Trusting only whom you know, knowing only whom you trust: the joint impact of social capital and trust on individuals’ economic performance and happiness in CEE countries

This paper demonstrates that bridging and bonding social capital as well as social trust interdependently affect individuals’ earnings and happiness. Based on crosssectional World Values Survey 2000 data on individuals from eight Central and Eastern European countries (CEECs), we provide evidence that majority of citizens of these countries have likely fallen in a “low trust trap” where deficits of bridging social capital and trust reinforce each other in lowering individuals’ incomes and happiness. Apart from gradual modernization and economic growth, also increases in labor market participation are identified as a potential way out of this “trap”, because employed people in CEECs tend to have statistically significantly more bridging social capital and more trust. While assessing robustness of our empirical results, we have found a high risk of regressor endogeneity and omitted variables bias, generally overlooked in earlier studies. These issues are carefully addressed in the current contribution.bridging social capital, bonding social capital, social trust, CEE countries, earnings, happiness

Social Capital, Well-Being, and Earnings: Theory and Evidence from Poland

We study the relationship between two distinct dimensions of social capital (bridging and bonding social capital) and the personal performances of individuals: their reported subjective well-being (SWB) and earnings. A theoretical model is put forward which explains the sources and dynamics of social capital formation. It predicts an inverse U-shaped relationship between any type of social capital and SWB, an inverse U-shaped relationship between bridging social capital and earnings, and an unambiguously negative impact of bonding social capital on earnings. The key predictions of the model are confirmed using cross-section survey data from the 2005 wave of the “Social Diagnosis” survey program conducted in Poland. Very low levels of bridging social capital observed in Poland imply that it is unambiguously beneficial to invest in it: both SWB of individuals and their earnings would increase in such case.bridging social capital, bonding social capital, earnings, subjective well-being, Poland

Social Capital, Well-Being, and Earnings: Theory and Evidence from Poland

We study the relationship between two distinct dimensions of social capital (bridging and bonding social capital) and the personal performances of individuals: their reported subjective well-being (SWB) and earnings. A theoretical model is put forward which explains the sources and dynamics of social capital formation. It predicts an inverse U-shaped relationship between any type of social capital and SWB, an inverse U-shaped relationship between bridging social capital and earnings, and an unambiguously negative impact of bonding social capital on earnings. The key predictions of the model are confirmed using cross-section survey data from the 2005 wave of the “Social Diagnosis” survey program conducted in Poland. Very low levels of bridging social capital observed in Poland imply that it is unambiguously beneficial to invest in it: both SWB of individuals and their earnings would increase in such case

Learning Insularity? Social Capital, Social Learning and Staying at Home among European Youth

This paper explores youth mobility in two European regions: Northern Ireland and Portugal. The original research upon which it is based focuses on two specific mobility themes: housing transitions and migration intentions. We have found that almost three quarters of the young people in both samples were living in the parental home, with a significant correlation between living at home and not wanting to migrate in the future. A number of explanations are discussed, including the importance of economic, emotional and social ties in encouraging and inhibiting youth mobility. Our analysis leads us to conclude that many of these young people have learnt to become geographically insular through a social learning process involving strong reliance on the bonding social capital created and embedded in their family relationships

Social Capital, Well-Being, and Earnings: Theory and Evidence from Poland

We study the relationship between two distinct dimensions of social capital (bridging and bonding social capital) and the personal performances of individuals: their reported subjective well-being (SWB) and earnings. A theoretical model is put forward which explains the sources and dynamics of social capital formation. It predicts an inverse U-shaped relationship between any type of social capital and SWB, an inverse U-shaped relationship between bridging social capital and earnings, and an unambiguously negative impact of bonding social capital on earnings. The key predictions of the model are confirmed using cross-section survey data from the 2005 wave of the “Social Diagnosis” survey program conducted in Poland. Very low levels of bridging social capital observed in Poland imply that it is unambiguously beneficial to invest in it: both SWB of individuals and their earnings would increase in such case

