The Most Good per Dollar

Many times our mindset, especially in the international development sector, is that once we throw enough money onto a problem, we’ll magically solve it. I am by no means trying to diminish the importance of money to solve some of the world’s biggest problems — matters like economic development and financial independence, climate change, minority rights, the list goes on… Money is a necessity, but it does not solve it all. People need to know how to use it effectively and appropriately.

Last week’s Freakonomics episode “Fixing the World, Bang for the Buck Edition” discussed this by looking at how the United Nations utilizes its money. Each year, the UN receives over $100 billion. How does the organization decide what kind of problems to spend all that money on? While this sounds like a simplistic question, it is worth discussing further.

Let us look at an example. The Millennium Development Goals have been one of the most successful programs in UN history. Every 15 years, the organization chooses goals, which it works on accomplishing in that time span. From 2000-2015, they will have focused about US$500 billion of aid to targets, which range from reducing child mortality to ensuring environmental sustainability.

While many of these goals are smart, there was not cost and benefit analysis made to identify the targets. Then Secretary-General of the U.N. Kofi Annan worked with a close-knit team of advisors to develop these goals. When everyone adopted them, no one questioned how likely they were to succeed or whether they were the best to put forth. Current Secretary-General Girl's hands holding globeBan Ki-moon wants to change all of that by opening up the discussion to the public for the next Millennium Development Goals that will last until 2030. Open Working Groups, which include a collection of 70 countries, have been meeting regularly in order to set realistic and efficient goals. The drawback of this high-level panel is that, because so many opinions will produce more potential targets (up to 1,400), there will be a big struggle to narrow down and prioritize goals. Nevertheless, Ban Ki-moon’s new tactics for the Millennium Development Goals are a good decision as they will result in better goals for international development.

One organization that is trying to help the UN identify which goals will do the most good is the Copenhagen Consensus. Trying to explicitly quantify the costs and benefits, the charity looks at the most effective goals that could be accomplished by 2030 and have the biggest impact on the world. This is done by researching different themes, such as Education and Population & Demographics, and doing a cost-benefit analysis on each of the propositions by the UN and Open-Working Group

Education:

The most high-yielding targets:Screen Shot 2014-10-14 at 11.18.33 PM As seen from the table above, the most effective way to do good in the area of education is to increase preschool enrollment. Not only are the qualifications to teach it low, but the opportunity cost for children is also extremely old. No three-year-old child will be able to work and make money instead of going to preschool. Nothing competes with the idea. Benefits of increased preschool enrollment:

  • better progress throughout the education system (primary, secondary, and tertiary education)
  • reduced achievement gap between children from richer and poorer backgrounds
  • increased average earnings by 42% (Jamaican Study)

Population and Demography

The most high-yielding targets:Screen Shot 2014-10-14 at 11.56.16 PM Universal access to sexual and reproductive health services is and extremely effective target to have for the UN according to the Copenhagen Consensus. Currently,  high fertility countries contribute 38% of the population growth even though they are only 18% of the world’s population. Population growth is projected to come exclusively from these countries by 2060. Benefits of universal access to sexual and reproductive health services (e.g. contraception):

  • better child health and more schooling
  • reduced child-birth mortality
  • increased female human capital, which may result in economic development
  • sexual and reproductive health information through voluntary family programs

These are just a two out of many recommendations that the Copenhagen Consensus is giving the UN to improve the Millennium Development Goals of 2015-2030. While the director of the charity, Bjorn Lomborg, knows that the United Nations will not take all of his and the Center’s advice on the best possible Millennial goals, he is still hopeful for change.

The world will spend $2.5 trillion on development aid over the next 15 years. So we’re leveraging huge amount of money. So if we can just make the U.N. ditch one bad target and put one more good target in there instead, we could do hundreds of billions of dollars worth of good. And so, you know, we’re figuring we’re only going to change a little bit, but because we’re leveraging so much, we’ll actually end up doing a lot of good — Lomborg (@BjornLomborg)

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