[Predicting GDP of 289 NUTS regions in Europe with 'subjective' indicators for human and social capital]

Most of the aggregate level analyses on the relationship between objective and subjective measures for well-being have limited themselves to measures of national GDP and mean life satisfaction. We develop this line of research by embedding the analysis into the context of 289 NUTS regions in Europe and replacing the simple life satisfaction measure with measures of active human functioning. This approach suggest that the measures of personal and social well-being, as they are operationalized in the 6th round European Social Survey (ESS) questionnaire, can be treated as subjective indicators for social and human capital and thereby be are associated with the regional level GDP in cross-sectional analysis. The focus of this study could hence be defined as an interdisciplinary attempt to understand economic reality from the perspective of subjective well-being research. Thus, the paper also argues for better interdisciplinary communication between the traditions of economic geography and subjective well-being research. First, the results give further validation to the previous research indicating that general 'social trust` is strongly associated with economic performance. This component was shown to have robust and independent association with the dependent variable in both OLS and spatial filtering models. Also the indicator for 'social contact and support` appears to have positive and significant correlation with the regional GDP. On the subjective human capital the strongest predictor for regional GDP is a sense of 'competence and meaning' among the population. However, from the perspective of personal wellbeing, there seems to be some sort of tradeoff regarding some elements of objective and subjective wellbeing; the component 'autonomy and control` seems to be negatively correlated to economic performance. All of the effects described above proved robust also after including the objective control variables (population density, intramural R&D expenditure, share of tertiary educated population and employment). The results of this study are hoped to contribute to literature on regional economic development. This study offers some new insight to the instrumentalization and measuring of social and human capital. The subjective indicators used in this study are reflecting the quality of both human and social capital without retaining only to the objective quantity such as educational (human capital) or associational (social capital) attainment. From the policy perspective the results give tentative support to bottom-up policies facilitating local capacity building through supporting the psychological and social wellbeing and positive human functioning in regions. However, the cross-sectional framework limits significantly the possibility for any policy suggestions as we cannot confirm the assumptions on causalities embedded in the analysis. The results of this study could however inspire new interdisciplinary enquiries on this field of research and offer new alternative measures for building regional growth models.