INTRODUCTION
PROBLEM STATEMENT
Social capital has gained significant attention in both scientific research and policy discussions, as empirical evidence links it to various life aspects and suggests a positive influence on individual and national life satisfaction (Putnam, 2000) Previous studies have shown that different forms of social capital correlate strongly with subjective well-being, as they foster social networks and interactions that provide individuals with essential support from their communities (Helliwell).
Research by Bjornskov (2003) indicates that social capital plays a crucial role in understanding the happiness levels of different countries Similarly, Putnam (2000) discovered a positive correlation between social capital and happiness in the United States Consequently, communities with abundant social capital and individuals with strong personal social networks tend to experience greater overall satisfaction.
Conflicting results have emerged regarding the relationship between social capital and life satisfaction, largely due to the ambiguous definitions and measurement methods used in studies While some researchers report no significant correlation, the specific relationship between social capital and subjective life satisfaction among residents in rural Vietnam remains unexplored Given the country's recent social, economic, and political transformations, which may influence the socio-cultural context that shapes social capital, investigating this relationship is crucial Additionally, the close-knit nature of Vietnamese society, where family, village, and nation form the foundation of social structure, suggests that accumulated social capital could significantly impact individuals' life satisfaction.
In recent years, economists have increasingly focused on empirical studies of happiness and life satisfaction, recognizing them as key indicators of life quality that many countries prioritize Life satisfaction is crucial for a nation's wealth, as satisfied citizens contribute positively to economic, social, and psychological well-being Satisfied individuals tend to be healthier, live longer, and effectively utilize their strengths and skills for personal and societal benefit Additionally, they are better equipped to handle depression, anxiety, and stress, leading to lower crime rates and reduced strain on health services and social welfare systems Consequently, enhancing individual satisfaction not only benefits the person but also fosters national improvement Notably, Vietnam, despite being a developing country, ranks highly on the global happiness index, placing second in the Happy Planet Index (HPI) among 151 countries in both 2012 and 2016, according to the New Economics Foundation.
In 2016, Vietnam ranked second in the Asia Pacific region for self-satisfaction, but is this true for rural areas? This article examines the findings from the VARHS 2014 survey to assess the life satisfaction of Vietnamese people, focusing on social capital and its impact on self-rated well-being Understanding these factors is crucial for policymakers and local governments to make informed investment decisions that enhance quality of life and promote rural development As Vietnam undergoes industrialization and modernization, effective policies are essential for improving living conditions and fostering growth in rural communities This empirical study aims to enrich the literature on rural Vietnam by exploring the connection between social capital and life satisfaction among its residents.
RESEARCH OBJECTIVES AND QUESTIONS
This study explores the relationship between social capital and subjective life satisfaction among residents in rural Vietnam Social capital is defined as a multidimensional construct that encompasses social trust, formal and informal networks, and cooperative behaviors Meanwhile, life satisfaction is assessed through self-reported evaluations from the Vietnamese population.
This study attempts to answer the following questions:
What are the characteristics which contribute to the investment in social capital of an individual?
Does an individual feel more satisfied with life if he or she has more social capital?
In other words, if an individual has more friends, joins more institutions, more trust and is more cooperative, is he or she more satisfied with life?
The impact of social capital on an individual’s subjective life satisfaction can be influenced by various factors, including relative income, gender, the number of children, and the duration of residence in the same community Understanding how these elements interact with social capital is essential for assessing overall life satisfaction.
RESEARCH SCOPE AND METHODOLOGY
The research uses the data from Vietnam Access To Resources Household Survey (VARHS) conducted in twelve Vietnamese rural provinces in 2014.
The main methodology of this study is quantitative analysis Specifically, order probit estimation is used to estimate the relationship between self-rated life-satisfaction and social capital.
Following Bjornskov (2003) and Frey and Stutzer (2002), terms “happiness”, “life- satisfaction”, “self-rated happiness”, “self-rated life-satisfaction”, “subjective happiness”,
“subjective life-satisfaction”, and “wellbeing” in this research are used interchangeably to indicate the happiness of an individual.
THESIS STRUCTURE
This thesis comprises five chapters, beginning with Chapter 1, which outlines the background and motivation behind the research on the impact of social capital on life satisfaction in Vietnam Chapter 2 provides a review of relevant theories and prior empirical studies Chapter 3 details the data collection process, summary statistics, and the methodology used to derive the essential results.
4 shows the results and discussions Chapter 5 summarizes main research findings,suggests policy implications.
