IN the heart of a financial crisis, most of us carefully consider every last purchase. It is important that politicians do the same when making vital policy decisions.
Instead of focusing on initiatives with the greatest benefits, they tend to be swayed by those with the most vocal advocates. Take the Kyoto Protocol. Its $180 billion annual global cost would perhaps be worth the investment if it made any substantial difference to global warming. But even if Kyoto were implemented for the rest of this century, it would cut temperatures by just 0.3 degrees Fahrenheit.
This doesn’t pass a basic cost-benefit test. The investment would cause more immediate financial hardship than eventual good. There are many better uses for the money.
That point was underscored by Copenhagen Consensus 2008, a project I designed to champion the use of economic tools in international aid and development policy.
For two years before Copenhagen Consensus 2008, teams of experts wrote papers identifying the best ways to solve the world’s biggest problems: air pollution, conflict, disease, inadequate education, global warming, malnutrition and hunger, sanitation and water challenges, subsidies and trade barriers, terrorism and gender-disparity issues. They identified the investments that would best tackle each challenge and outlined the costs and benefits of each.
A group of prestigious economists — including five Nobel laureates — gathered and examined this research. They took the long menu of investments and turned it into a prioritized list of opportunities. At the bottom — the least cost-effective investment the world could make to respond to any of these problems — was dealing with climate change through immediate CO2 cuts, as the Kyoto Protocol attempts.
At the top was the provision of micronutrients — particularly vitamin A and zinc — to undernourished children in South Asia and Sub-Saharan Africa.
For just $60 million annually, we could reach 80 percent of the world’s 140 million or so undernourished children. The economic gains from improving their lives would eventually clear $1 billion a year.
For another $286 million, we could iodize salt and fortify basic food with iron for 80 percent of the children who are at risk of stunting and poor development because they’re going without.
Interestingly — and perhaps predictably — many of the economists’ top-ranked solutions were to problems that don’t attract many headlines or much celebrity attention. The simple act of deworming children in developing countries, for example, would improve nourishment and allow some of the world’s most disadvantaged kids to learn more and get better jobs later.
Copenhagen Consensus 2008 showed that we know how to stop people from dying from malnutrition, pollution, HIV/AIDS and malaria. Solving these problems would open a world of opportunities, including allowing a disadvantaged community to grow, develop and care about longer-term issues like global warming.
What we need to do now is cheap and simple. It’s mostly a question of getting what’s needed (micronutrients, cleaner forms of fuel, free condoms and mosquito nets) to those in need. Death tolls remain high because we have limited resources, and these problems are not considered our biggest concerns.
Economic tools such as cost-benefit analysis and prioritization will never offer the last word in public policy debate — and nor should they — but they can provide a vital input for decision-makers.
The process that worked for Copenhagen Consensus 2008 — and that encouraged philanthropic organizations to invest more in malnutrition — is also relevant for national and state governments and city administrations.
Prioritization is difficult for any politician, whether a member of the Obama team or a city administrator. The project would give a city like New York the opportunity to focus on the spending priorities that achieve the most. Vested interests and lobbying groups create a lot of noise. Copenhagen Consensus sets aside that noise, so that the costs and benefits of competing options can be seriously considered side-by-side.
The recession that has made life more difficult also offers an opportunity for us all to rethink our priorities — and ensure that each dollar spent achieves as much as possible.