Macroeconomic Conditions and Well-Being: Do Social Interactions Matter?

20 Pages Posted: 14 Dec 2016

See all articles by Emilio Colombo

Emilio Colombo

Catholic University of the Sacred Heart of Milan

Valentina Rotondi

Bocconi University - DONDENA - Carlo F. Dondena Centre for Research on Social Dynamics

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: December 13, 2016

Abstract

This paper investigates the role played by social interactions in explaining the effects of macroeconomic conditions on well-being. Using survey data for a representative sample of Italian individuals, we find that social interactions play a dual role as both moderators and mediators of the effects of macroeconomic conditions. On the one hand, the well-being of people who spend more time with their friends or go out more often is less sensitive to the effects of macroeconomic fluctuations. On the other hand, social interactions are negatively affected by worsening macroeconomic conditions, thus playing a relevant role in the transmission of macroeconomic shocks to subjective well-being. More specifically, the negative impact of macroeconomic downturns on frequency of going out and active participation in associations contributes to explain the adverse effects of recessions on satisfaction with life and with individual life domains.

Keywords: macroeconomic fluctuations, unemployment, subjective well-being

JEL Classification: E32, I31, I38

Suggested Citation

Colombo, Emilio and Rotondi, Valentina and Stanca, Luca, Macroeconomic Conditions and Well-Being: Do Social Interactions Matter? (December 13, 2016). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 355. Available at SSRN: https://ssrn.com/abstract=2885155 or http://dx.doi.org/10.2139/ssrn.2885155

Emilio Colombo

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Valentina Rotondi

Bocconi University - DONDENA - Carlo F. Dondena Centre for Research on Social Dynamics ( email )

Via Roentgen 1
Milan, 20136
Italy

Luca Stanca (Contact Author)

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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