LITERATURE REVIEW
Concept of social capital
Social capital is often viewed as an abstract and elusive concept lacking a universally accepted definition To analyze the relationship between social capital and individual life satisfaction, this study adopts a dimensional definition based on the theories of Coleman (1988), Putnam (2000), and Paxton (1999) Coleman defines social capital as the social relationships that facilitate both economic and non-economic benefits, encompassing trust, obligations, and norms within a group, which foster coordination and cooperation Putnam expands on this by emphasizing the importance of interpersonal networks, defining social capital as a blend of trust, norms, and both formal and informal social networks that shape human interactions Formal institutions, such as organizations, increase opportunities for interaction, while informal institutions involve connections with family and friends, both contributing to the overall accumulation of social capital.
According to Paxton (1999), social capital comprises two key components: the objective relationships that connect individuals in their daily lives and the subjective ties characterized by trust, reciprocity, and positive emotions among people.
This study explores the concepts of social trust and cooperation as proxies to assess an individual's trust in others and their community engagement It also evaluates social capital through the lens of formal institutions and informal networks in which individuals participate Although an attempt was made to create a general social capital index using these four proxies, the effort was unsuccessful Consequently, the research relies on the four proxies—trust, cooperation, social network, and formal institutions—to examine the relationship between social capital and individual self-rated life satisfaction.
Model of social capital investment
Glaeser et al (2002) proposed a model to analyze the formation of social capital, addressing the lack of a universally accepted theoretical framework regarding its investment determinants Their approach focuses on optimal individual investment decisions, highlighting the significance of understanding the effects of social capital through a structured analytical lens.
(2002), the dynamics of social capital stock S are followed by a dynamic budget constraint and described as:
Individual social capital (S) experiences depreciation at a rate of (1 - δ), where δ is less than 1 The investment level incurs a time cost, C(It), which is characterized as an increasing and convex function Additionally, the opportunity cost of time is represented by the wage rate (w).
Glaeser et al (2002) define social capital as the social skills and charisma that allow individuals to achieve both market and non-market benefits through their connections within society Investing in social capital is linked to increased self-rated life satisfaction; however, if such investments do not enhance subjective satisfaction, it may indicate a focus solely on market returns The individual's challenge of maximizing social capital over a lifespan of T periods can be framed within this context.
� t [StR(�̂) – wC(It)], s.t St+1 = �∅ St + It
The future discount factor (�) and aggregate per-capita social capital (�̂) play crucial roles in determining the per period utility flow (SR(�̂)) that individuals experience, which encompasses both market returns, such as wages or improved job opportunities for socially skilled individuals, and non-market returns, including enhancements in relationships, health, and overall satisfaction It is essential to note that R’(�̂) is greater than zero, indicating that an individual gains nothing from a group lacking members The depreciation factor (∅), calculated as (1 - �) + ��, reflects the loss of social capital that occurs when a person relocates The optimal investment condition for maximizing returns on social capital is defined by the equation wC’(It) = 1−(��∅).
1− ��∅ R(�̂) This first order condition shows that the social capital investment (1) increases with the discount factor, �, (2) rises with occupational returns to social skills, R (.), and
The study investigates how social capital investment is influenced by various factors: it increases in communities with higher aggregate social capital, while it declines with increased mobility, higher opportunity costs of time, and greater rates of social capital depreciation due to relocation Additionally, the study examines how age affects social capital investment, aiming to test these theoretical propositions.
Becker and Murphy (2000)’s theory on the relationship between social capital and life-satisfaction
Since the dawn of civilization, the pursuit of life satisfaction has been a universal goal for individuals and nations alike While various methods exist to assess satisfaction, subjective measures of life satisfaction are considered both reliable and valid indicators of well-being Research has shown that these subjective assessments correlate strongly with objective evaluations, such as those derived from laboratory experiments observing facial expressions and vocal tones, as well as feedback from close acquaintances of the individuals being assessed.
1994) Therefore, the self-judged life-satisfaction applied in this research is considered to be
�−�+ 1 reliable in terms of assessing a person’s wellbeing.
Individual satisfaction is influenced by both internal and external factors, as noted by Denier (2000) Internal factors encompass personal mental and physical feelings that contribute to a sense of fulfillment, while external factors include the surrounding environment and social capital Research indicates a significant relationship between social capital and satisfaction, as it offers support, opportunities for social interaction, and fosters trust and belonging Becker and Murphy (2000) further emphasize that social capital, alongside consumed goods and services, serves as a direct input affecting an individual's utility.
The utility function U = U(x, y; S) illustrates how social capital (S) directly influences an individual's level of satisfaction, rather than merely serving as a background factor The number of friends and social relationships a person maintains significantly impacts their overall happiness, as increased social interactions often lead to greater life satisfaction This model is particularly relevant in stable social environments; however, shifts in the environment, such as relocating a family, can alter the utility function itself (Becker & Murphy, 2000).
H = U (S) Where H is the level of life-satisfaction, S is social capital Social capital directly affects the level of satisfaction of an individual.
