The role of human, social, built, and natural capital in explaining life satisfaction at the country level: Toward a National Well-Being Index (NWI)

Abstract

This paper investigates the contributions to life satisfaction of four basic types of capital: human, social, built, and natural. Life satisfaction data were available for respondents from fifty-seven countries from the World Values Survey over the decade of the 1990s. Data on proxies for human, social, built, and natural capital were available for 171 countries, using data from the 1998 United Nations Human Development Report [United Nations Development Programme, 1998. Human Development Report 1998. Oxford University Press, New York.], Freedom House (1999) [Freedom House, 1999. News of the Century: Press Freedom 1999. Freedom House, http://freedomhouse.org/pfs99/pfs99.pdf, September 30, 2003.], and Sutton and Costanza (2002) [Sutton, P., Costanza, R., 2002. Global estimates of market and non-market values derived from nighttime satellite imagery, land cover, and ecosystem service valuation. Ecol. Econ., 41:509–527.]. Regression models show that both the UN Human Development Index (HDI — which includes proxies for both built and human capital) and an index of the value of ecosystem services per km 2 (as a proxy for natural capital) are important factors in explaining life satisfaction at the country level and together can explain 72% of the variation in life satisfaction. We did not find a proxy for social capital that was a significant predictor in the regression models. This was due to the inadequacy of available proxy variables for social capital at the national scale and intercorrelation with other variables. We discuss data limitations and a range of other problems with the existing limited data along with methods to overcome some of these limitations to improve future analyses. We propose a National Well-Being Index (NWI) based on our findings and describe a path to improve it over time.