Social Capital and Economic Performance in the American States.

Do areas with higher levels of social capital have stronger economies? Robert Putnam’s concept of social capital is said to provide widespread benefits, not the least of which are vibrant, productive economies. Putnam presents a logical, compelling case for the salutary effects of social capital, but what he does not present is any coherent data -- beyond anecdotal evidence -- to show that there is a consistent correlation, let alone a causal connection, between social capital and economic performance in the US. This paper will thus present an empirical analysis of social capital and economic performance for the American states. The 14-variable state-level social capital index presented by Putnam in Bowling Alone will be used to gauge variations in social capital across states. This is compared against state-level output data, measures of physical capital and measures of human capital. The results show a mild but statistically significant correlation between social capital and economic performance, but only when social capital is combined with other predictors of economic performance. Furthermore, social capital is shown to be a far less significant factor than more traditional economic indicators. In sum, although there may be an economic payoff to higher levels of social capital, it is relatively small and only accrues if other drivers of economic performance are already secure. [ABSTRACT FROM AUTHOR]