A plausible explanation for the negative correlation between environmental degradation and healthcare expenditure

ABSTRACT

This article provides a plausible explanation for the seemingly counterintuitive observation that healthcare expenditure can be negatively correlated with environmental degradation, measured by CO2 emissions. A mathematical proof is presented to demonstrate that the relation between expenditure and degradation may be positive or negative, depending on the position of the underlying country or region on the environmental Kuznets curve. This proposition is confirmed by a diagrammatic exposition and a simulation exercise.

KEYWORDS:

• Healthcare expenditure
• environmental degradation
• environmental Kuznets curve
• CO2 emissions

JEL CLASSIFICATION:

• I15
• Q50

Acknowledgments

We are grateful to two anonymous referees for useful comments.

Disclosure statement

No potential conflict of interest was reported by the authors.