Social Interactions and Life Satisfaction: Evidence from Latin America

In this paper, we seek to examine the effect of social comparisons and of social capital on life satisfaction over a sample of Latin American countries. We test if, through social influence and exposure, social capital is either an enhancer or appeaser of the effect of social comparisons of material conditions in life satisfaction. Using the Latinobarómetro Survey (2007) we find, contrary to the existing literature that, the better others perform in the material dimension, the happier the individual is. We also find that social capital is among the strongest correlates of individuals’ life satisfaction. Our findings suggest that social contacts may enhance the effect of social comparisons, which is more intense for those who perform worse in their reference group.