The Dependent Variable Problem in Comparative Analysis of Municipal Social Spending

Abstract

This study aims to identify the dependent variable problem in comparative analysis of municipal social spending and to emphasize the importance of operationally defining dependent variables. For empirical analysis, the author used Social Welfare Expenditure Database (Korea Institute for Health and Social Affairs) and the Local Finance Yearbook’ by the Ministry of Public Administration and Security. Relationships were examined between five independent variables (i.e., population density, the ratio of children aged 0-4 years, the ratio of beneficiary of National Basic Livelihood Protection, local self-finance reliance ratio, local revenue per capita), and six dependent variables (i.e., social spending ratio, social spending per capita, social spending per capita on social services, social spending-to-needs ratio, social spending per beneficiary of National Basic Livelihood Protection, the ratio of social spending on municipal own business, and the ratio of municipal own source revenue for social welfare). The empirical results were striking. Some dependent variables had very weak positive or strong negative relationships with the other dependent variables, although in comparative analysis of municipal social spending every dependent variable is equally considered as a positive indicator of welfare effort made by municipal government. The explanatory power of independent variables and even its direction varied significantly from dependent variable to dependent variable. These results indicate that the entire findings of the comparative analysis of municipal social spending are pre-determined by the way of defining dependent variables and thus call attention to this matter.