The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis

We investigate whether the correlation of income and social capital with well-being changes in times of economic crisis. Both subjective well-being and social capital may decline during a crisis, and their correlation can change: if social capital becomes a scarce good, it may correlate more with well-being. Alternatively, people may find that in times of crisis other things matter more for well-being and its association with social capital should decrease. To account for these possibilities, we apply a Blinder–Oaxaca decomposition and regression analysis with interaction effects to European Social Survey data from 2006 to 2012. Our findings indicate that, after accounting for the decline of social capital, its correlation with well-being does not change over time. On the contrary, income becomes only temporarily more important for well-being. We conclude that in times of crisis, when material concerns are urgent, policy makers targeting recovery should account for the policy impacts on social capital.