Did the Decline in Social Connections Depress Americans’ Happiness?

During the last 30 years US citizens experienced, on average, a decline in reported happiness, social connections, and confidence
in institutions. We show that a remarkable portion of the decrease in happiness is predicted by the decline in social connections
and confidence in institutions. We carry out our investigation in three steps. First, we run a happiness regression that includes
various indicators of social connections and confidence in institutions, alongside with own income, reference income, and
the usual socio-demographic controls. We find that indicators of social connections and confidence in institutions are positively
and significantly correlated with happiness. Second, we investigate the evolution of social connections and confidence in
institutions over time, finding that they generally show a declining trend. Third, we calculate the variation in happiness over time as predicted by each of its statistically significant correlates, finding that the decrease in happiness is mainly predicted by the decline in social connections and by the growth in reference
income. More precisely, the sum of the negative changes in happiness predicted by the reduction in social connections and
the increase in reference income more than offsets the positive change predicted by the growth of household income. Also,
the reduction in happiness predicted by the decline in confidence in institutions is non-negligible, although substantially
smaller than the one predicted by either social connections or reference income.