Government Expenditure for Social Services – 2005

Thus, the dilemmas of socioeconomic policy remain unresolved: is a pro-growth macroeconomic policy enough to enhance the well being of weak population groups? And if the general improvement does not trickle down enough, or does so at an unsatisfactory pace, how should the government intervene? Should Israel revert to its traditional policy of spending more on social services and transfer payments, or should it take a different approach, more focused and less universal, including significant changes in expenditure targets?

Ideological outlooks influence attitudes toward these questions. Even people who share similar worldviews, however, may disagree due to practical difficulties that originate, among other things, in limitations in identifying and measuring costs and benefits and, primarily—in comparing the cost-benefit ratios of different public social outlays. The review that follows strives to establish a factual basis for discussion of a desirable government socioeconomic policy. Apart from describing developments and noting main long-term trends, the analysis also makes a partial assessment of the efficacy of the expenditures.

This paper appears as a chapter in the Center’s annual publication, Israel’s Social Services 2005, Yaakov Kop (editor).