Are Better Health Outcomes Related to Social Expenditure?

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Summary

Research shows that, across OECD countries, higher levels of social spending are strongly associated with better health, and the association is particularly strong for public social spending. Additionally, the association between social spending and better health strengthens over time.

Background

Many European countries are implementing policies of fiscal austerity, and social welfare programmes are popular targets for spending cuts. The United Kingdom is scaling back disability benefits, and Greece, Spain, and Portugal have shrunk welfare provisions. Might these cuts affect the health of their people?

Related to that question, a fascinating line of inquiry has emerged: whether spending more on health care alone is the best way to improve population health. Previous studies have shown that higher social spending, more specifically the ratio of social to health spending, is associated with better health outcomes in OECD countries.

Goals

This exploratory study builds on this finding by widening the scope of the analysis, by incorporating other societal factors – namely, social capital and income inequality – and by assessing these relationships not only at the cross-national level but also at the cross-state level within the United States.

In order to do so, the project team addressed several exploratory research questions:

  • Is the relationship between social expenditure and health outcomes robust when more countries and years are added to previous analyses?
  • Does the type of social spending (e.g. on particular age groups or social challenges) influence the relationship between social spending and health outcomes?
  • Do wider contextual factors influence both social expenditure and health outcomes?
  • Do findings about the relationship between social spending and health outcomes hold at the sub-national level, i.e. within the United States?

Methodology

The team’s international comparative analyses focused on the country level, using over 30 years of data across 34 OECD countries. Various measures of health outcomes were tested, alongside a number of potential explanatory variables, including social spending (as a proportion of GDP). For example, the team looked at the average proportion of children born underweight in a given year as one outcome. In the analysis of relationships within the United States, observations were clustered by state.

Findings

The project team found that:

  • Across OECD countries, higher levels of social spending are strongly associated with better health.
  • The association is particularly strong for public social spending, as opposed to private social spending.
  • Spending on old age programmes demonstrated the strongest association with better health outcomes, including in unexpected areas such as infant mortality and low birth weight.
  • The association between social spending and better health strengthens over time.
  • Social factors, such as income inequality and social capital (a measure of how much people trust each other in a population), are associated with health outcomes.
  • The association between social spending and health outcomes is strongest where income inequality is greatest. In other words, social protection may be more important for health outcomes in more unequal societies.
  • The associations observed across countries hold across regions of the US.

Policy Implications

The study lends support to suggestions that national governments reconsider their social spending and its balance with healthcare spending. Investments in social spending could yield substantial results in terms of improved population health outcomes.

Since the association of health outcomes with social spending is stronger in less equal contexts, social spending may be of particular importance in countries with greater income inequality.

Read the full study

Additional Team Members