Are there diminishing returns to social spending? Social policy, health and health inequalities in European countries. A comparative longitudinal survey data analysis

Abstract

This paper revisits the relationship between welfare arrangements and health (inequality) considerations. We examine whether specific welfare arrangements improve health and reduce health inequalities and if these effects diminish at higher levels of social protection. Our analyses of general self-rated health focuses on eight social spending categories and total social spending, using Eurostat data and statistical modelling techniques that distinguish between cross-sectional and longitudinal (within and between-country) effects, addressing unobserved country-level heterogeneity. Results from multilevel logistic regression analyses of 321,404 individuals within 28 countries in the European Social Survey (2002-2016) support the hypothesis that social policy matters for health and health inequality, particularly through large and inclusive programs like Old Age, Health, and Unemployment. Between-country variation in social spending was more consistently linked to health (inequality) than were within-country changes, as the latter may need longer timespans to materialize. The findings suggest a curvilinear relationship, where spending is most effective at lower levels. The paper concludes that welfare states can improve health and reduce health inequalities, especially in less developed welfare states through broad and inclusive programs.