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Defense Expenditure and National Well-Being: Evidence from the G7 Countries

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  • Tosin Kolajo Gbadegesin

Abstract

This study investigates the relationship between defense spending and societal welfare in G7 nations, focusing on health, education, and consumption expenditure as indicators of national well-being. Utilizing panel data from 1971 to 2022, we employ fixed effects to study the short-run and utilized DOLS/FMOLS econometric methods which address issues such as unobserved heterogeneity, non-stationarity, and serial correlation for long-run estimates. Incorporating a comprehensive set of control variables enhances the reliability of our analysis, our findings indicate a significant positive impact of military expenditure on health, education, and final consumption expenditure. Robustness checks confirm these results even after controlling for additional factors such as tax-to-GDP ratio, GDP per capita, trade, demographics, and historical events. Contrary to some prior studies, our findings suggest that defense spending positively influences national well-being.

Suggested Citation

  • Tosin Kolajo Gbadegesin, 2025. "Defense Expenditure and National Well-Being: Evidence from the G7 Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 36(7), pages 1030-1041, October.
    • Handle: RePEc:taf:defpea:v:36:y:2025:i:7:p:1030-1041
    DOI: 10.1080/10242694.2024.2413232
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