Macroeconomic Conditions and Well-Being : Do Social Interactions Matter?

This paper investigates the role played by social interactions in explaining the effects of macroeconomic conditions on well-being. Using survey data for a representative sample of Italian individuals, we find that social interactions play a dual role as both moderators and mediators of the effects of macroeconomic conditions. On the one hand, the well-being of people who spend more time with their friends or go out more often is less sensitive to the effects of macroeconomic fluctuations. On the other hand, social interactions are negatively affected by worsening macroeconomic conditions, thus playing a relevant role in the transmission of macroeconomic shocks to subjective well-being. More specifically, the negative impact of macroeconomic downturns on frequency of going out and active participation in associations contributes to explain the adverse effects of recessions on satisfaction with life and with individual life domains