Sunday, February 8, 2015

"No-brainers" to make the world a better place

The Economist explains:

“THE lives of people in poor countries will improve faster in the next 15 years than at any other time in history. And their lives will improve more than anyone else’s.” So predict Bill and Melinda Gates in their annual letter, published on January 22nd. The wealthy philanthropists expect the rate of infant mortality to halve by 2030, from one child in 20 dying before turning five to one in 40. They also forecast the eradication of polio and perhaps three other deadly diseases. Improvements in agriculture will mean that Africa will be able to feed itself. Financial security will improve as the 2 billion people who do not have a bank account start storing money and making payments using mobile phones. And affordable online courses will open up huge educational opportunities for poor people, especially girls.

Yet the letter has surprisingly little to say about the United Nations initiative that is intended to bring such predictions to fruition: the “Sustainable Development Goals” to be agreed by world leaders at the UN General Assembly in September. . . .

One of the loudest voices calling for greater focus is Bjorn Lomborg, a Danish economist, who has launched the Post-2015 Consensus, an effort to draw up a shortish list of goals and targets the benefits of which, if achieved, would far outweigh the costs. This is a souped-up version of the Copenhagen Consensus he has run for the past decade, bringing together leading economists to calculate the cheapest ways to improve the state of the world.

Mr Lomborg has commissioned some 60 teams of economists, plus representatives from the UN, NGOs and business, to review the proposed targets to work out which would generate the most bang for the buck (he rates less than a tenth of them “phenomenal” value for money). . . . A panel of three Nobel Prize-winning economists will then write an overview of the work and make recommendations for how best to spend the $2.5 trillion in international development assistance Mr Lomborg expects over the years to 2030.

Some of the results are surprising. For instance, a recent paper by Bjorn Larsen looked at ways to reduce deaths from air pollution, which currently kills around 7m people a year. It found that shifting 1.4 billion people from traditional cooking methods to stoves with outdoor vents could save half a million lives a year and generate an economic benefit to the world of $10 for every $1 spent. Using higher-tech smoke-free stoves would bring an even bigger reduction in deaths. Yet the cost would be much higher, so the benefit would be only $2 per dollar spent.

Perhaps more surprising, the most beneficial measure Mr Lomborg’s teams evaluated was lowering barriers to trade, which achieves far more per dollar spent than any other option (see chart). Completing the treaty currently under negotiation at the World Trade Organisation, for example, would bring developing countries $3,426 for every dollar spent. A free-trade deal encompassing China, Japan, South Korea and the ASEAN countries would be worth $3,438 per dollar spent.

Most poverty-reduction measures are more expensive than cutting tariffs, but many are still well worth it. Providing contraception and other reproductive-health services to all who want them would cost $3.6 billion a year, according to Mr Lomborg’s researchers, yet generate annual benefits of $432 billion, $120 per dollar spent. Increasing the nursery school enrolment rate in sub-Saharan Africa to 59% from its current 18% would generate benefits of $33 per dollar spent. Reducing by 40% the number of children whose growth is stunted by malnutrition would be worth $45 per dollar spent; reducing deaths from tuberculosis $43. Increasing mobile broadband penetration from 32% of the world’s population to 90% by 2030 would deliver benefits of $17 per dollar spent. Stopping tax evasion in sub-Saharan Africa (where it currently costs 20 governments around 10% of GDP a year) would also pay off handsomely, at $49 per dollar spent. Increasing by 20% the worldwide availability of work visas would generate benefits of $15 per dollar.