Provisional draft Did the Decline in Social Capital Decrease American Happiness? A Relational Explanation of the Happiness Paradox

Most popular explanations of the happiness paradox cannot fully account for the lack of growth in U.S. reported well-being during the last thirty years (Blanchflower and Oswald (2004)). In this paper we test an alternative hypothesis, namely that the decline in U.S. social capital is responsible for what is left unexplained by previous research. We provide three main findings. First, we show that the inclusion of social capital does improve the account of reported happiness. Second, we provide evidence of a decline in social capital indicators for the period 1975-2004, confirming Putnam's claim to a large extent. Finally, we show that failed growth of happiness is mostly due to the decline of social capital and, in particular, to the decline of its relational and intrinsically motivated component