Social Capital and the Financial Crisis: The Case of Iceland

Abstract

The aim of this working paper is to examine social capital in Iceland, as measured in terms of social ties, social trust, political activity and civic engagement, from a comparative perspective before and after the financial crisis of 2008. It uses data from four successive waves of the European Values Study (EVS). Following a contextualisation of this research theme, our results show that Icelanders appear to be as satisfied with their lives after the onset of the crisis as they were prior to the economic collapse. The strength of their family ties has been progressively increasing during the 26 year period covered by the data, with gradual growth in the importance awarded to family relationships, which indicates that Icelanders are now more reliant on their parents than in the past. Ties with non-family members are also adjudged to have become more important, though only after the financial crisis. Furthermore, Icelanders are more active civically and politically: for example, they are more likely to belong to a political party, social welfare organisation or local community initiative, which implies that such activities have become of greater importance since 2008. In addition, while there may have been an increase in levels of social trust among people, there is more dissatisfaction with how democracy works. In conclusion, we can see that social capital has almost certainly become more important in Iceland since the economic crisis but, given that we have been able to identify underlying trends showing that this is at least in part a long-term development, this heightened importance may not just be a consequence of the crisis but rather part of a more gradual societal change.