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In 1975 the world population reached 4 billion people. In 2023 it reached 8 billion

In 1975 the US population was 211 million. Today it is 340 million.

Considering that:

1- we now have more people, more knowledge and more technologies. 2- one important principle that we promote is freedom 3- there seems to be a positive correlation between Government spending and quality of life. (HDI = Human Development Index)

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What amount of money per capita should our governments spend? Did someone develop a model of some kind.

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  • $\begingroup$ You might want to look at government spending as a % of GDP, I think that would be more stable then government spending per person. $\endgroup$
    – Daniel
    Oct 9 at 18:09

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There are numerous models of optimal government expenditure. You can have look at some standard textbooks such as Romer Advanced Macroeconomics ch 13 for overview of basic models and then follow references for more advanced versions.

You might want to also look at public economics literature where optimal tax and spending policy is discussed under different ideological frameworks. 'Promoting freedom' is bit vague, but I guess you can look at literature on optimal spending given classical liberal/conservative welfare criterion where welfare weights for all individuals are uniformly distributed, so you get minimum amount of government interference.

Also, note most of these models are representative agents models, so even though they do not explicitly state so, they can be de facto reinterpreted as per capita models.

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  • $\begingroup$ Thanks for your answer. I looked at ADVANCED MACROECONOMICS, FOURTH EDITION, but there is no ch 13. As for freedom, it is just one of the elements we need to look at. However, what is more important is the quality of life. Is there a model that takes this into account? $\endgroup$
    – Denis Pageau-Sociétalogue
    Oct 8 at 19:47
  • $\begingroup$ @DenisPageau-Sociétalogue there is ch 13 in 5th edition. All these models take quality of life into account because in economics we focus maximizing welfare (utility). $\endgroup$
    – 1muflon1 ♦
    Oct 8 at 23:32
  • $\begingroup$ You wrote: "in economics we focus maximizing welfare (utility)" Thank you for this info. I was not familiar with this concept. This being said, it seems to be pretty subjective. "However, welfare economics is a subjective study that depends heavily on chosen assumptions regarding how welfare can be defined, measured, and compared for individuals and society as a whole." $\endgroup$
    – Denis Pageau-Sociétalogue
    Oct 9 at 0:02
  • $\begingroup$ @DenisPageau-Sociétalogue it is subjective only in a sense that different people can have different preferences. It is objective in a sense that objectively every person derives more wellbeing from satisfying his/hers preferences. Hence if you want to maximize people’s wellbeing/quality of life you have to work within preferences people have. For example, if you provide nutritious meal for Muslim that has pork, even if the meal might be of high quality, you are not really improving that person’s wellbeing/quality of life, in fact you are likely worsening the wellbeing of that person. $\endgroup$
    – 1muflon1 ♦
    Oct 9 at 7:58
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    $\begingroup$ But GDP is a cold economic term. HDI has a warmer tone and makes a more direct connection with us humans. ;-) $\endgroup$
    – Denis Pageau-Sociétalogue
    Oct 9 at 20:55

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