Social welfare expenditures in the United States and the Nordic Countries

by on May 18, 2010 at 7:24 am in Data Source, Economics, History | Permalink

Price Fishback has a new paper and perhaps this abstract should be screamed from the yttertak:

The extent of social expenditures in the U.S. and the Nordic Countries is compared in the early 1900s and again in the early 2000s. The common view that America spends much less on social welfare than the Nordic countries does not survive closer inspection when we consider the differences in the structures of social expenditures. The standard comparison examines gross social expenditures. After adjustments for direct and indirect taxes paid, the net social expenditures in the Nordic countries are much closer to American levels. Inclusion of mandatory and private social expenditures raises the American share of GDP devoted to social expenditures to rank among the middle of the Nordic countries. Per capita net public social expenditures in the U.S. rank behind only Sweden. Add in the private spending, and per capita spending in the U.S. is higher than in all of the Nordic countries. Finally, I document the enormous diversity across time and place in public social expenditures in the U.S. in the early 1900s and circa 1990.

Fishback does discuss how, in line with intuition, the U.S. system is more porous and less universal.  He also stresses how common it is that people do not claim or apply for benefits for which they are eligible.

Here are some of Fishback's papers on-line, but I do not see an ungated copy of this one.

1 William Sjostrom May 18, 2010 at 7:38 am

Leaving aside the detail that he is a first rate economic historian, and uncharacteristically for the academic racket, a nice guy, how many economists get named Price?

2 jc May 18, 2010 at 8:21 am

It’s not an ungated copy of the exact article, but here’s a similar working paper from Fishback et al. that, at a glance, may describe the findings from the gated article in a bit more detail than the abstract. (This article compares states in the U.S.)

QUOTE: “Meanwhile, the U.S. follows a safety net strategy, in which private purchases of insurance and private charities play a much larger role and people typically do not receive payments until their income drops below specified levels. As a result, gross government expenditures on social welfare in the U.S. circa 2000 are much smaller as a share of GDP than in Sweden, Norway, Finland, and Denmark. Once adjustments for taxation of benefits and purchases and unfunded mandates are taken into account, however, the gap narrows considerably. In 1990 purchasing power dollars, net government expenditures by the U.S. in 2003 were $5,408 per capita, which is lower than Sweden’s per capita spending of $6,259 and Norway’s $5901, about the same as Denmark’s 5,472, and higher than Finland’s $4,232. Once private social welfare expenditures are included, the U.S. per capita net public and private social welfare spending rises to $7,850, which is substantially higher than Sweden’s $6,715, Norway’s $6,315, Denmark’s $5,818, and Finland’s $4,920.”

http://econ.arizona.edu/docs/Working_Papers/Econ-WP-10-01.pdf

3 Candadai Tirumalai May 18, 2010 at 9:14 am

Once you really look into any subject, you find that complications
emerge and common perceptions (or popular myth) dissipate. At the
same time you discover that common perceptions are not altogether
groundles.
Some are so (pre)determined to explode common conceptions that they end
up perpetuating myths of their own.
I enjoyed William Sjostrom’s comment.

4 GreenGenes May 18, 2010 at 9:27 am

I would be interested in expenditures that exclude health care costs because the cost of health care is much higher in the U.S. I assume the U.S. expenditures, excluding health care, would be significantly lower than Nordic expenditures.

5 Robb Lutton May 18, 2010 at 12:32 pm

Tyler,
among questions unasked; How come they want to charge casual users to view this pdf? I checked their financials and they get only 1.6 million for publications out of 35 million (more or less) in expenditures and income. Why bother? All they are doing is reducing (a lot) the number of people who view their publications.

6 Bill May 18, 2010 at 4:38 pm

Given our medical costs, we are probably more redistributionist to doctors than to poor people.

7 TGGP May 19, 2010 at 12:24 am

The question of whether people (particularly those whose pay comes from the government) really “earn it” is quite subjective.

8 Norwegian September 10, 2010 at 4:06 pm

Norways social security benefits include:

-Pensions (min U$ 12 000/year, more for people who has ever been employed, quite high amounts for people who had long careers with high wages)
-Child benefits (U$ 2000/year per child under 18, for everyone)
-Maternity/paternity leave 40 weeks at 100 % pay or 54 weeks at 80% for every child, paid for by the social security
-Insurance, paying out for people who aquire injuries or disabilities
-Child support (U$ 6000 per child age 3 and down who do not go to kindergarten)
-Burial support (1300 $ per burial)
-Sick pay at 100% of wages for 50 weeks. Paid for by social security.
-Early pension for people too sick or injured to work
-Free dental until the age of 18.
-Free health care for life. High quality, and low waiting times for serious matters. Free transport to the hospital of your choice, foreign hospitals when neccessary.
-Free education all the way, grants for students who do not live at home, and extra support for students who chose to go to other countries to study.

Probably other stuff I’ve forgotten or take for granted.

If the US spend as much as Norway on social support, one must wonder where the money goes. This paper makes the US come off like one of those 3rd world dictatorships where 90% of the money vanish to corruption before it gets where its going.

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