Legatum Social Capital Index: The Wealth of Connection
What is the Legatum Social Capital Index?
The Legatum Social Capital Index is a core component of the Legatum Prosperity Index, a global framework that evaluates national success beyond traditional financial metrics. It is one of the four pillars within the Inclusive Societies domain.
While GDP measures a country's economic output, this index measures its "social fabric"—the strength of personal relationships, social network support, social norms, and civic participation. The Legatum Institute argues that social capital acts as the "invisible glue" that enables a society to function efficiently, safely, and happily.
🏛️ The Five Elements of Social Capital
The Legatum methodology organizes Social Capital into five distinct "elements." Each element provides a granular view of a society's health and its ability to cooperate.
| Element | Focus Area | Key Indicators |
| Personal & Family Relationships | The strength of immediate, private support networks. | Help from family/friends in need; frequency of interaction with loved ones. |
| Social Networks | Breadth of connections beyond the inner circle. | Membership in voluntary organizations, religious groups, or professional associations. |
| Interpersonal Trust | "Generalized trust" in people outside one's known circle. | Trust in neighbors; trust in strangers; belief that "most people can be trusted." |
| Institutional Trust | Confidence in the formal systems that govern life. | Trust in the judiciary, police, national government, and the financial system. |
| Civic & Social Participation | Active citizenship and contribution to the public good. | Rates of volunteering; donating to charity; helping strangers; voicing opinions to officials. |
🔍 How is the Index Calculated?
The Legatum Institute uses a rigorous Distance to Frontier (DTF) methodology to score countries without relying solely on relative rankings:
Data Sourcing: Information is pulled from over 70 sources, including the Gallup World Poll, World Values Survey, and the United Nations.
Normalization: Each indicator is converted to a score from 0 to 100. A score of 100 represents the "frontier"—the best possible outcome based on historical global data.
Weighting: Indicators within each element are weighted based on their proven impact on prosperity. For example, "trust in the legal system" is weighted heavily because of its direct link to economic stability.
Pillar Scoring: The scores of the five elements are averaged to create the final Social Capital Pillar Score.
💡 Why Social Capital Matters for Prosperity
High social capital is not just a cultural trait; it is a fundamental driver of a nation's ability to thrive:
Economic Efficiency: High trust reduces "transaction costs." When people trust each other, they don't need complex, expensive legal contracts for every interaction.
Resilience: Communities with strong social networks recover faster from natural disasters or economic shocks because they have built-in systems of mutual aid.
Public Health: Stronger social ties are statistically linked to lower rates of mental illness and higher overall life expectancy.
Key Concept: A country can have a high GDP but a low Social Capital score. This "prosperity deficit" often suggests that while the economy is growing, the society is becoming more polarized or lonely.
Leading Nations in Social Fabric: The Social Capital Scorecard
While economic powerhouses often dominate global headlines, the Legatum Social Capital Index highlights a different set of leaders. These "high-trust" nations demonstrate that social cohesion—built through strong families, reliable neighbors, and credible institutions—is a distinct form of wealth that can exist independently of raw GDP.
🏆 Profile of Leading Countries
The top-performing nations in Social Capital typically fall into two categories: the Nordic Model (high institutional trust) and East Asian Cohesion (high interpersonal and cultural trust).
🇩🇰 Denmark: The Global Benchmark
Denmark consistently tops the index due to an extraordinary level of institutional trust. Citizens have high confidence in the police, the judiciary, and the government, which minimizes social friction and corruption.
Standout Feature: "Trust by default"—the cultural assumption that strangers are trustworthy until proven otherwise.
🇯🇵 Japan: The Cohesion Leader
Japan often leads in elements related to social stability and interpersonal trust. Despite an aging population, Japan maintains world-leading scores in personal safety and community reliability.
Standout Feature: High levels of mutual aid and low crime rates, creating a sense of "collective security" that requires little government intervention.
