Description and meaning of the component

A significant amount of public expenditure is defensive in nature: the money is spent to avoid deterioration of social welfare. Insofar they do not truly enhance welfare of a country even though they are included in GDP. At least some share of public spending can be considered welfare enhancing and thus should be positively recognized within a framework of a welfare index, because these expenditures can effectuate an increase of life expectancy and an improvement of economic and social development-

Such a separate record is necessary since the NWI – different from GDP – initially includes only private expenditures (component 2).

The assumed share of fifty percent of total spending is based on a very rough estimation of defensive and positive expenditures because a more solid differentiation would be enormously laboriuos.


Description of Indicator trends

Public expenditures on health and education are fluctuating in the time period considered here – not looking at the estimated results netween 1991 and 1994 – between 65 and 54 billion Euro. Between 1995 ans 1998, the trend is slightly falling. After that period, there are no big changes until 2008. After that year, expenditures rise significantly, arriving at a maximum in 2014 (63 billion Euro) that can be ascribed to the increase of the expenditures for education. Although there is no direct correlation to the level of education and the educational achievements, the expenditure is an important component of social welfare. As a general rule, increasing levels of education are connection to an increase of income and to a rise of interest in political participation. It is central fort he ecobomic prosperity of a country.