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The Easterlin paradox and the decline of social capital: an integrated explanation


  • Maurizio Pugno

    (University of Cassino)


During the most recent decades people in industrialised countries have reported both a stagnant or even declining subjective well-being, as Easterlin (1974) originally observed, and deterioration in their social and family bonds, as Putnam (2000) has claimed. The paper proposes an integrated explanation of these two stylised facts by extending the analysis of the relative income explanation of the Easterlin paradox to social relationships as enjoyable ends of choice. Drawing on the evidence-based results of social psychology, the paper constructs a model whose premises are (i) that individuals produce social relationships by means of relational ability, (ii) that this ability is primarily shaped during infancy and remains largely unpredictable, and (iii) that commercial pressure on children to consume in competition with others may displace the enjoyment of social relationships. The model extends microfoundations to encompass new psychological dimensions. It is thus able to merge individuals’ idiosyncratic dynamics – which may deteriorate across generations – with improving economic contextual conditions, and to indicate some new priorities in policy options.

Suggested Citation

  • Maurizio Pugno, 2008. "The Easterlin paradox and the decline of social capital: an integrated explanation," Working Papers 2008-02, Universita' di Cassino, Dipartimento di Scienze Economiche.
  • Handle: RePEc:css:wpaper:2008-02

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    References listed on IDEAS

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    Cited by:

    1. Junyi Zhang & Yubing Xiong, 2015. "Effects of multifaceted consumption on happiness in life: a case study in Japan based on an integrated approach," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(2), pages 143-162, June.
    2. repec:bof:bofitp:urn:nbn:fi:bof-201508181355 is not listed on IDEAS
    3. Jacopo Baggio & Elissaios Papyrakis, 2014. "Agent-Based Simulations of Subjective Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 115(2), pages 623-635, January.
    4. Johannes Vatter, 2012. "Well-Being in Germany: What Explains the Regional Variation?," SOEPpapers on Multidisciplinary Panel Data Research 435, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. repec:spr:grdene:v:24:y:2015:i:4:d:10.1007_s10726-014-9409-3 is not listed on IDEAS
    6. Petri Böckerman & Jani-Petri Laamanen & Esa Palosaari, 2016. "The Role of Social Ties in Explaining Heterogeneity in the Association Between Economic Growth and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 17(6), pages 2457-2479, December.
    7. Fernandes, Liliana & Mendes, Américo & Teixeira, Aurora, 2013. "Assessing child well-being through a new multidimensional child-based weighting scheme index: An empirical estimation for Portugal," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 155-174.
    8. Lotito, Gianna & Migheli, Matteo & Ortona, Guido, 2011. "An experimental inquiry into the nature of relational goods," POLIS Working Papers 160, Institute of Public Policy and Public Choice - POLIS.
    9. Ferrante, Francesco, 2014. "Great expectations. The unintended consequences of educational choices," MPRA Paper 62474, University Library of Munich, Germany.
    10. Jie Zhou & Yu Xie, 2016. "Does Economic Development Affect Life Satisfaction? A Spatial–Temporal Contextual Analysis in China," Journal of Happiness Studies, Springer, vol. 17(2), pages 643-658, April.
    11. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-015-1220-2 is not listed on IDEAS
    12. Johannes Vatter, 2012. "Well-Being in Germany: GDP and Unemployment Still Matter," Working Paper Series of the German Council for Social and Economic Data 196, German Council for Social and Economic Data (RatSWD).
    13. Vatter, Johannes, 2012. "Well-being in Germany: What explains the regional variation?," FZG Discussion Papers 50, University of Freiburg, Research Center for Generational Contracts (FZG).
    14. Haining Wang & Zhiming Cheng & Russell Smyth, 2015. "Does Consuming More Make You Happier? Evidence from Chinese Panel Data," Monash Economics Working Papers 29-15, Monash University, Department of Economics.
    15. Marta Portela & Isabel Neira & Maria del Salinas-Jiménez, 2013. "Social Capital and Subjective Wellbeing in Europe: A New Approach on Social Capital," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(2), pages 493-511, November.
    16. repec:spr:jhappi:v:18:y:2017:i:5:d:10.1007_s10902-016-9775-4 is not listed on IDEAS

    More about this item


    happiness; well-being; relational goods; personal relationships; attachment; unconscious;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General


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