Social Capital, Trust and Well-being in the Evaluation of Wealth
We combine theory with data from different domains to provide an empirical analysis of the scale and variability of social capital as wealth. This is used to argue, given what we have learned in the literature on social capital, that the welfare returns to investing in trust could be substantial. Using social trust data from 132 nations covered by the Gallup World Poll, we present a range of estimates of social trust’s wealth-equivalent values. The estimates of the wealth embodied in social capital are very large, and with a structure and distribution quite different from those for physical capital. These estimates reflect values above and beyond what social trust contributes to supporting incomes and health. Although social trust is an important component of total wealth in all regions and country groupings, there are nonetheless big variations within and among regions, ranging from as low as 12% of total wealth in Latin America to 28% in the OECD.
The views expressed in this paper are those of the authors alone, and should not be attributed to the organizations with which they are, respectively, affiliated. We are grateful to Gallup for access to data from the Gallup World Poll, and to the Canadian Institute for Advanced Research for continuing support for Helliwell’s research. We are also grateful for anonymous peer review comments, as well as comments from Alex Teytelboym and participants at the wealth conference, Waddesdon Manor, June 20-21 2016. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.