Causations or payoffs? The interaction between countries' economic results and competing proxies of social capital

Abstract

The repository of literature studying the relationship between economic indicators and social capital through traditional surveys data is growing. At the same time, the emergence of social networks has created competing big data that require in-depth analysis and comparison of results. The aim of this research is to analyze the interaction between countries' economic outcomes and proxy indicators of social capital, considering and comparing the traditional data of surveys and Facebook's data of social connectedness index. Correlation analysis, Granger and Dumitrescu Hurlin Panel Causality tests, Ordinary Least Squares (OLS) regression methods of analysis on panel and crosscountry data are used to show that countries' GDP per capita indicator is a cause for higher social capital, while social connectedness indicators explain only a very small part of the GDP per capita indicator. It is also shown that institutional trust and networks elements of social capital are the most influential and statistically significant explaining variables of GDP per capita (in case of the latter variable, the connection is two-sided). The scientific contribution of this study is that it brings research growing in two different directions into one dimension. The results of the analysis are also of practical importance for public policy development, social media companies and the buyers-users of their data.