Social Capital Predicts Happiness Over Time

The evidence summarized in this chapter documents that GDP is associated with well-being over the business cycle, while this correlation tends to wane over longer periods. Instead, the relationship between social capital and well- being tends to set slowly and to be persistent. This is consistent with both the notion that income is affected by adaptation and social comparisons and, conversely, with the notion that social capital is not affected by these same forces. Moreover, we sum up studies concerning the world-wide most striking cases of the Easterlin paradox, the American, Chinese, and Indian ones. These three countries—amounting to almost half of the world population—exhibit a decline in subjective well-being (SWB), despite a more or less outstanding economic growth in the past few decades. We document that the decline of social capital plays a major role in predicting the decline of happiness in these countries—besides the well-known role of social comparisons. This suggests that the decline of social capital may be a part of the explanation of the Easterlin paradox. Overall, our findings support the view that the basic message of happiness economics should not change, i.e., the centrality of GDP should be reduced. Indeed, social capital—as well as economic growth— can be the target for policies aimed at preserving/fostering it (Helliwell, 2011a; Helliwell, 2011b; Rogers etal., 2011; Bilancini and D’Alessandro, 2012).