The happy few: Cross-country evidence on social capital and life satisfaction

I examine why the populations of certain countries are so much more satisfied with their lives than the rest of the world. The main hypothesis is that social capital leads to happier citizens. To test this, a measure of social capital is formed using data from the World Values Survey. In cross-country analyses gross national income,. economic uncertainty and expectations for the future are robust predictors of happiness while the social capital measure emerges strongly and robustly associated with happiness. Moreover, while social capital emerges as a strong predictor of happiness in affluent societies where income does not seem to matter, the reverse holds true for a group of low-income countries. I conclude that the populations in a few Northern European countries are probably the happiest in the world because of their high levels of social capital more than their pecuniary affluence.