Social Capital and Life Satisfaction in Switzerland

This paper investigates the causal relationship running from some crucial social capital indicators to life satisfaction using linear panel data models (fixed-effects, random effects) on data coming from 12 waves (1999-2012) of Swiss Household Panel (SHP). The positive association between indicators of social capital - particularly trust with people, friendships, participation in voluntary associations - and life satisfaction has been widely proven in the literature although most of these studies adopt standard regression models and cross-sectional data leading to spurious conclusion. The panel nature and the rich information provided in the SHP allows to control for time constant unobserved characteristics, such as personality traits, and for most covariates that have been proven to influence life satisfaction. Overall, this study suggests that informal relationships and trust are the most important social capital indicators in terms of their effects on life satisfaction. Gender related differences are also apparent, in that the emotional support received from relatives or friends is a far better predictor of life satisfaction for women than for men