Research indicates that social capital significantly enhances individual life satisfaction by fostering social networks that provide support and opportunities for sharing, leading to a sense of belonging and societal integration (Putnam, 2000; Helliwell and Barrington-Lee, 2010; Leung et al., 2013; Rodríguez-Pose & Berlepsch, 2014) According to Pichler (2006), social networks play a crucial role in helping individuals identify their place within society Moreover, spending quality time with family, friends, and neighbors is positively correlated with overall life satisfaction (Lelkes, 2006).
Research indicates that marriage, family connections, friendships, and community involvement are strongly linked to happiness and life satisfaction (Helliwell & Putnam, 2004) Powdthavee (2008) notes that increased frequency of social interactions can enhance life satisfaction However, this correlation may not be consistent, as Bjørnskov (2008) found no significant relationship between informal networks and satisfaction in his analysis of data from the United States.
Social trust and formal participation, key components of social capital, are strongly linked to life satisfaction Research by Rodríguez-Pose & Berlepsch (2014) across 25 European countries indicates that social capital, particularly social interaction and trust, positively influences satisfaction Multiple studies, including those by Helliwell and Putnam (2004) and Bjűrnskov (2006), support the notion that trust enhances life satisfaction, with Bjűrnskov demonstrating a significant relationship between generalized social trust and satisfaction across over 80 countries High social trust facilitates collaboration and connection with unfamiliar individuals, contributing to overall happiness In Taiwan, Chang (2009) found that trust positively impacts satisfaction levels, while Yip et al (2007) highlighted the correlation between cognitive social capital, such as social trust, and psychological wellbeing at the village level Uslander (1999) emphasized trust as a crucial element of social capital that fosters community vibrancy However, Ram (2010) noted that the trust-satisfaction relationship can be fragile and insignificant in various cross-country analyses Additionally, Leung et al (2013) found that, within a Canadian context, only familial trust significantly correlates with satisfaction, while trust in neighbors or strangers does not have a notable effect.
Regarding the formal network, there is little statistical and inconsistent correlation between structural social capital (organizational membership) and people’s satisfaction.
Research indicates a complex relationship between civic participation and individual wellbeing Bjornskov (2006) found a negative correlation between civic engagement and wellbeing, while Leung et al (2013) reported that Canadians involved in civic activities do not experience higher happiness levels compared to non-participants Conversely, Gundelach and Kreiner (2004) revealed a strong positive link between organizational membership and self-rated satisfaction in European countries, suggesting that social factors play a significant role in this dynamic.
(2008) contribute to the empirical studies by the study in Australia which finds that social capital and participation in community activities predict happiness, health and life- satisfaction.
Cooperation, as a form of social capital, significantly influences life satisfaction Researchers suggest that engaging in collaborative activities fosters excitement and enhances overall satisfaction among individuals.
Research indicates that a lack of cooperativeness in teamwork can negatively impact overall satisfaction (Lu & Argyle, 1991) However, a study involving sixty-three adults conducted by Argyle & Lu (1990) found no significant correlation between cooperation and satisfaction, suggesting that this may be due to insufficient measures of cooperativeness.
Research indicates a positive correlation between life satisfaction and cooperation Argyle (1991) found this relationship in a regression analysis involving 114 participants aged 18 to 65 Additionally, Crandall (1980) supported these findings through various small samples, revealing that individuals who reported higher levels of cooperation also experienced greater life satisfaction.
Numerous factors influence life satisfaction beyond social capital, including demographic variables such as age, sex, income, race, education, and marital status, which account for only 8-20% of satisfaction variance (Diener et al., 1999) Research indicates that individuals around the age of fifty report the lowest life satisfaction, suggesting that younger individuals may experience higher satisfaction levels (Blanchflower & Oswald, 2008) Gender also plays a significant role, as women tend to be more socialized than men, potentially amplifying the impact of social capital on their satisfaction (Hudson, 2006) While there is a positive relationship between income and satisfaction, its significance is often minimal (Diener et al., 1993; Frey & Stutzer, 2010) Additionally, health is a crucial factor in determining self-rated life satisfaction (Kozma).
& Stones, 1983) Perneger et al (2004) explores that the feeling of satisfaction all or most of the time respondents in his cross-sectional survey of 1257 randomly selected university students in
Demographic characteristics: age, gender, education, income, marital status.
Memberships Social network Trust Cooperation
Geneva, Switzerland is closely linked to improved mental health and a sense of love and affection derived from social capital However, the connection between satisfaction and physical health appears to be weak and statistically insignificant While exploring the relationship between social capital and satisfaction, recent research highlights challenges, particularly the non-robustness of this association According to Bjørnskov (2008), this relationship becomes stable only when a country reaches a specific income threshold Additionally, the ambiguous definition of social capital contributes to inconsistencies in the use of proxies, resulting in varying empirical outcomes.
