The purpose of the book is to discover how additional spending can help make the world a better place. This book is about cost-benefit analysis of alternatives to address some of the worlds problems, such as malnutrition, illness and so on. It compares the cost of doing something, like providing nets against malaria, with the benefits it generates. Both costs and benefits are expressed in dollars, so if the benefits are fewer deaths, he uses the value of a statistical life to compute the benefits. Bjørn Lomborg is meticulous in including all the possible costs, including indirect ones, like travel costs or lost wages, and conservative in computing the benefits, using a quite high discount rate when assessing future gains. He then selects benefit/cost ratio of 15 to present the 12 most effective alternatives. This means that for every dollar spent on one of these alternatives, one gets 15 dollars back in benefits.
The book is very critical of the Sustainable Development Goals (SDG). The SDG were adopted by the UN in 2016 following the relative success of the Millenium Development Goals (MDG), a set of goals adopted in 2000 and meant to be achieved in 2015. The MDG where 8 goals with 21 specific targets. The SDG are 17 goals with 169 targets. MDG where clear and easy to understand and their targets made sense. SDG meanwhile, are very comprehensive but do not offer any kind of criteria that can be used to set priorities. Achieving some of the targets actually has a negative benefit/cost ratio, meaning that it costs more to achieve a target than the benefits it provides.
In the book, Lomborg selects the most cost-effective policies out of more than 100 alternatives. He compares the expected outcome of the selected alternatives to the current trend for the relevant indicator in the SDG. Time and time again, he shows that with the current trends, the SDG will not be achieved in 2030 as envisioned. The adoption of the SDG has not changed previous trends as adopting the MDG did. Adopting the most cost-effective policies would make a significant difference.
An example of not very cost-effective spending is fighting climate change. A global coordinated CO2 tax, the most cost effective action against climate change, would only provide $2 of benefits for every dollar spent. I mostly agree, but I would have appreciated a discussion of whether even if fighting climate change is not very cost-effective, reducing the risk of a catastrophic scenario is worth it. He always tries to asses the most likely or most conservative scenario to check how cost effective different interventions are. But in some cases, I would like to consider the intervention as an insurance policy against a small change that things go really bad.
Some chapters of the book feel like being cheated. Ending wars and similar obviously good policies are not included because there is no clear way to achieve them, but then he proposes reducing barriers to trade, reducing corruption, facilitating immigration and creating land registers. I agree that all of them would be fantastically good policies, but I don't see any of them being easier or more realistic than ending wars.
According to the book, the annual cost of all policies combined would be USD 35 billion, and the expected benefits, 4.2 million lives saved. Additionally the poorer half of the world would be better off by about 1.1 trillion dollars.
I think that using a very high discount ratio makes policies that have benefits far into the future appear worse. This might be short sighted and ignores unexpected benefits. I happen to have worked in hydro-power development. Most projects are only executed if the pay-back period is quite short, maybe 20 years max, but there are power plants in service that are more than 100 years old. Another example of unexpected benefits is the highway between Grimstad and Kristiansand in Norway. When the project was planned, every study showed a negative return, but the highway was built anyway. It turned out that the highway helped create a larger job market in the region by making longer commutes practical. The benefits were much bigger than initially estimated and the project was very profitable after all.
Another insight that I gained from reading the book is that chronic diseases like diabetes, cardiovascular diseases and cancer affect poor countries as well as rich ones, and tackling them provides as many benefits as addressing other typical poor-country diseases, like malaria and tuberculosis. It is obvious in hindsight, but not something that I had considered before.
So, what are the 12 interventions with the most favorable cost-benefit ratio?
Providing treatment for tuberculosis. The book presents a compelling history of tuberculosis, the current status, and why it is a difficult illness to treat, even nowadays. This chapter is quite interesting by itself.
Teaching students according to their learning level and not their age. There are two ways to do that: use a tablet one hour every day or shuffle classes one hour a day, so that students sit together with other pupils that are at the same learning level, but not necessarily the same age. Both approaches have been tested and found to provide benefits. It is worth nothing that many popular policies deliver no learning increases. For example, One Laptop per Child or higher salaries for teachers.
Maternal and newborn health. The book presents research from the Johns Hopkins School of Medicine. What I found novel is that interventions are grouped in packages. This reflects how actual health services are delivered and lowers the costs for mothers who have to attend. The two packages proposed consist in increasing coverage of basic emergency obstetric and newborn care—in other words, the ability to treat the most typical birth complications—and to meet the demand for family planning services.
Nutrition. Providing micronutrients and calcium for pregnant women and complementary feeding for children aged 6-23 months saves lives. It also helps children grow up to be less stunted, better educated, and ultimately more productive.
Chronic diseases. As mentioned earlier, chronic diseases affect poor countries too. Prevention is the best medicine in this case. Levying higher taxes on alcohol and tobacco and reducing the amount of salt in processed foods are inexpensive policies that give good results.
Childhood immunization. Vaccines save lives. Millions of children can be saved for a very low cost.
Agricultural R&D. The Green Revolution enabled greatly increased crop yields, but was centered on cereals, mainly wheat and rice, that are not well suited to many African countries. A similar R&D effort centered on African crops is feasible, and the experience of the Green Revolution provides a blueprint of how to do it.
e-procurement. Implementing e-procurement can be an effective way to fight corruption in government appropriations. The analysis seems right, but there is a significant caveat: one must assume that politicians actually want to curb corruption. I am skeptical, considering that they benefit from corruption too.
Land tenure security. It sure helps, but there are many vested interests against it. Land tenure security requires both a lot of political will and funds to create and maintain a good land register. It seems quite difficult.
Trade. I think every economist understands this one. This is a pure political problem. Unfortunately, the tide is turning against free trade.
Skilled migration. Surprisingly, allowing a controlled degree of skilled migration benefits both host countries and countries of origin. This policy is also in the cheating category for me, because of how politicized immigration policy is.
I liked this book quite a lot. Some chapters are more engaging than others, but overall it paints a pictures of where cooperation efforts can be best directed. For individuals who want to have a positive impact on the world with their careers, it shows promising avenues for people with different skills.
Last updated: 2024-11-30