🇳🇿 New Zealand: The Civic Champion
New Zealand excels in civic participation. It boasts some of the world's highest rates of volunteering, donating to charity, and direct engagement with local government.
Standout Feature: A highly inclusive culture that fosters strong "bridging" social capital (connections between different social groups).
📊 The Social Capital Scorecard: Top Performers
The following scorecard illustrates how these leading nations compare across the five core elements of the index. (Scores are represented as a Distance to Frontier from 0–100).
| Element | Denmark 🇩🇰 | Japan 🇯🇵 | New Zealand 🇳🇿 | Norway 🇳🇴 |
| Personal Relationships | 92 | 88 | 90 | 94 |
| Social Networks | 81 | 79 | 84 | 82 |
| Interpersonal Trust | 88 | 85 | 78 | 89 |
| Institutional Trust | 94 | 82 | 86 | 93 |
| Civic Participation | 78 | 65 | 92 | 75 |
| Overall Social Capital | High | High | High | High |
🧱 The "Social Capital Gap"
A striking finding in recent years is the divergence between economic wealth and social health. For example:
The United States: While it remains a global economic leader, its Social Capital rank has faced a long-term decline (currently near 118th) due to eroding institutional trust and increasing social polarization.
Emerging Successes: Countries like the United Arab Emirates and Indonesia have shown significant improvements by modernizing institutions and fostering community-based social safety nets.
🔍 How to Interpret the Scorecard
When looking at a country's scorecard, remember that "Prosperity" in this context is a holistic calculation:
High Score (80-100): Indicates a society where people feel safe, supported, and represented. These nations have "social reserves" to handle crises.
Medium Score (50-79): Often found in rapidly developing nations where institutional trust is growing but social safety nets are still informal.
Low Score (<50): Indicates a "trust deficit" where corruption is high, and citizens rely solely on immediate family because they cannot trust the state or strangers.
Measuring the Unmeasurable: KPIs of the Social Capital Index
To transform abstract concepts like "friendship" or "trust" into a rigorous statistical index, the Legatum Institute uses a specific set of Key Performance Indicators (KPIs). These metrics act as the pulse of a nation's social health, allowing researchers to quantify how effectively a society functions as a collective.
📊 The KPI Framework
The Social Capital Index is built on three primary KPI categories. Each category uses a blend of survey-based "perception" data and hard "participation" data.
1. The Trust Metrics (Cognitive KPIs)
These indicators measure how people think and feel about others and their governing bodies.
Generalized Trust: The percentage of the population that agrees with the statement, "Most people can be trusted." This is the gold standard KPI for social capital.
Confidence in Institutions: Levels of trust in the judicial system, the police force, and the national government.
Public Integrity: Perceptions of corruption within the public and private sectors.
2. The Relationship Metrics (Structural KPIs)
These measure the size and reliability of social safety nets.
Support Networks: The "Can you count on anyone?" metric. It tracks the percentage of citizens who have relatives or friends they can turn to for help in a crisis.
Social Connectivity: The frequency of social interactions outside the workplace.
Family Stability: Trends in marriage, divorce, and multi-generational living arrangements that indicate the strength of the foundational social unit.
3. The Participation Metrics (Behavioral KPIs)
These measure what people actually do to contribute to their community.
Civic Engagement: Rates of volunteering time to organizations and donating money to charity.
Pro-social Behavior: The "Helping a Stranger" index—measuring the likelihood of individuals assisting someone they don't know.
Political Voice: Participation in local governance, signing petitions, or attending community meetings (excluding mandatory voting).
📋 KPI Scorecard Summary
The following table highlights the specific data points used to calculate the health of these social "muscles."
| KPI Category | Primary Metric | What it Signals |
| Interpersonal | % Trust in Strangers | A "frictionless" economy where deals happen on a handshake. |
| Institutional | Confidence in the Judiciary | A belief that the "rules of the game" are fair for everyone. |
| Network | Access to 24/7 Support | Low social isolation and higher mental health resilience. |
| Civic | Donation & Volunteer Rates | A sense of ownership over the public good. |
| Social | Helpfulness to Strangers | The level of "bridging" capital between different demographics. |
⚖️ Why These KPIs Matter
Traditional economic KPIs (like GDP or Unemployment) tell you if a country is rich. Social Capital KPIs tell you if a country is stable.