This study utilizes a multidimensional approach to social capital, which includes social trust, networks formed by both formal and informal institutions, and cooperation, to effectively assess the impact of social capital on self-rated life satisfaction.
Based on the literature review of relevant theories and empirical studies, a conceptual framework illustrating the relationship between social capital and life satisfaction is presented in Figure 2.1.
Figure 2 1: The framework of the relationships among social capital, other dependent variables and life-satisfaction
DATA AND METHODOLOGY
DATA
The Vietnam Access To Resources Household Survey (VARHS) was conducted in 2014 across rural areas in twelve provinces, including ex-Ha Tay, Nghe An, Khanh Hoa, and others This collaborative project involved multiple institutions, such as the Central Institute for Economic Management and the Centre for Agricultural Policy Consulting The survey focused on individuals aged 18 and older, resulting in a sample of 3,415 respondents The extensive data collection ensures a representative overview of the rural population in these provinces, making VARHS a valuable resource for detailed insights into the economic and social landscape of rural Vietnam.
RESEARCH METHODOLOGY
In this dissertation, social capital is a multidimensional concept measured by social trust, network including formal institution and informal institution, and cooperation.
(i) Formal institution is measured by the number of formal associations that the respondents participate.
(ii) Informal institution or social network is measured by the number of people that the respondents can ask for help when they have difficulties.
(iii) Trust is calculated by the question asking “most people are basically honest and can be trusted”, the responses are “Agree”, “Disagree”.
Cooperation can be evaluated by considering two choices: the first option involves independently cultivating 1/2 hectare of land, while the second option entails collaborating with another family to farm a total of 3/2 hectares.
This model aims to establish a composite social capital index to assess its overall impact on individual life satisfaction However, factor analysis reveals that creating this index is unfeasible, as there are no valid factors available to represent social capital in this study (refer to Table 3.1 for details).
Table 3 1: Factor analysis of social capital
Factor analysis/correlation Number of obs = 3415
Method: principal factors Retained factors = 3
Rotation: (unrotated) Number of params = 6
Factor Eigenvalue Difference Proportion Cumulative
LR test: independent vs saturated: chi2(6) = 178.90 Prob>chi2 = 0.0000 Factor loadings (pattern matrix) and unique variances
Subjective life satisfaction is assessed using a four-point scale in response to the question, “Are you pleased with your life?” The possible answers include “very pleased” (3), “rather pleased” (2), “not very pleased” (1), and “not at all pleased” (0).
Demographic factors such as age, gender, income, education, marital status, number of children, and annual sick days are examined to understand their impact on individual life satisfaction and the duration of residence in the same community.
Variable Factor1 Factor2 Factor3 Uniqueness
All variables are described in the following summary table:
Formal institution Number of formal associations participated
Social network Number of people that respondents could ask for help
Trust A two- point scale response to the statement “Most people are basically honest and can be trusted” (Agree (1)– Disagree (0)) Cooperation
A dummy variable presents a choice between two farming options: Option 1 (0) involves independently cultivating half a hectare of land, while Option 2 (1) entails collaborating with other family members to farm one and a half hectares of land.
Averagesatisfaction Average of life-satisfaction of individuals in a community. Satisfaction Answers to the question: “Are you pleased with your life?”
The four choices are “very pleased” (3), “rather pleased” (2),
“not very pleased” (1), and “not at all pleased (0)
Age Age of the respondent
Age2 Age square of the respondent
Sex Dummy variable: Female =0, Male = 1
Children Number of children the respondent has
Illdays The number of days that the respondent was not able to perform normal activities due to sickness during the past twelve months.
Relativeincome The relative income of a household in the province
Yearsliving The number of years of living in this commune
Married If married, married = 1; otherwise, married = 0
Widowed If widowed, widowed = 1; otherwise, widowed = 0
Divorced If divorced, divorced = 1; otherwise, divorced = 0
Separated If separated, separated = 1; otherwise, separated = 0
In the context of educational qualifications, a short vocational program is indicated by a value of 1, while its absence is represented by 0 Similarly, a long vocational program is assigned a value of 1 if present, and 0 if not For specialized high schools, a value of 1 signifies enrollment, whereas 0 indicates otherwise Lastly, college attendance is denoted by a value of 1, with 0 reflecting non-attendance.
University If university, university = 1; otherwise university = 0
Master If master, master = 1; otherwise master = 0
Ordinary least square estimations are used to test the model of social capital investment.
SCk, or social capital, encompasses various demographic factors represented by Yk, which include gender, age, number of children, marital status, education level, income, and years of residence in the same community.
Ordered Probit estimations are used to investigate the relationship between self-rated life-satisfaction and social capital The estimation function takes the form:
HAPPIi = α 1 SCi + α 2 Xi + ε i HAPPIi is the dependent variable of an individual’s self-rated life-satisfaction while
SCi stands for social capital In this study, SC1 is the social network, SC2 is the formal institution, SC3 is cooperation and SC4 is social trust.
