The Economics of Social Capital and Health.

Paringer, Lynn

The Economics of Social Capital and Health edited by Sherman Folland and Lorenzo Rocco, Hackensack, NJ: World Scientific Publishing, 2014.

This volume, the second in World Scientific's series on Global Healthcare Economics and Public Policy, is comprised of a collection of articles written by authors from around the world who explore and investigate the definition of social capital, its accumulation and measurement, and its relationship to health status.

Depending on one's frame of reference and training, social capital can mean different things to different audiences and different investigators. In Chapter 2, Folland addresses the question of how social capital is defined and how one can trace the relationship between social capital and health status. He discusses the various definitions, ranging from, "Influences of family and community on the individual" (Loury, 1977), "Obligations and expectations, information channels and social norms" (Coleman, 1988), "The benefit of a network of friends and acquaintances and of membership in a group" (Bourdieu, 1985), and "Relationships, groups, networks and social norms experienced by individuals and community" (Putnam, 1993). Folland also reflects on the notion of "capital" as used by economists in the context of requiring one to forego current benefits for future benefits and the fact that "producing" social capital requires opportunity costs. The definition of social capital and the types of ways in which one can measure social capital is critical if one is to attempt to estimate the effect of such capital on health and to draw policy implications from the measured impact.

In general, most of the authors take on the perspective of economists in defining social capital and hence examine the accumulation and depletion of the stock of social capital and how its level and acquisition might impact health status in different population groups. Social capital takes time to develop and maintain and can depreciate over time. The theory presented in the various articles draws heavily on established labor/leisure choice models and on previous work by Grossman (1972).

Chapter 3 by Folland, Kaarbee and Islam develops a theoretical model of the decision to invest in social capital. The amount and type of social capital accumulated by an individual is viewed in the context of a utility maximization problem. The link between social capital and health is accomplished via a model in which increments in social capital improve the probability of survival and there are opportunity costs to the decision to acquire more social capital. Chapter 4 by LaPorte further explores a theoretical model of social capital acquisition in the context of uncertainty. She raises the question of how the probability of how mobility and the probability of exiting a particular community might impact the decision to invest in social capital within the current community.

Chapter 5 by Folland and Iversen examines how social capital arises in populations and specifically looks at six characteristics: age, marriage and cohabitation, culture, education, gender and income and how they are expected to impact one's stock of social capital. For each of these characteristics, the authors review the evidence on the relationship between these factors and the development of social capital. In Chapter 6, Scheffler and Bahgat review the measures of social capital that have been used by numerous researchers worldwide in exploring the relationship between social capital and health. They examine the correlation between health and happiness and also between health and measures of social capital such as trust, friendship and membership in different organizations.

In Chapter 7, Rocco and Fumagalli take on the problem of reverse causation and trying to disentangle the problem of whether social capital impacts health or whether health impacts accumulation of social capital. They discuss the use of instrumental variables in sorting out the reverse causation problem and review the studies that have been done to identify the relationship between social capital and health and the variables that have been used by researchers to measure social capital. They also examine the potential "of exploiting historical shocks as exogenous sources of variation" in trying to solve the problem of two-way causation.

In Chapter 8, Anchorena, Ronconi and Ozawa address the question of whether the relationship between social capital and health that has generally been found to exist in high income countries is also present in lower and middle income countries. Their research suggests that people in more developed countries exhibit higher levels of trust and are more likely to participate in organizations and have fewer interactions with family and friends than those in less developed countries. They further find that the relationship between trust and participation in organizations and health status is stronger in more developed countries than in less developed countries.

Rocco and d'Hombres examine the relationship between social capital and smoking in Chapter 9. Using data from Germany they set out to determine if the effect of smoking bans on smoking prevalence is stronger for persons who are "rich in terms of social capital" compared to those who are relatively poor in terms of social capital. They find that the bans had very little effect on smoking cessation among those with low levels of social capital compared to those with higher levels of social capital as measured by levels of trust and social inclination.

Aas concludes the book with a chapter on policy implications. She discusses the current state of knowledge with respect to the effect of policy intervention on the formation of social capital and the need to further examine the costs and benefits of using public policy to enhance social capital.

The complexities associated with defining and measuring social capital, the difficulty in identifying and separating out two way causation between health and social capital accumulation, and the uncertainty of the payoff to the social capital investment are at the core of the text and make for interesting and thought provoking reading. The articles in the book span a range of very interesting topics from the definitional to the theoretical to the empirical, and I believe the editors did a good job addressing a number of interesting questions and thoughts with their selection of articles included in the text.

However, one area in which I wish at least some of the articles had devoted more attention is the role that technological advances such as the internet play in the acquisition of social capital and how this is likely to impact health. On the one hand, the ability to research information and to connect with others facing similar health issues can expand one's social capital. On the other hand, the often impersonal nature of social media connections may have little impact or even a negative impact on one's sense of community connections.

Lynn Paringer

Professor of Economics, Emerita

California State University, East Bay