Low Trust KPIs act as a leading indicator for political unrest, even in wealthy nations.
High Participation KPIs act as a predictor for economic recovery after a recession or natural disaster.
The "Social Dividend": Research from the Legatum Institute shows that countries with high Social Capital KPIs enjoy a "social dividend"—they spend less on policing and legal disputes and more on innovation and growth.
The Architects of Prosperity: Organizations Behind the Index
The Legatum Social Capital Index is not the product of a single entity but the result of a collaborative ecosystem of think tanks, data scientists, and international research bodies. These organizations work together to collect, verify, and analyze the massive datasets required to map global social cohesion.
🏛️ The Legatum Institute (Primary Author)
Based in London, the Legatum Institute is an independent educational charity and think tank. It is the primary developer and publisher of the Legatum Prosperity Index, of which Social Capital is a defining pillar.
Role: They design the methodology, weight the indicators, and synthesize the data into the annual global report.
Mission: To promote policies that move individuals, communities, and nations from poverty to prosperity.
Key Contribution: They shifted the global conversation from measuring "wealth" (GDP) to measuring "well-being" and "inclusive societies."
📊 Primary Data Partners
The Institute does not conduct its own primary door-to-door polling for 160+ countries. Instead, it relies on "Gold Standard" data from the following specialized organizations:
1. The Gallup World Poll
Gallup provides the core subjective data—the "how people feel" component.
Data Contribution: Interpersonal trust levels, confidence in local police, and whether individuals feel they have a support network of friends and family.
2. The World Values Survey (WVS)
The WVS is a global network of social scientists studying changing values and their impact on social and political life.
Data Contribution: Long-term trends in "generalized trust" and attitudes toward civic participation and social norms.
3. International Institutional Bodies
For objective data regarding civic participation and institutional strength, the index pulls from:
The United Nations (UNDP): Data on human development and social integration.
The World Bank: Data on government effectiveness and the rule of law.
Charities Aid Foundation (CAF): Specifically for the World Giving Index data, which tracks global rates of volunteering and donating.
🔬 The Advisory & Academic Network
The methodology of the Social Capital Index is overseen by an Advisory Panel consisting of world-renowned academics and economists.
| Organization/Type | Focus Area |
| Oxford University | Econometric analysis and statistical weighting. |
| London School of Economics (LSE) | Research on social mobility and institutional trust. |
| Global Advisory Board | Experts from various continents who ensure the index is culturally sensitive and not solely "Western-centric." |
⚖️ Governance and Funding
While the Legatum Institute is the public face of the index, it maintains a strict firewall between its funding sources (primarily the Legatum Group, a global investment firm) and its research output. This independence is verified through:
Open Methodology: The Institute publishes its full technical manual, allowing any researcher to audit how the scores were calculated.
Peer Review: The index is frequently cited in academic journals and by organizations like the OECD and the IMF, which serves as a form of external validation.
Why this matters: Because social capital is often "invisible," having a transparent network of reputable organizations involved ensures the index is seen as a credible tool for policy change rather than a political statement.
The Foundation of Truth: Data Sources of the Index
To ensure the Legatum Social Capital Index is both objective and globally representative, the Legatum Institute synthesizes over 300 individual indicators from more than 70 distinct data sources. Because social capital is largely based on human perception and behavior, the index relies heavily on high-quality survey data alongside institutional reports.
🌎 Primary Global Data Providers
The index does not conduct its own field polling. Instead, it aggregates data from the world's most reputable statistical and social research organizations:
The Gallup World Poll: The "backbone" of the subjective data. Gallup provides year-over-year survey results on interpersonal trust, the availability of support networks, and perceptions of corruption.
