Who Has the Most Friends? New Research on Social Capital by Income Level
Amanda Fisher
Community Engagement Director
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Scientific research is a valuable resource for learning about charitable programs’ best practices. Often, a well-designed study does a better job of confirming or disproving our assumptions than anecdotal observations or deliberate outcomes measurement. This synopsis addresses the connections between individuals’ social capital and income in the working paper entitled The Distribution of Social Capital Across Individuals and Its Relationship to Income.
What question does this research answer?
What connections exist between individuals’ social capital and income?
One can find people who claim that lower-income populations have stronger social capital based on the belief that they maintain tight social networks to survive. The more prevalent claim is that the wealthier have more connections. Prior to this research, there was no empirical way to know which claim was true.
Several studies address social capital, but the information up to the point of this study gives general trends based on states. None observe social capital by individual demographics such as age, sex, education, race, and ethnicity. This study aggregates existing datasets to develop an individual measure of social capital. From these datasets, these six social capital domains were considered: community engagement, religious involvement, social connection, family strength, work, and social trust.
Study Design
Data Source: AEI Economic Policy Working Paper Series
Sample Size:
Nearly 200K respondents of the 2019 Current Population Survey Annual Social and Economic Supplement, the Volunteer and Civic Life Supplement, the 2019 American Time Use Survey, and the 2018 General Social Survey
Type of Study:
This is an “observational study,” which means researchers observe the apparent effect of an intervention without determining who does and does not receive the intervention.
For example, a study could observe that a sample of people with higher levels of education tend to have higher incomes than people with less education. However, simply showing a correlation is insufficient to prove education caused the higher income. It may be that people with more income pursue more education or some third factor, like ambition, causes people to earn more income and pursue more education. A well-designed observational study will attempt to eliminate obvious third causes but will not be able to fully prove the intervention caused the apparent outcome.
Limitations:
Because this study is observational, correlations may be made among the data but conclusions about causation cannot be made. For example, while a $10,000 government transfer correlates with a decrease in social capital, one cannot conclude the transfer caused the decrease in social capital. Such a deduction may be logical, but the study does not provide causal evidence to support that claim.
Additionally, unlike other economic variables, like educational attainment, “social capital” doesn’t have a uniform definition. The authors defend the six components of their index well, but there is still room for debate about whether they have captured the best indicators of social capital.
Key Findings
1. The main finding is that social capital increases as income increases, but there is a greater gap between the poor and middle class than there is between the middle and upper-income brackets. Another important finding shows that while increased income is important in its
relationship to social capital, the source of income matters. Individuals who receive government assistance have less social capital than people who earn $10,000 from working.
2. The largest differences in social capital occur across educational lines. Think: higher education = higher social capital.
3. Social capital varies by race and ethnicity but does not vary significantly by gender. At nearly all education levels, non-Hispanic whites have more social capital than Hispanics, who have more than non-Hispanic blacks. The notable exception is non-high school educated Hispanics outperform similarly educated people of other ethnicities. See Figure 2.
4. The source of the increase in income is important. When there is a government cash transfer of $10,000 to an individual, social capital decreases. When there is a market-based increase to an individual of $10,000, social capital increases. See Figure 5.
Practical Application
While this study does not claim low social capital causes poverty or vice versa, other studies prove it is central to economic mobility. These two findings should inspire ministries to better support individuals in building social capital. By implementing new programs — or improving upon their current ones to prioritize relationship-building — they can help alleviate poverty. Incorporating mentoring programs or training volunteers to foster meaningful relationships with participants can be vital first steps, and offering paths to increased education may be a longer-term solution.
Another key takeaway applies to charity workers considering use of government assistance to aid the poor — and policymakers considering legislation to increase those subsidies. This study suggests that government transfers are linked to a decline in social capital, while income from employment tends to increase a person’s social connectedness. This is understandable — financial support from the government does not require personal relationships, while income earned through the marketplace can result in building connections with co-workers and other opportunities to serve in the community. It is worth noting the negative effects can be mitigated with work requirements for recipients of government transfers.
Conclusion
Important connections exist between social capital and income. While individuals working in poverty alleviation likely know and understand these connections anecdotally, this research backs up their intuition. Further, these connections are vital for charity workers as they implement programs — and for policymakers considering government program expansion to the poor.
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