HAPPI1 = α 11 SC1 + α 21 Xi + ε i1 HAPPI2 = α 12 SC2 + α 22
Xi + ε i2 HAPPI3 = α 13 SC3 + α 23 Xi + ε i3 HAPPI4 = α 14 SC4
The demographic characteristics analyzed include age, gender, income, education level, marital status, the number of ill days, duration of residence at the same address, and the number of children.
To test which factors amplify the relationship between social capital and life- satisfaction, some interaction terms are added into the model as below:
HAPPIi = α 1 SCi + α 2 Xi + α 3 SCi Xi + ε i
In this research, the factors which are tested are the relative income, gender, the number of children and the number of years living in the community.
RESULTS AND DISCUSSION
DESCRIPTIVE STATISTICS
The average household participates in 0.83 formal institutions, indicating that most individuals engage with at least one association in their daily lives While some respondents do not belong to any groups, others are members of up to four organizations On average, individuals report having nearly five friends for support, though some lack trusted friends entirely, while others have as many as fifty friends to rely on Over 80% of respondents perceive most people as honest and trustworthy; however, many households prefer to work independently rather than collaborate with others.
The study examines the impact of various independent variables, including demographic factors such as gender, age, education level, marital status, number of children, income, and length of residence, on participants' satisfaction Most respondents are married males around the age of 50 with an average of two children, and approximately 14% have engaged in short-term vocational training, highlighting a generally low education level Additionally, the health of participants is assessed through the variable "Illdays," with an average of nearly twelve sick days per year, indicating that individuals experience illness at least once a month The model also incorporates average satisfaction levels within the province to evaluate whether respondents' happiness is influenced by the satisfaction of those around them in their communities.
Variable Obs Mean Std Dev Min Max
The average subjective satisfaction score is approximately 1.36, indicating a general sense of dissatisfaction Specifically, 8% of individuals report being not at all pleased with their lives, while 51.10% are not rather pleased, and only 3.48% express feeling very pleased Lam Dong province leads in satisfaction with a score of 1.73, where 9.59% feel very pleased and 54.79% are rather pleased Conversely, Lai Chau has the lowest satisfaction level at 1.11, with 80.41% of residents feeling not very pleased and no one reporting a positive outlook on their life.
Percentage of satisfaction level and average happiness
Hà Tây ĐakĐakĐiện KhánhLaiLâm Lào Cai Long NghệPhú Quảng
Lak Nông Biên HòaChâu Đồng An An Thọ Nam
Not at all pleased Very pleased
Not very pleased Average happiness
Figure 4 1: Average life-satisfaction in twelve provinces in 2014
Table 4.2 indicates that all independent variables, including social capital and demographic factors, show significant correlations with individuals' self-rated satisfaction, with the exception of trust Consequently, it is anticipated that trust may not influence individual satisfaction in this study.
Figures 4.2 to 4.5 depict the connections between life satisfaction and various factors, including social networks, formal institutions, cooperation, and trust Notably, a positive correlation is evident between life satisfaction and both social networks and formal institutions However, the relationship between life satisfaction and trust, as well as cooperation, remains ambiguous, as illustrated in Figures 4.4 and 4.5.
Table 4 2: Correlation coefficients among key variables
Satisfaction Network Formal institution Trust Cooperation
Figure 4 2: The relationship between social network and life-satisfaction
Figure 4 3: The relationship between formal institution and life-satisfaction
Figure 4 4: The relationship between cooperation and life-satisfaction
Figure 4 5: The relationship between trust and life-satisfaction
RESULTS OF SOCIAL CAPITAL INVESTMENT MODEL
The study employs Ordinary Least Squares for continuous variables and a Probit model for dummy variables to evaluate the impact of social capital and individual demographic characteristics Findings indicate a consistent relationship between empirical results and theoretical predictions, particularly regarding formal institutions, where social capital initially increases with age before declining, reflecting an inverted U-shape This suggests that younger individuals tend to engage more in organizations, thereby accumulating social capital, which diminishes as they age Conversely, older individuals exhibit increased cooperation, while the effects of age on trust and informal networks remain statistically insignificant.
The study indicates that while male respondents were anticipated to exhibit lower levels of social capital, the findings show no significant correlation Conversely, the presence of children negatively impacts social capital, particularly in informal networks and formal institutions Families with more children tend to have less time to cultivate social capital, as they often prioritize earning income to support their households Additionally, the relationship between the number of children and social capital concerning trust and cooperation remains insignificant.
A long-term residence in a commune fosters a strong positive relationship with social capital, particularly in terms of trust and formal institutions This aligns with the theory that social capital diminishes with relocation, as prolonged living in one area enhances individual trust and encourages participation in community associations, thereby building a robust social network.