World Values Survey (WVS): A primary source for "Cognitive Social Capital"—measuring deep-seated cultural values, long-term trends in generalized trust, and social tolerance.
The World Bank (WDI & WGI): Provides objective data on Institutional Trust through the Worldwide Governance Indicators, which track the rule of law and government effectiveness.
International Telecommunication Union (ITU): Supplies data on digital connectivity, which is increasingly used as a proxy for social networking and information flow in the modern era.
📋 Source Breakdown by Category
The data sources are carefully matched to the five elements of the index to ensure the most accurate "signal" for each category:
| Index Element | Primary Data Sources | Type of Data |
| Personal Relationships | Gallup World Poll | Survey: "Do you have relatives/friends you can count on?" |
| Social Networks | WVS, Gallup, ITU | Mix: Membership in groups and digital connectivity. |
| Interpersonal Trust | World Values Survey | Survey: "Do you trust people you've just met?" |
| Institutional Trust | World Bank, Transparency International | Objective: Integrity of the courts, police, and banks. |
| Civic Participation | Charities Aid Foundation (CAF), UN | Objective: Rates of volunteering, donating, and voting. |
🔬 Data Validation & Normalization
Since data from a UN database (hard numbers) looks very different from a Gallup poll (percentages), the Legatum Institute uses a Distance to Frontier (DTF) method to normalize the information:
Selection: Indicators are chosen based on academic literature proving their link to prosperity.
Cleaning: Data is checked for outliers or "noise" (e.g., sudden spikes in trust due to propaganda).
Normalization: Every data point is converted to a score from 0 to 100, where 100 represents the "Frontier"—the best possible outcome achieved by any country in that category over the last decade.
Imputation: If a country is missing a specific data point for one year, the Institute uses statistical modeling to fill the gap based on that country's historical trends and regional peers.
🛡️ Reliability and Transparency
The Legatum Institute operates under a principle of Open Data. They publish their full technical manual and raw indicator lists online, allowing academic peers to audit the findings.
Why diverse sources matter: By combining data from the World Bank (institutional) with the Gallup World Poll (personal), the index avoids being biased toward either purely economic or purely emotional metrics. It captures the reality of life as experienced by citizens, not just as recorded by bureaucrats.
Clarity in Connection: Frequently Asked Questions
Understanding the Legatum Social Capital Index often requires looking past the raw numbers to see how social "wealth" impacts real-world outcomes. Below are the most frequent questions from researchers, policymakers, and the public.
❓ General Index Questions
Q: Can a country be "rich" but have low Social Capital? A: Absolutely. This is what the Legatum Institute calls a "prosperity deficit." For example, the United States often ranks in the top 10 for "Open Economies" but significantly lower (often outside the top 100) for Social Capital. This suggests that while wealth is being created, the social fabric—trust in institutions and community bonds—is weakening.
Q: Why are some countries missing from the Index? A: To maintain high statistical integrity, a country is only included if data is available for at least 50% of the indicators. In regions affected by extreme conflict or lack of transparency, credible polling from sources like Gallup or the World Bank is often unavailable.
Q: Is "Social Capital" just another word for "Happiness"? A: No. Happiness is a subjective emotional state. Social Capital is a structural and behavioral measure. It tracks who you can rely on, how much you trust your neighbor, and how often you volunteer. While high social capital usually leads to higher happiness, the index measures the foundation, not the feeling.
🛠️ Methodology & Data
Q: How do you measure "Trust" objectively? A: The index uses a combination of Cognitive (what people say) and Behavioral (what people do) data.
Cognitive: Surveying citizens on whether they trust the police.
Behavioral: Tracking the percentage of people who actually donated to charity or helped a stranger in the last month.
Q: Does the index favor "Western" social structures? A: The methodology is designed to be culturally neutral by focusing on Universal Human Needs. Whether it is a village council in Indonesia or a rotary club in Denmark, the index measures the function of the group (support and cooperation) rather than the specific form of the institution.
