EFFECT OF HEALTH EXPENDITURE ON THE STANDARD OF LIVING IN NIGERIA

Abstract

Health care expenditure is an essential component for a higher standard of living since a healthy population translates to an excellent labor force, which makes an economy function effectively. However, this is extremely difficult to achieve, especially in developing countries. Therefore, this paper examined the effect of health expenditure on the standard of living in Nigeria. Specifically, it investigated the relationship between health capital expenditure, health recurrent expenditure and out-of-pocket health expenditure, on standard of living using time series data from 1990 to 2021 and the Dynamic Ordinary Least Squares (DOLS) method was adopted in carrying out the empirical analysis. The paper found that health capital expenditure and out of pocket health expenditure had a positive but insignificant relationship with standard of living while health recurrent expenditure had a positive significant relationship with standard of living. The paper recommends that the Nigerian government should address the insignificant relationship between health capital expenditure, and standard of living by building new hospitals and clinics, buying medical equipment, and training healthcare workers. Also, government needs to prioritize allocation of adequate funds to sustain and improve healthcare services and implement policies such as tax incentives and subsidies to encourage citizens to invest more in their healthcare which will reduce out-of-pocket expenses for essential healthcare service.