(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.
Defensive expenditures in Maryland increased nearly 27% from 2012 to 2019, chiefly driven by large increases in the cost of insurance and medical care. However, these costs have slightly decreased from 2015 to 2019.
These data are household expenditures classified as defensive expenditures taken from the ESRI consumer database. 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), household security and costs of family changes (alimony and child support).