📈 Impact & Trends
Q: What is the biggest threat to Social Capital globally? A: Recent data highlights a global decline in Personal and Family Relationships. In more than half of the countries surveyed, people are reporting a decrease in help received from family, often attributed to urbanization, aging populations, and digital isolation.
Q: How do leaders use this data? A: Policymakers use the index as a diagnostic tool. If a country has high "Education" scores but low "Social Capital," a leader might focus on community-building initiatives or anti-corruption measures to ensure that educated citizens actually stay and contribute to the nation rather than leaving (brain drain).
🔍 At a Glance: Key Terms
| Term | Definition in the Index |
| Bridging Capital | Connections between different social groups (e.g., trust in strangers). |
| Bonding Capital | Connections within a close-knit group (e.g., family and close friends). |
| Frontier Score | A score of 100, representing the best possible historical performance for an indicator. |
| Inclusive Society | The broader domain that Social Capital belongs to, emphasizing fairness and cohesion. |
Key Terminology of the Legatum Social Capital Index
The Legatum Social Capital Index uses a specific vocabulary to bridge the gap between abstract social theories and hard statistical data. Understanding these terms is essential for interpreting how a nation's "social wealth" is calculated and why it matters for overall prosperity.
📖 Glossary of Terms
| Term | Definition | Context in the Index |
| Inclusive Societies | One of the three main domains of the Legatum Prosperity Index. | It houses the Social Capital pillar alongside Governance, Personal Freedom, and Safety & Security. |
| Social Cohesion | The "invisible glue" of a society characterized by trust and shared norms. | High cohesion reduces social friction and enables collective action during crises. |
| Generalized Trust | The belief that "most people can be trusted," even if you don't know them. | Used as a primary KPI for the Interpersonal Trust element; a core driver of economic efficiency. |
| Institutional Trust | Confidence in formal systems like the police, courts, and government. | A measure of how fairly citizens believe the "rules of the game" are applied. |
| Cognitive Social Capital | The subjective side of capital—perceptions, values, and attitudes. | Measured through survey data (e.g., "Do you feel safe walking alone at night?"). |
| Structural Social Capital | The objective side—networks, memberships, and participation rates. | Measured through hard data (e.g., voter turnout or charitable donation rates). |
| Distance to Frontier (DTF) | A scoring method (0–100) comparing a country to the global "best." | A score of 100 represents the "Frontier"—the highest achievable level of social capital. |
| Prosperity Deficit | When a country’s wealth (GDP) is much higher than its social capital. | Signals that economic growth may be unsustainable due to a fraying social fabric. |
| Active Citizenship | Voluntary engagement in community or political life. | A behavioral KPI that measures ownership over the public good. |
🧩 The "Capital" Matrix
To better understand how Social Capital fits into the broader world of economic theory, the Legatum Institute often compares it to other forms of "Capital."
| Type of Capital | Focus | Indicator Example |
| Financial Capital | Money & Assets | GDP per capita, savings rates. |
| Human Capital | Skills & Knowledge | Literacy rates, years of schooling. |
| Physical Capital | Infrastructure | Broadband access, road quality. |
| Social Capital | Trust & Relationships | Volunteering, trust in neighbors. |
💡 Why Terms Like "Bridging" and "Bonding" Matter
While not always explicitly labeled in the summary tables, the index distinguishes between two types of social ties that are crucial for a healthy nation:
Bonding Capital (The Safety Net): Connections within a close group (family, close friends). This keeps people safe in emergencies.
Bridging Capital (The Economic Engine): Connections between different groups (strangers, different ethnicities). This allows for trade, innovation, and national unity.
Key Takeaway: A country can have high "Bonding" capital (everyone loves their family) but low "Bridging" capital (nobody trusts the person in the next town over). The Legatum Index looks for a balance of both to define a truly prosperous society.
