There is an interesting annual report out of Copenhagen Business School called the Copenhagen Consensus which hires top economists to identify the global challenges that can be solved most cost effectively … or, in other words, with the best bang for the buck.
I think this is an interesting perspective … and while by no means should be the prescription for where we should prioritize … it provides some data to the equation and should be considered. Certain high impact per dollar spend, less sexy/popular investments are often under-funded compared those with more political and media-attractive investments.
Here are a few of the examples as noted in the Wall Street Journal — Article 1, Article 2. Note: I have highlighted just a few and I apologize in advance that for brevity that they are all not directly comparable and that I’ve left out a lot of the commentary around them.
- Terrorism. Transnational terrorism has taken an average of 420 lives per year vs. 30,000 lost lives on USA highways each year. More than $10B/year is spent on anti-terrorism and the number of deaths/year is increasing.
- Climate Change. Investing money on emissions reductions will net $0.90 for every $1, while investing in R&D for clean energy will return $11 for every $1 invested.
- Child Mortality. 10 million children will die this year in poor nations … this would be reduced to 1 million if child mortality rates were the same as rich countries.
- Heart Disease. In many poor countries, heart disease causes more than 25% of deaths. Much of this is due to lack of unavailability of cheap drugs. Investing $200M/year in these countries would result in 300,000 fewer deaths per year … about $650/life.
- Malaria. Investing $500M/year in bed nets and new anti-malarial drugs would save 500,000 lives per year about $100/life.
- General Health. Each dollar invested in helping people to be healthier and more productive would generate $20 in benefits.
- Malnutrition. Malnutrition will claim 3.5M lives this year. Most survivors of malnutrition have life-long consequences including lower productivity, and physical and mental impairments.
- Micronutrients. An investment of $60M/year would provide micronutriets (particularly vitamin A and zinc) to 100M+ undernourished children per year with an economic benefit of $1B+ per year … or $17 for every $1 invested.
- Agriculture Development. An investment of $60M/year in biofortification R&D would develop two staple crops such as rice and wheat fortified with micronutrients for 40 countries in South Asia and sub-Saharan Africa resulting in $16 of economic benefit for every $1 invested.
Do these numbers look right to you? Are there other investments that have a high or higher bang-for-the-buck?
7 thoughts on “Bang for the Buck”
Yes, as far as biofortification(which was one of the CC’s top 5 solutions) the potential benefits are enormous.HarvestPlus is breeding staple food crops eaten by the poor, that are rich in vitamin A, zinc, and iron. Once the crops are developed for a relatively small investment, they can be grown and consumed locally, in rural areas, year after year. Remember that the vast majority of the world’s poor live in rural areas, are tied in one way or another to agriculture, rely mostly on staple foods for nourishment(hence the problem of micronutrient malnutrition in the first place), and are beyond the reach of most supplementation programs and fortified foods.
A book edited by Bjorn Lomborg, Global Crises, Global Solutions, deals with this with incredible detail. Although I think there’s certainly some value in approaching global issues this way, it certainly seems to have its limitations. There are a lot of things I didn’t like about the book’s approach, but the biggest was that the costs and solutions try to put a value on human life in order to complete the ranking process. They tried to be sensitive about it, but then they adjusted this vslue for purchasing power parity…Cool article. Thanks!
What would happend to all those surviving people, if all those suggested investments would be made?How much would it affect overpopulation?How much more suffering would it bring?
hmmm…anonymous…would you suggest we invest nothing in helping our most vulnerable fellow citizens? Are you implying that you’d rather just see people suffer and perish?
I love the article Dave. Here’s a fantasy of mine. Offer venture capitalists a significant tax incentive to give their time evaluate government proposals to solve social problems of all sorts. If you ever watched the reality show ‘Shark Tank’ with a panel of venture capitalists, that would be my dream…but instead of committing their own money they are evaluating how we are committing our common money from a risk/reward perspective. I’d rather hear what a panel like that would say vs the Congressional Budget Office or similar.
In my view, venture capitalists are specialists in determining risk/reward trade offs. They would bring fresh real world input to a process that most times to me seems run by people who are unfamiliar with the concept of economic trade offs, bang for your buck, etc. I am extraordinarily disappointed by the small percentage of people advising our current president who have any job experience beyond working for govt or academia.