  2. Wim Groot & Henriëtte van den Brink, 2003. "Sympathy and the Value of Health: The Spill-over Effects of Migraine on Household Well-being," Social Indicators Research, Springer, Springer, vol. 61(1), pages 97-120, January.
  3. Edward L. Glaeser & David Laibson & Jose A. Scheinkman & Christine L. Soutter, 1999. "What is Social Capital? The Determinants of Trust and Trustworthiness," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1875, Harvard - Institute of Economic Research.
  4. Alberto Alesina & Eliana La Ferrara, 2000. "The Determinants of Trust," NBER Working Papers 7621, National Bureau of Economic Research, Inc.
  5. Durlauf,S.N., 2000. "Bowling alone : a review essay," Working papers, Wisconsin Madison - Social Systems 29, Wisconsin Madison - Social Systems.
  6. Bernard M. S. van Praag & P. Frijters & Ada Ferrer-i-Carbonell, 2001. "The Anatomy of Subjective Well-Being," Discussion Papers of DIW Berlin 265, DIW Berlin, German Institute for Economic Research.
  7. Steven N. Durlauf & Marcel Fafchamps, 2004. "Social Capital," CSAE Working Paper Series 2004-14, Centre for the Study of African Economies, University of Oxford.
  8. John F. Helliwell & Robert D. Putnam, 2007. "Education and Social Capital," Eastern Economic Journal, Eastern Economic Association, vol. 33(1), pages 1-19, Winter.
  9. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1251-88, November.
  10. Cameron McIntosh, 2001. "Report on the Construct Validity of the Temporal Satisfaction With Life Scale," Social Indicators Research, Springer, Springer, vol. 54(1), pages 37-56, April.
  11. Ed Diener & Eunkook Suh, 1997. "Measuring Quality Of Life: Economic, Social, And Subjective Indicators," Social Indicators Research, Springer, Springer, vol. 40(1), pages 189-216, January.
  12. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
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Citations

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Cited by:
  1. Jan Fidrmuc & Klarita Gerxhani, 2007. "Mind the Gap! Social Capital, East and West," William Davidson Institute Working Papers Series wp888, William Davidson Institute at the University of Michigan.
  2. Rainer Winkelmann, 2009. "Unemployment, Social Capital, and Subjective Well-Being," Journal of Happiness Studies, Springer, Springer, vol. 10(4), pages 421-430, August.
  3. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  4. Cheung, Chau-kiu & Ng, Sik Hung, 2012. "Impacts of financial crisis on social engagement in Hong Kong," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 41(5), pages 623-632.
  5. Hancock, Ruth & Morciano, Marcello & Pudney, Stephen, 2013. "Nonparametric estimation of a compensating variation: the cost of disability," ISER Working Paper Series 2013-26, Institute for Social and Economic Research.
  6. Rati Ram, 2010. "Social Capital and Happiness: Additional Cross-Country Evidence," Journal of Happiness Studies, Springer, Springer, vol. 11(4), pages 409-418, August.

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