Well-being beyond utility: contextualising the effect of unemployment on life-satisfaction using social capital

Abstract

This thesis analyses how the effect of unemployment on life-satisfaction varies in different contexts using data from two large-scale surveys (the World Values Survey and the European Values Study). Over 40 Western-European and Anglo Saxon countries are included in the investigation. Through multilevel modelling, relevant national-level factors are identified that moderate the impact of unemployment upon life-satisfaction relationship. The study shows that in particular sociodemographic and cultural country-level variables affect how individuals experience unemployment and how it is insufficient to rely on economic indicators only.

In order to situate individuals in not only their national context, but also in their personal one, social capital constructs are integrated into the project reflecting the networks individuals are part of. More accurate estimates of the unemployment effect are calculated using structural equation modelling to control for endogeneity effects. The results show that the role of unemployment for life-satisfaction appears to be highly contextualised. After taking into account selection biases from socioeconomic characteristics of an individual as well as their social capital resources, the negative effect of unemployment upon life satisfaction that is consistently found cannot be verified as robust and independent. Instead, different domains of social capital largely determine what effect unemployment has on life-satisfaction for different individuals. Furthermore, significant variation in the effect of unemployment between countries, found in the simpler multilevel models, largely disappears when personal context is taken into account. This implies that future investigations should reconsider how to contextualise individual-level processes regarding subjective well-being. The findings from this project suggest that instead of contextualising the direct effects of predictors on life-satisfaction with country-level factors, it may be more appropriate to contextualise the personal context people live in and investigate the effects at the individual level thereafter.

The results are discussed in a framework contrasting utility-based micro-economic approaches to understanding human behaviour with approaches that address subjective well-being emphasising the variety of human motivations, beyond profit maximisation.