Social Policy Expenditures and Life Expectancy in High-Income Countries

The U.S. spends more than any other country on health care, yet Americans have lower life expectancy than people in most industrialized countries. Recent studies suggest that lower expenditures on social policies in the U.S. may contribute to less-favorable trends in life expectancy. This study tests the hypothesis that greater social spending will be positively associated with life expectancy across the countries of the Organisation of Economic Co-operation and Development and that the magnitude of these associations will outweigh those between government healthcare spending and life expectancy.

In 2016, longitudinal data on six domains of social expenditures for the U.S. and 19 other wealthy nations between 1980 and 2010 were used to estimate the associations between prior year expenditures on education, family, unemployment, incapacity, old age, and active labor market programs, and period life expectancy using fixed effects models.

Controlling for a wide set of confounders and government healthcare expenditures, a 1% increase in prior year education expenditures was associated with 0.160 (95% CI=0.033, 0.286) of a year gain in life expectancy, whereas a 1% increase in prior year incapacity benefit expenditures was associated with 0.168 (95% CI=0.003, 0.333) of a year gain in life expectancy. Counterfactual models suggest that if the U.S. were to increase expenditures on education and incapacity to the levels of the country with the maximum expenditures, life expectancy would increase to 80.12 years.

The U.S. life expectancy lag could be considerably smaller if U.S. expenditures on education and incapacity programs were comparable with those in other high-income countries.