When Government Spending Is a Moneymaker
A new measure shows which social programs yield positive returns.
It hurts now, but it’s worth it.
Photographer: Spencer Platt/Getty Images North AmericaA common refrain among opponents of social-welfare programs is that they're too costly and act as a drag on future growth because someday taxpayers will have to pick up the tab. That's a crude and short-sighted view: it's long been understood that some social programs not only pay for themselves, but yield positive returns; they also play an important role in reducing inequality, which is crucial for boosting the economy.
Yet some programs are better than others, and it's often difficult to know which we should invest in. My Harvard colleague Nathan Hendren and Harvard graduate student Ben Sprung-Keyser help answer that question in a new paper that looks at 133 different government programs, including social insurance, education and in-kind transfers such as food stamps.1