Social Capital and Self-Rated Health. An IV Analysis

Abstract: This paper studies the contextual effects of social capital on individual self-rated health in a cross sectional analysis using individual level data from 44 European Countries. The question is addressed with an Ordinary Least Squares regression as well as an Instrumental Variable analysis. A contextual effect of social capital on individual self-rated health is found and the findings imply that higher country-level social capital has a detrimental effect on individual self-rated health. It is also found that it is crucial to account for the interaction effect between individual- and country-level social capital in order to fully understand the influences of social capital on health. Trusting individuals’ self-rated health benefit from higher country-level social capital, as opposed to distrustful individuals’. Based on these findings it is therefore suggested that, in order to improve health, policy actions should not be targeted solely at increasing country-level social capital but also individual-level social capital.