Social Capital, Trust, and Multiple Equilibria in Economic Performance

We propose a novel mechanism giving rise to poverty traps and multiple equilibria in economic performance. It is a potentially important source of persistent underdevelopment across countries and regions. At the core of this mechanism, bridging social capital and social trust feed back on each other, interdependently affecting individuals' earnings and subjective well-being. High trust and abundant bridging social capital reinforce each other, leading to a "high" equilibrium where both these variables take persistently high values, and earnings and well-being are high as well, whereas low trust and lacking bridging social capital create a vicious circle, leading to a "low trust trap" where all these variables are persistently low. The workings of our theoretical model are in agreement with a wide range of findings from the contemporary literature in sociology and social psychology

Social Capital, Trust, and Multiple Equilibria in Economic Performance

We propose a novel mechanism giving rise to poverty traps and multiple equilibria in economic performance. It is a potentially important source of persistent underdevelopment across countries and regions. At the core of this mechanism, bridging social capital and social trust feed back on each other, interdependently affecting individuals' earnings and subjective well-being. High trust and abundant bridging social capital reinforce each other, leading to a "high" equilibrium where both these variables take persistently high values, and earnings and well-being are high as well, whereas low trust and lacking bridging social capital create a vicious circle, leading to a "low trust trap" where all these variables are persistently low. The workings of our theoretical model are in agreement with a wide range of findings from the contemporary literature in sociology and social psychology

Trusting Only Whom You Know, Knowing Only Whom You Trust: The Joint Impact of Social Capital and Trust on Individuals' Economic Performance and Well-Being in CEE Countries

This paper provides evidence that bridging and bonding social capital as well as social trust may interdependently affect individuals' earnings and subjective well-being. Based on cross-sectional World Values Survey 2000 data on individuals from Central and Eastern European countries (CEECs), we show that majority of citizens of these countries seem to fall in a "low trust trap" where deficits of bridging social capital and trust reinforce each other in lowering individuals' incomes and well-being. Apart from gradual modernization and economic growth, also increases in labor market participation can be perceived as a potential way out of this "trap", because employed people in CEECs tend to have statistically significantly more bridging social capital and more trust. We discuss our empirical results by providing an assessment of their robustness, and pointing out the high risk of endogeneity and omitted variables bias, often overlooked in earlier studies

Social Capital and the Financial Crisis: The Case of Iceland

The aim of this working paper is to examine social capital in Iceland, as measured in terms of social ties, social trust, political activity and civic engagement, from a comparative perspective before and after the financial crisis of 2008. It uses data from four successive waves of the European Values Study (EVS). Following a contextualisation of this research theme, our results show that Icelanders appear to be as satisfied with their lives after the onset of the crisis as they were prior to the economic collapse. The strength of their family ties has been progressively increasing during the 26 year period covered by the data, with gradual growth in the importance awarded to family relationships, which indicates that Icelanders are now more reliant on their parents than in the past. Ties with non-family members are also adjudged to have become more important, though only after the financial crisis. Furthermore, Icelanders are more active civically and politically: for example, they are more likely to belong to a political party, social welfare organisation or local community initiative, which implies that such activities have become of greater importance since 2008. In addition, while there may have been an increase in levels of social trust among people, there is more dissatisfaction with how democracy works. In conclusion, we can see that social capital has almost certainly become more important in Iceland since the economic crisis but, given that we have been able to identify underlying trends showing that this is at least in part a long-term development, this heightened importance may not just be a consequence of the crisis but rather part of a more gradual societal change

Social mindfulness and prosociality vary across the globe

Humans are social animals, but not everyone will be mindful of others to the same extent. Individual differences have been found, but would social mindfulness also be shaped by one’s location in the world? Expecting cross-national differences to exist, we examined if and how social mindfulness differs across countries. At little to no material cost, social mindfulness typically entails small acts of attention or kindness. Even though fairly common, such low-cost cooperation has received little empirical attention. Measuring social mindfulness across 31 samples from industrialized countries and regions (n = 8,354), we found considerable variation. Among selected country-level variables, greater social mindfulness was most strongly associated with countries’ better general performance on environmental protection. Together, our findings contribute to the literature on prosociality by targeting the kind of everyday cooperation that is more focused on communicating benevolence than on providing material benefits