Investment in social capital by the Korean elderly and baby-boomers

Abstract

Social capital (SC) is both an input and an output of individuals' economic choices, but relatively little is known about SC investment, particularly in individuals' old age. With a premise that SC is an individual-level concept in which individuals purposely invest, we estimate elderly individuals' stock and investment in SC using principal component analysis of their social engagement, networks, and trust in social institutions. We describe the distribution of the SC stock and investment across various demographic groups. Based on a capital-accumulation model, and using linear regressions and mixture models, we test hypotheses about the drivers - expected benefits, costs, depreciation, preexisting SC, and social-capital in one's community - and trajectories of elderly individuals' SC investment. Implications for their life satisfaction are also assessed. Using four waves of the Korean Longitudinal Study of Ageing, we find that the elderly exhibit gradual attrition of SC, but women retain more SC on account of better mental health and higher returns on investment from lower starting points. Expected returns on SC are associated positively with individuals' investment, while the opportunity cost of one's time and SC depreciation are associated weakly negatively with it. Physical and human capital are complementary to SC, encouraging investment. Community-level stock and investment in SC lead to higher investment by individuals themselves.