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The Compensating Income Variation of Social Capital

Author

Listed:
  • 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.

Suggested Citation

  • Wim Groot & Henriette Maassen van den Brink & Bernard M.S. van Praag, 2007. "The Compensating Income Variation of Social Capital," CESifo Working Paper Series 1889, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1889
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    References listed on IDEAS

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    1. 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 1875, Harvard - Institute of Economic Research.
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    3. Durlauf, Steven N. & Fafchamps, Marcel, 2005. "Social Capital," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 26, pages 1639-1699 Elsevier.
    4. Alberto Alesina & Eliana La Ferrara, 2000. "The Determinants of Trust," NBER Working Papers 7621, National Bureau of Economic Research, Inc.
    5. Ed Diener & Eunkook Suh, 1997. "Measuring Quality Of Life: Economic, Social, And Subjective Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 40(1), pages 189-216, January.
    6. Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 709-722.
    7. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
    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. Durlauf, Steven N., 2002. "Bowling Alone: a review essay," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 259-273, March.
    10. 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: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 61(1), pages 97-120, January.
    11. van Praag, B. M. S. & Frijters, P. & Ferrer-i-Carbonell, A., 2003. "The anatomy of subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 29-49, May.
    12. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2000. "The Economic Approach to Social Capital," NBER Working Papers 7728, National Bureau of Economic Research, Inc.
    13. repec:hrv:faseco:30726298 is not listed on IDEAS
    14. Cameron McIntosh, 2001. "Report on the Construct Validity of the Temporal Satisfaction With Life Scale," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 54(1), pages 37-56, April.
    15. Groot, Wim & Maassen van den Brink, Henriëtte, 2004. "A direct method for estimating the compensating income variation for severe headache and migraine," Social Science & Medicine, Elsevier, vol. 58(2), pages 305-314, January.
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    Cited by:

    1. repec:bla:jconsa:v:51:y:2017:i:2:p:380-405 is not listed on IDEAS
    2. Mendolia, Silvia & McNamee, Paul & Yerokhin, Oleg, 2018. "The Transmission of Mental Health within Households: Does One Partner's Mental Health Influence the Other Partner's Life Satisfaction?," IZA Discussion Papers 11431, Institute for the Study of Labor (IZA).
    3. Fidrmuc, Jan & Gërxhani, Klarita, 2008. "Mind the gap! Social capital, East and West," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 264-286, June.
    4. Rainer Winkelmann, 2009. "Unemployment, Social Capital, and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 10(4), pages 421-430, August.
    5. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    6. 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, vol. 41(5), pages 623-632.
    7. McNamee, Paul & Mendolia, Silvia, 2014. "The effect of chronic pain on life satisfaction: Evidence from Australian data," Social Science & Medicine, Elsevier, vol. 121(C), pages 65-73.
    8. Tina Rochelle, 2015. "Diversity and Trust in Hong Kong: An Examination of Tin Shui Wai, Hong Kong’s ‘City of Sadness’," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(2), pages 437-454, January.
    9. Rati Ram, 2010. "Social Capital and Happiness: Additional Cross-Country Evidence," Journal of Happiness Studies, Springer, vol. 11(4), pages 409-418, August.
    10. 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.

    More about this item

    Keywords

    social capital; life satisfaction;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics

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