This paper aims at analysing the effectiveness and
the efficiency of social public expenditure in 22 European countries. We
present a basic theoretical framework connecting the choice of the level of
social protection to the median voter’s preferences and the inefficiency of
expenditure. To test it against real data, we construct performance and
efficiency indicators. While the existing literature measures the performance
of social policy restricting the analysis to its impact on inequality and the
labour market, our index summarises the outcomes achieved in all sectors of
social protection (family, health, labour market elderly, disabled,
unemployment, inequality). Based on this, we find that the ranking of countries
differs from those found in the literature. We then put together performance
and the amount of expenditure needed to achieve it (to better compare
countries, we use social public expenditure net of tax and transfers),
constructing efficiency indicators. Our results suggest that countries with a
higher social expenditure inefficiency index present a greater variability of
performance in all subsectors considered.
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