How government spending relates to eco-social outcomes: A global comparative analysis from 2005 to 2019

Abstract Governments play a central role in achieving eco-social outcomes, understood as the joint achievement of social wellbeing and environmental sustainability. Yet little is known about how government spending relates to these outcomes. This study examines how government spending relates to need-based social threshold attainment, carbon emissions, and carbon intensity (CO₂e/US$) across 116 countries between 2005 and 2019, using input-output and regression analyses. To account for global climate justice, we adjust carbon intensities according to countries’ fair shares of the remaining global carbon budget. We use these equity-adjusted carbon intensities as our primary ecological indicator because they combine information about the carbon efficiency of spending with countries’ relative position in relation to their fair carbon budgets. We find that higher government spending is associated with better social outcomes, although these associations exhibit diminishing returns and depend on spending composition. Spending on education and recreation, social protection, and public administration is associated with higher social threshold attainment and relatively low equity-adjusted intensities. By contrast, industry-related government spending exhibits high intensities and suggests potential carbon lock-ins. Most spending categories exhibit lower intensities in countries with higher social threshold attainment, with housing as a notable exception. Order and defense spending is associated with lower social threshold attainment despite considerable carbon impacts. Across welfare sectors, including education and recreation, health and environment, and social protection, government spending is associated with more favorable eco-social outcomes than household spending, suggesting advantages of public and collective provisioning. Nonetheless, even the highest-performing countries remain ecologically unsustainable. Sustainable wellbeing will therefore require government spending to support the transformation of provisioning systems so that human needs can be met within planetary boundaries.