The relationship between income and social capital reveals that absolute income positively influences trust and informal networks However, individuals with relatively higher incomes in their provinces experience greater opportunity costs, resulting in less time to cultivate social capital through informal means This aligns with theoretical expectations Interestingly, despite the negative correlation between total income and social capital, those with higher relative incomes tend to engage more in cooperation and formal institutions, suggesting that wealthier individuals exhibit greater cooperativeness and a stronger inclination to participate in organizations.
Married individuals are uniquely positioned to invest in social capital through networks and formal institutions, as their partnerships often expand their connections to friends, relatives, and organizations tailored for couples In contrast, other marital statuses do not demonstrate a significant relationship with social capital investment.
Higher education levels are strongly associated with increased social capital, particularly among university graduates Statistical analysis shows positive correlations between university education and both informal and formal networks, as well as cooperative behaviors.
The estimation results align with Glaeser et al.'s (2002) theoretical model of social capital investment, revealing an inverted U-shaped relationship between social capital and age Individuals with higher education levels tend to possess greater social capital, while those with lower mobility exhibit increased social capital, highlighting the community's significance in these dynamics Additionally, the opportunity cost associated with different forms of social capital indicates that individuals with higher incomes may have lower social capital in some respects, yet they can still accumulate it through alternative avenues.
Table 4 3: Regression of demographic variables on social capital.
Network Formal network Probit regression
RELATIONSHIP BETWEEN SOCIAL CAPITAL AND SELF-RATED LIFE-
The analysis reveals a strong correlation between social capital and subjective satisfaction, as detailed in Table 4.4, which presents Ordered Probit results Specifically, individuals who participate in more associations report higher levels of satisfaction, with a 2.3 percentage point increase in the likelihood of being "rather satisfied" when joining an additional organization Similarly, the presence of one more friend boosts the probability of satisfaction by 0.8 percentage points These findings align with existing research, highlighting that robust social connections and a sense of belonging significantly enhance life satisfaction.
Cooperation significantly contributes to life satisfaction, as evidenced by its positive and statistically significant coefficients This supports Argyle and Lu's (1990) assertion that cooperativeness boosts joy and satisfaction in collaborative efforts For instance, individuals who agree to farm 3/2 hectares of land with family members experience a 3.6 percentage point higher probability of feeling satisfied compared to others.
The relationship between trust and life satisfaction in Vietnam appears to be minimal, contrasting with numerous studies that highlight a positive correlation, such as those by Helliwell and Putnam (2004), Helliwell (2006), and Bjørnskov (2008) However, this finding aligns with Ram's (2010) research, suggesting that the connection between trust and life satisfaction may be fragile and difficult to interpret within the social context of Vietnam.
Higher education from specialized schools, colleges, and universities significantly contributes to an individual's life satisfaction, as engaging in new learning experiences enhances well-being Additionally, individuals with relative income higher than their peers report greater life satisfaction, while factors such as the number of ill days in the past year and the number of children negatively impact life satisfaction Poor physical health can lead to unhappiness, and having more children often reduces personal time for relaxation, contributing to parental dissatisfaction Furthermore, residing in a happier community positively influences individual satisfaction, highlighting the importance of one's environment and social connections These findings suggest that policymakers should focus on improving living standards to enhance overall life satisfaction at the individual level.
VARIABLES Satisfaction Satisfaction Satisfaction Satisfaction
Table 4 4: Results of estimations of the relationship between life-satisfaction and social capital
To explore the factors that enhance the connection between social capital and life satisfaction, interaction terms are introduced in the regression analysis Specifically, the interaction between social capital and relative income is examined to determine whether a higher relative income significantly influences an individual's satisfaction in relation to their social capital.
Table 4.5 reveals a significant negative correlation between the interaction of network and relative income with satisfaction levels This indicates that individuals with higher relative income experience diminished benefits from their social networks on overall satisfaction As illustrated in Figure B.4, an individual with an income 0.5 lower than their peers has a 0.95% higher likelihood of feeling satisfied when increasing their friend count from four to five This finding aligns with the opportunity cost theory, suggesting that individuals focused on earning money may sacrifice social connections, thereby decreasing their social capital and overall satisfaction.
The study examines the impact of gender on the relationship between social capital and life satisfaction by creating an interaction term between the two variables However, the findings indicate that gender has an insignificant effect on the association between social capital and life satisfaction, as detailed in Table B.1 in the Appendix.
The interaction between social capital and the number of children reveals important insights into life satisfaction Findings indicate that an increase in children enhances the positive relationship between social networks and individual satisfaction, likely due to the opportunities for parents to connect and support each other, thereby boosting their social capital Conversely, the inclusion of an interaction term between trust and children shows a significantly negative relationship; individuals with lower levels of trust report higher satisfaction However, having more children appears to mitigate the negative impact of trust on overall satisfaction levels.
