Does environmental pollution weaken the positive effect of government public expenditure on residents’ subjective well-being? A case study in China

Abstract

With the deepening of government reform, the Chinese government has strengthened the functions of public service and social management. Public policies are increasingly concerned with residents’ well-being. However, environmental quality, which can be regarded as a visual indicator to reflect the performance of environmental protection and the quality of public service, is still not optimistic in China. Thus, we wonder if there exist deep relationships among public expenditure, environmental pollution, and subjective well-being. By combining the data from the Chinese Family Panel Survey (CFPS) with relevant government statistics, we find that public expenditure improves residents’ well-being, whereas environmental pollution has a negative effect. More importantly, environmental pollution is found to moderate the relationship between government expenditure and residents’ subjective well-being. These findings not only prove the extra costs of environmental degradation, but also suggest that good performance of environmental governance should be emphasized in promoting human welfare.