The real priorities - The Centre for Independent Studies
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The real priorities

A Mayor has a $10million surplus, which he wants to allocate to a good cause. Ten groups clamour for the cash. One wants to buy new computers for an inner-city high school. Another hopes to beautify a local park. Each of the 10 organisations puts together a persuasive case outlining the benefits they could achieve. What should the politician do?

The straightforward answer is to divide the cash into 10 equal amounts. Intuitively, the idea seems fair: nobody will walk away empty-handed. But the obvious answer is wrong.

With more information, it is possible to quantify the spinoffs from each alternative. Some options will always be better than others. The extra money should go first to the cause with the greatest social value.

On a larger scale, governments and the UN have massive, but limited, budgets to reduce suffering in the world. And yet they too tend to distribute their money thinly across different causes, often following the media’s roving attention.

A little extra is spent battling HIV/AIDS, malaria and malnutrition. Some more is devoted to stamping out corruption and conflict. Other cash is set aside to holding back climate change and warding off avian flu. After all, if politicians give everyone something, nobody complains. But they would do better with a rational framework or explicit prioritisation.

For policy-makers, the list of spending possibilities is like a huge menu at a restaurant. But it is a menu without prices or serving sizes. Global leaders and ordinary citizens need better information to make informed choices.

Providing a principled framework for those vital decisions was the goal for a group of economists who gathered in Denmark in 2004. The team, including four Nobel laureates, took part in a project called the Copenhagen Consensus that compared the social value of solutions to different challenges facing humankind.

The question the economists strived to answer was: “How could you spend $50billion extra to achieve the most good possible?” They studied research created for the project on the costs and benefits of different ways to combat HIV/AIDS, starvation, global conflict, climate change, corruption and other challenges. The result was a concrete, prioritised “to-do” list that outlined how policy-makers could achieve the most good possible.

The economists decided that spending $US27billion ($35billion) on an HIV/AIDS-prevention program would be the best possible investment for humanity. It would save more than 28 million lives within six years and have massive flow-on effects, including increased productivity.

Providing micronutrient-rich dietary supplements to the malnourished was their second-highest priority. More than half the world suffers from deficiencies of iron, iodine, zinc or vitamin A, so cheap solutions such as nutrient fortification have an exceptionally high ratio of benefits to costs.

Third on the list was trade liberalisation. Although this would require politically difficult decisions, it would be remarkably cheap and would benefit the entire world, not least the developing world. A staggering GDP increase of $US2.4trillion annually would accrue equally to developed and developing countries with free trade.

The economists would then focus on the huge benefits possible from controlling malaria with chemically treated mosquito nets. Next on their list was emphasising agricultural research and the improvement of sanitation and water quality for a billion of the world’s poorest people.

Each of these ventures has benefits that far outweigh the costs.

Forty dollars of good would be achieved for every dollar spent on HIV/AIDS prevention. In other words, the provision of $1 worth of condoms in the right location would result in benefits that an AIDS-ravaged community would value at $40.

Some will ask why that community doesn’t spend the dollar itself in the first place. Typically the answer is because the money and spending power lies elsewhere: in wealthier nations or with the UN.

Information about the risks and ways to avoid them are often hard to come by. Also, the effects of HIV/AIDS are very far-reaching. One infection will cause several more in the future and will devastate families, workplaces and communities. Yet the individual investment in prevention rarely takes these downstream costs into consideration.

There is a lot of momentum to ensure governments commit to combating climate change. Former US vice-president Al Gore has turned film-maker, creating a documentary called The Inconvenient Truth. The really inconvenient truth is that combating climate change through the Kyoto Protocol has a social value of less than a dollar for each dollar spent.

In other words, spending the world’s limited resources combating climate change would achieve good, but would cost more than it would achieve. That money could achieve more elsewhere. That is why the Copenhagen Consensus economists crossed drastic climate-change measures off the list of things that the world needs to do right now.

Prioritisation should not be an academic exercise performed only by economists. It must become part of the political discourse if decisions about reducing suffering are to have greater transparency and legitimacy.

In mid-June at Georgetown University in the US, a select group of distinguished UN ambassadors gathered to come up with their own to-do list. It brought together US representative John Bolton, along with his counterparts from India, China and other nations to think about priorities. They heard evidence from both economic and UN experts.

Their choice? They came up with a list of priorities that is surprisingly close to the Nobels. They found that the world’s top priorities should deal with health, water, education and hunger. And, perhaps more courageously, they also said what should not come at the top: financial instability and climate change ranked at the bottom of the list. The project was a significant step towards putting prioritisation on the agenda for global decision-makers. And they all were keen on taking it further; to have 40 or 50 ambassadors do the ranking in New York this northern autumn.

But at the end of the day, priorities are not the ones Nobels or UN ambassadors set, but something societies debate and democracies decide. I hope that our new book, How to spend $50billion and make the world a better place, will help us to have a real conversation about our rankings. In a world where politicians and voters are faced with ever-increasing and competing demands for attention, the Copenhagen Consensus process can help us focus on initiatives with the greatest benefits, rather than just the ones with the most vocal advocates.

Honestly, prioritisation is not an easy option. But the provision of a principled framework for decisions could ultimately ensure that the world’s limited resources are spent doing the most for humanity. And that option is very hard to ignore.

Bjorn Lomborg is the organiser of the Copenhagen Consensus, an adjunct professor at Copenhagen Business School and editor of How to spend $50billion to make the world a better place. He is listed as one of the world’s 100 most influential people by Time magazine.