The missing link: Are individuals with more social capital in better health? Evidence from India

This paper extends a two-period Overlapping Generations (OLG) model of endogenous growth in which associations between human capital, social capital, and health outcomes are critically examined for a low income country, India. If individuals with higher level of human capital can build strong social ties and have more robust social networks, they are then less likely to have health problems and are therefore physically healthier. In an attempt to test the so-called relationship between the variables in question, a unique dataset, where micro-level data from the World Values Survey (WVS) and regional-level macro data from the Central Statistics Office of India were both utilized, was accessed. A three-equation model has been then estimated using the conditional mixed-process (CMP) method in order to explicitly address endogeneity issues. Our estimation results provide important insights into the theoretical thesis in several ways. Firstly, human capital has a favorable impact upon social capital, which in turn enhances self-reported health. Secondly, we provide a comparison of three main experiments: an increase in the share of public spending by region on education, social capital-enhancing activities, and health. The results confirm the positive effect of an increase in each form of government spending on outcome variables. Thirdly, the correlation coefficient between disturbances of these three equations turns out to be statistically significant, suggesting that there are unobserved factors, which can affect self-reported health, social capital and human capital variables.