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How people spend their money

December 2, 2011

People spend their money on a lot of different things. As Tyler Cowen likes to point out, sometimes it seems as if there are “Markets in Everything”. Information about where people spend their money is useful across many economic policy discussions. Economic growth must come from a sector that comprises a decent portion of the economy; making 1% of the economy ten times as efficient increases growth about the same as making a sector that is 10% of the economy 10% more efficient.

Where does the money go?

Consumer Spending

I think some of the reason why healthcare expenditure looks so low given that health care is 16% or so of the economy is that much of our health care spending is done by our employers. Health care would look a lot bigger if it were not obfuscated behind such a bizarre regulatory scheme.

Amount of taxes paid

Where does the government spend money?

History of spending

I wanted a variety of sources. Some of the earlier graphs don’t include government spending at all, but as government spending is about 20% of the economy (not to mention highly regulated sectors such as health and banking), it seems misleading not to include graphs of what the government spends money on. Many recent suggestions for economic growth center around making government more efficient and competitive, such as the seasteading movement.

A BLS report on spending.


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