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Cuts in social spending are psychologically damaging, finds new research

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Cuts in social spending are psychologically damaging, finds new research

There are substantial psychological gains from having a strong welfare state, finds new research done jointly by the University of Warwick and City University. Social spending acts to reduce citizens’ worries about the future.

The report uses data on 280,000 randomly sampled citizens in Western Europe between the years 2005 and 2022. Approximately 40% of citizens in Western Europe now report high levels of worry, and over time there has been a continuing upward trend in ‘national worry’. The proportion of individuals experiencing extreme worry has increased at an underlying rate of 10 percentage points in the West European population over the last decade.

A rising trend in national worry levels was visible in the data, the researchers show, well before COVID, the invasion of Ukraine, and the conflict in Gaza. “In that sense, we find that something foundational, and currently not understood, appears to be going wrong within western society. It is true even beyond Western Europe.” said Lucia Macchia of City University London, one of the two authors. The authors also examined data on the whole OECD.

Her co-author, Andrew Oswald, professor of economics and behavioural science at the University of Warwick, said “This research, on what determines the level of worry within a society, seems to be the first of its kind. One finding is that social spending by a government apparently acts as a protective mental buffer against worry. Social spending reduces people’s fears. The welfare state appears to have remarkable psychological value -- including for those who do not use it -- in a way that I suspect is not completely understood, although I am prepared to bet that William Beveridge understood it.”

The authors show that of all the OECD nations the United Kingdom had the fastest growth in worry levels between 2010 and 2019 (before the special COVID years in which data comparisons become less reliable). Costa Rica had the next-highest growth in worry.

The UK had the strongest decline in social spending across the European nations studied by the authors, and one of the strongest in the OECD. All social spending levels in the authors’ report were calculated relative to GDP.