Money, Social Relationships and Materialism. Evidence from Happiness Data

Are unhappiness, high concern for money and scarcity of social capital different faces of the same phenomenon? Economists tend to treat these variables as distinct correlates of well-being. On the contrary, positive psychologists argue that they all relate to materialism, a system of personal values ascribing great importance in life to extrinsic motivations and low priority to intrinsic motivations. Using two independent datasets (GSOEP and EU-SILC) and regressions with interaction terms, I test the hypothesis that material interests, as proxied by the effects of individual and reference income on well-being, are associated with low levels of social capital. The results suggest that people with scarce social capital tend to attach higher importance to money and income comparisons. The implication of such finding is that promoting social capital reduces people’s attention to material concerns with positive impact on well-being.