To examine the long-term amplification effects of residing in the same community, an interaction term between social capital and years of living in that community was analyzed The findings, illustrated in Figure 4.7, reveal that prolonged community residence mitigates the adverse impact of trust on individual life satisfaction, as evidenced by the significantly positive coefficient of the interaction term between trust, duration of community living, and life satisfaction.
Table 4 5: Results of the test of the impact of relative income on the relationship between life-satisfaction and social capital
VARIABLES Satisfaction Satisfaction Satisfaction Satisfaction
Table 4 6: Results of the test of the impact of children on the relationship between satisfaction and social capital
VARIABLES Satisfaction Satisfaction Satisfaction Satisfaction
Table 4 7: Results of the test of the impact of the time of living in the same community on the relationship between satisfaction and social capital
VARIABLES Satisfaction Satisfaction Satisfaction Satisfaction
ROBUSTNESS TESTS
The assessment of self-satisfaction has been simplified from four scales to two for improved estimation accuracy Responses indicating "very pleased" or "rather pleased" are assigned a satisfaction score of 1, while responses of "not very pleased" or "not at all pleased" receive a score of 0.
Table 4.8 presents the robustness check results, confirming the findings of the primary estimations The analysis reveals that social capital, encompassing social networks, formal institutions, and cooperation, is positively correlated with individuals' self-rated life satisfaction In contrast, trust appears to have an insignificant impact on life satisfaction levels.
Table 4 8: Results of estimations of the relationship between social capital and life- satisfaction (robustness check)
CONCLUSIONS
CONCLUSIONS
5.1.1 Concluding remarks from the test of model of social capital investment
This research investigated the theoretical predictions of Glaeser et al.'s (2002) social capital investment model and its impact on self-rated life satisfaction in rural Vietnam Analyzing data from VARHS 2014, the findings align closely with the model's predictions, indicating a significant relationship between various forms of social capital and life satisfaction levels.
Less mobility improves the investment in social capital
Higher education brings more investment in social capital
Social capital in forms of social network and trust is negatively associated with relative income
Inverted U-shaped relationship between age and formal institution
Research indicates that a longer duration of residence in the same neighborhood correlates positively with an individual's social capital, particularly in terms of formal institutions and trust When individuals relocate, they often experience a decline in social capital, likely due to the loss of support and connections with long-term neighbors, as well as a diminished trust in others, especially in unfamiliar environments.
Education plays a crucial role in enhancing social capital, as individuals acquire essential social skills in school Those with higher education levels are better equipped to leverage social interactions, benefiting from their advanced human capital, such as strong language and communication abilities (Glaeser, 2002).
The economic model suggests a decline in social capital investment due to increased opportunity costs of time However, this research challenges that prediction, revealing a positive correlation between absolute income and both trust and informal networks, while relative income shows a negative relationship with social networks and trust.
Finally, there is a U-shaped relationship between age and formal institution, which suggests that after a certain age, social capital of an individual will start to fall.
5.1.2 Concluding remarks from the estimations of relationship between social capital and subjective life-satisfaction
This study enhances the extensive research on the link between social capital and life satisfaction, utilizing a large sample from rural Vietnam Findings from order probit estimations indicate that social capital—manifested through social networks, formal institutions, and cooperation—positively influences individual subjective life satisfaction However, no empirical evidence supports a connection between social trust and life satisfaction in this context Additionally, various other characteristics are identified as influencing an individual's self-rated life satisfaction.
Higher level of social capital in forms of social network, formal institution, and cooperation improves an individual’s subjective life-satisfaction
Higher education brings people more life-satisfaction
Living in a satisfied community affect positively a household’s life-satisfaction
Higher relative income also raises an individual’s life-satisfaction
Having more children decreases an individual’s level of satisfaction with life
Illness reduces an individual’s life-satisfaction
Having strong social capital through networks and institutions provides individuals with greater support and sharing opportunities According to Diener and Seligman (2002), positive social relationships are crucial for enhancing life satisfaction Healthy relationships contribute significantly to emotional well-being, and individuals tend to experience increased well-being when engaging in social activities and spending time with friends.
Cooperation significantly influences an individual's life satisfaction, as evidenced by research from Argyle and Lu (1990), which highlights the joy and excitement that arise from collaborating with others.
The living environment significantly influences individual happiness, as being surrounded by cheerful and satisfied people fosters a more optimistic outlook Additionally, higher education and increased income are key factors that contribute to life satisfaction Education not only enhances knowledge and skills but also helps individuals identify their strengths and navigate their personal and professional lives Furthermore, a good education can lead to better health and mindset, ultimately boosting life satisfaction Similarly, higher income improves quality of life by enhancing health, living standards, and overall feelings of accomplishment and satisfaction.
