The paper explores the economic approach to social capital, emphasizing individual investment decisions rather than aggregate or community-level attributes. It argues that social capital, defined as an individual's social characteristics, is a key component of human capital. The authors present seven facts supporting the individual-based model of social capital formation, including its relationship with age, mobility, occupation, homeownership, physical distance, human capital investment, and interpersonal complementarities. The paper develops an economic model of social capital investment, similar to models of human and physical capital. It predicts that social capital investment rises with age, declines with mobility, is higher in occupations with high returns to social skills, and is more common among homeowners. It also predicts that physical distance and travel costs reduce social connections and that social capital complementarities exist within peer groups. Empirical evidence supports many of these predictions, including the inverted U-shaped lifecycle profile of social capital, the negative relationship between mobility and social capital investment, and the positive correlation between social capital and homeownership. However, the model's prediction that high-wage individuals accumulate less social capital is not supported by the data. The paper also discusses the challenges of aggregating individual social capital into community-level measures, noting that social capital externalities make this process complex. It highlights the importance of understanding the link between individual and aggregate social capital, as well as the role of interpersonal complementarities in social capital formation. The authors conclude that the economic approach to social capital provides a useful framework for understanding the determinants of social capital investment. However, they emphasize the need for further research to develop new tools for addressing the complex aggregation and externality issues associated with social capital.The paper explores the economic approach to social capital, emphasizing individual investment decisions rather than aggregate or community-level attributes. It argues that social capital, defined as an individual's social characteristics, is a key component of human capital. The authors present seven facts supporting the individual-based model of social capital formation, including its relationship with age, mobility, occupation, homeownership, physical distance, human capital investment, and interpersonal complementarities. The paper develops an economic model of social capital investment, similar to models of human and physical capital. It predicts that social capital investment rises with age, declines with mobility, is higher in occupations with high returns to social skills, and is more common among homeowners. It also predicts that physical distance and travel costs reduce social connections and that social capital complementarities exist within peer groups. Empirical evidence supports many of these predictions, including the inverted U-shaped lifecycle profile of social capital, the negative relationship between mobility and social capital investment, and the positive correlation between social capital and homeownership. However, the model's prediction that high-wage individuals accumulate less social capital is not supported by the data. The paper also discusses the challenges of aggregating individual social capital into community-level measures, noting that social capital externalities make this process complex. It highlights the importance of understanding the link between individual and aggregate social capital, as well as the role of interpersonal complementarities in social capital formation. The authors conclude that the economic approach to social capital provides a useful framework for understanding the determinants of social capital investment. However, they emphasize the need for further research to develop new tools for addressing the complex aggregation and externality issues associated with social capital.