Defensive Expenditures

(billions 2012 $)

What are we measuring?

A defensive expenditure occurs when we spend money on something that does not increase our welfare, or is necessary to avoid a decrease in well-being. For example, spending money on health insurance does not necessarily make us better off, but it does help protect us from future costs that would negatively affect our well-being.

Trends 2012-2022

Defensive expenditures in Maryland increased nearly 37% from 2012 to 2022, chiefly driven by large increases in the cost of medical care which increased by $5 billion from 2020 to 2022.

Calculation

These data are household expenditures classified as defensive expenditures taken from the Bureau of Economic Analysis personal consumption data. Categories of defensive expenditures are costs of medical care, costs of legal services, costs of food and energy waste, household pollution abatement, insurance, welfare neutral goods (tobacco and 25% of alcohol and gambling), and household security.