Does Social Capital Compensate for Limited Effects of Economic Affluence on Subjective Well-being?

Investigating the Relationship between Life Satisfaction and Trust

Abstract

Many previous studies show that economic affluence only explains a small part of subjective well-being. Meanwhile in recent years, increasing attention has been paid to social capital as a determinant of subjective well-being other than economic affluence. This study focuses on how generalized trust compensates for limited effects of economic affluence on subjective well-being, based on individual-level survey data (N=1,033) collected in Tokyo, Japan. Regression analyses with interactions are used to examine the effect of generalized trust and perceived economic security on life satisfaction by level of household income. The main results are as follows: 1) A positive effect of perceived economic security on life satisfaction is weaker for high-income groups. 2) A positive effect of generalized trust on life satisfaction, on the other hand, is larger for high-income groups. These results show that, compared with individuals with lower incomes, an increase in perceived economic security has a weaker impact on the life satisfaction of individuals with higher incomes. However, an increase in generalized trust could compensate for this loss, as generalized trust has a stronger positive effect on the life satisfaction for individuals with higher incomes. We discuss theory and policy implications of these findings.