The paper investigates the relation between social capital and life satisfaction focusing on the distinction between bonding and bridging. Using the latest version of the combined World and European Values Surveys, the authors first address the question of measurement of social capital by means of a multi-step factor analysis.
Through this procedure, they nd that proxies typically used for social capital tend to polarize around two dimensions interpreted as bonding and bridging. These two dimensions are in fact associated with a single latent variable with opposite signs suggesting that they describe two sides of the same latent variable rather than two independent latent variables. The authors call this latent variable the locus of socializing and use it to explore the relation between social capital and life satisfaction across world citizens and across groups of similar countries. The results indicate that people with extreme bonding or bridging attitudes are less happy than people with more balanced attitudes. Unlike the literature on social capital and economic growth that finds bridging attitudes more desirable than bonding attitudes, they nd that bonding attitudes are at least as important as bridging attitudes for life satisfaction. This suggests that the social capital dimensions important for economic growth may not nec ssarily coincide with the social capital dimensions important for life satisfaction
Social capital is a relatively new concept in economics, but the literature on the subject is already rich and controversial. It has been recognized that this concept captures a phenomenon important for economics, in that it relates to trust and cooperation, and hence to e ciency and economic growth. At the same time, economists have brought several criticisms against the concept of social capital, such as its vague de nition and the di culty of its measurement (Durlauf and Fafchamps 2005; Dasgupta 2005; Paldam and Svendsen 2000).
The de nition of social capital varies across the social sciences. In sociology and in political science, social capital is often de ned as a concept pertaining to organizations, or even nations, because it has been mainly referred to social relationships and supporting structures (Putnam 2003; Fukuyama 1997). Economics, and in part Bourdieu (1986), have usually de ned the concept of social capital, as it was originally conceived by Loury (1977), and then developed by Glaeser et al. (2003), as pertaining to individuals. Social capital has also been criticized for the di culty of its measurement. The concept emerges from the literature as multidimensional and as including immaterial components. Economists seemingly prefer to focus on some speci c variables usually considered to be indicators of social capital, like trust (e.g. Glaeser 2000; Fehr 2009; Alesina and La Ferrara 2002), or membership of social organizations (Glaeser et al.2000). Instead, when the concept of social capital has been explicitly treate , it is generally considered as a latent variable captured by various proxies (Beugelsdijk and Smulders 2009).
Recently, social capital has attracted growing interest, also among economists, in relation to individual self-reported life satisfaction.1 This relationship has been usually found to be positive, and in some cases very signi cant, depending on the indicators used for social capital (Bjornskov, 2006, Helliwell, 2006, 2008, Ram, 2010, Leung et al., 2011). However, the relationship between social capital and economic growth, which has been studied in the economic literature since the seminal article by Knack and Keefer (1997),is not as consistent in predicting a positive role of social capital. For example, Olson's (1982) economic analysis of interest groups and Ban eld's (1958) sociological analysis of \amoral familism" nd a negative relationship between social capital and economic growth.
World Bank. Document Date: 2012/01/01.Document Type: Policy Research Working Paper. Report Number: WPS5945