In rural areas, families often have multiple children to increase their workforce, but this expectation frequently leads to greater poverty and challenges, ultimately diminishing life satisfaction Additionally, health issues that prevent individuals from engaging in daily activities further reduce life satisfaction It is clear that poor health impacts not only physical well-being but also mental and psychological states, contributing to overall misery and dissatisfaction.
POLICY RECOMMENDATIONS
Improving an individual's social capital is essential for enhancing their life satisfaction, as research indicates a positive correlation between the two By fostering stronger social connections and networks, individuals can significantly boost their overall well-being and happiness.
To enhance social capital, the government should prioritize education by investing in the construction of schools and vocational training colleges that provide essential knowledge and skills for students Additionally, improving teacher quality is crucial for delivering practical knowledge and guiding students in their behavior and work ethics By focusing on these educational improvements, the government can elevate the educational level of Vietnamese households and create opportunities for local communities to strengthen their social capital.
Furthermore, schools shall operate more clubs and activities for students to take part in, thus creating a good environment for them to build solid connections with their friends.
Extracurricular activities not only benefit students but also provide opportunities for parents to connect through school events, enhancing their social networks and capital Furthermore, it is essential for graduates to secure well-paying jobs with good benefits Career centers, universities, and colleges must collaborate to guide students in their career paths and facilitate connections with potential employers A stable income enables individuals to engage more socially, participate in activities, and expand their networks, ultimately boosting their social capital.
The government should increase investments in public organizations like youth and culture clubs, as these platforms foster social capital among young individuals In an era where excessive screen time from televisions and mobile devices prevails, these organizations provide valuable opportunities for people to connect, share ideas, and enhance their awareness of social issues, ultimately strengthening community bonds and solidarity.
Settling down enhances social capital by fostering long-term community ties Government support in providing loans for purchasing homes in quality environments encourages stability, allowing individuals to build familiarity with their neighborhoods and strengthen relationships with friends and neighbors This stability creates a robust support network that is often unattainable for those who frequently relocate Research indicates that highly mobile individuals tend to feel less connected, which can contribute to increased crime rates and diminished trust within the community Studies show that trust among residents correlates with lower crime rates, and this trust is more prevalent in stable, less mobile populations, leading to more cohesive communities.
Health is a crucial factor influencing life satisfaction, particularly in rural areas where individuals often avoid seeking medical care To address this issue, local governments should initiate campaigns to encourage residents to visit doctors when feeling unwell, rather than relying on home remedies or herbal treatments Additionally, promoting health insurance for all family members can significantly alleviate the financial burden of medical expenses It is also essential to enhance the infrastructure of health services by improving the quality of healthcare professionals and increasing the number of health centers and hospitals, ensuring that families have convenient access to necessary treatments.
Mental health significantly influences an individual's life satisfaction, often more than physical health Factors such as personal traits and psychological conditions play a role, but external influences like social connections with friends, family, and community also enhance mental well-being Research indicates that a supportive environment positively impacts life satisfaction Therefore, local governments should promote strong community relationships by recognizing and rewarding families that foster friendliness and support Additionally, all households should have the freedom to pursue their own spiritual beliefs and activities, as long as they adhere to the law.
In rural Vietnam, there is a common misconception that having more children will enhance the household's labor force and income However, this belief often leads to increased poverty and lower life satisfaction among families To address this issue, local governments should promote family planning, encouraging couples to limit their children to one or two based on their circumstances Additionally, community initiatives, such as women's clubs, should be established to educate families about reproductive health and effective contraception methods, helping to prevent unintended pregnancies.
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APPENDIX A Table A.1 Level of life-satisfaction in rural Vietnam
Hà Tây 7.41% 36.71% 49.55% 6.33% 1.547920434 Đak Lak 7.54% 46.96% 43.48% 2.03% 1.4 Đak Nông 6.06% 44.70% 46.97% 2.27% 1.454545455 Điện Biên 10.57% 58.49% 30.94% 0.00% 1.203773585
APPENDIX B THE RESULTS OF ORDER PROBIT ESTIMATIONS
Figure B.1 Marginal effects of social network and life-satisfaction at the level “rather satisfied” and at mean of the number of friends.
Figure B.2 Marginal effects of formal association and life-satisfaction at the level “rather satisfied” and at one organization
Figure B.3 Marginal effects of cooperation and life-satisfaction at the level “rather satisfied” and at cooperative level
Figure B.4 Marginal effects of network and life-satisfaction at the level “rather satisfied”, the number of friends is 4 and the relative income is 0.5
VARIABLES Satisfaction Satisfaction Satisfaction Satisfaction
Table B.1 The result of regression of interaction term between sex and social capital and life-satisfaction