The World's Best Investment

You have $75 bilion dollars and you are required to invest it in worthwhile causes. What would those be, and where would you start? An organisation/initiative called The Copehnhagen Consensus put this test to 55 world-renowned economists, including half dozen Economics Nobel Prize winners, and experts in 10 areas identified as global challenges - Air Pollution; Conflicts; Diseases; Education; Global Warming; Malnutrition and Hunger; Sanitation and Water; Subsidies and Trade Barriers; Terrorism; and Women and Development.

Eight renowned economists led the effort: Jagdish Bhagwati, Columbia University; François Bourguignon, Paris School of Economics and former World Bank chief economist; Finn E. Kydland, University of California, Santa Barbara (Nobel laureate); Robert Mundell, Columbia University in New York (Nobel laureate); Douglass C North, Washington University in St. Louis (Nobel laureate); Thomas Schelling, University of Maryland (Nobel laureate); Vernon L Smith, Chapman University (Nobel laureate); and Nancy Stokey, University of Chicago.

The group analysed all these problems, created impact and outcome models and what-have-you, and came up with a list of 30 interventions or investments - ranked on basis of "value for money" i.e. impact on development vis. dollars invested - to tackle these challenges.

The idea of ranking was based on the need for "prioritization" of interventions given the fact that aid resources are dwindling, commitments are not coming through, and, when they do, are channeled without consideration of the outcomes and on the basis of what is hot or fashionable (microfinance is hot now) at the moment.

Guess what came on top as an investment with most impact on development. Not roads. Not conflict resolution.

So, to repeat the question that was posed to the group: What would be the best ways of advancing global welfare, and particularly the welfare of the developing countries, illustrated by supposing that an additional $75 billion of resources were at their disposal over a four year initial period?

From here I copy the text from the liteture of the Copenhagen Consensus, which commissioned this work:

"Ten challenge papers, commissioned from acknowledged authorities in each area of policy, set out more than 30 proposals for the panel’s consideration. During this week’s conference the panel examined these proposals in detail. Each paper was discussed at length with its principal author and with two other specialists who had been commissioned to write critical appraisals, and then the experts met in private session. Based on the costs and benefits of the solutions, the panel ranked the proposals, in descending order of desirability, as follows:

1 Micronutrient supplements for children (vitamin A and zinc)
2 The Doha development agenda
3 Micronutrient fortification (iron and salt iodization)
4 Expanded immunization coverage for children
5 Biofortification
6 Deworming and other nutrition programs at school
7 Lowering the price of schooling
8 Increase andimprove girls’ schooling
9 Community-based nutrition promotion
10 Provide support for women’s reproductive role
11 Heart attack acute management
12 Malaria prevention and treatment
13 Tuberculosis case finding and treatment
14 R&D in low-carbon energy technologies
15 Bio-sand filters for household water treatment
16 Rural water supply
17 Conditional cash transfers (paying parents for sending kids to school regularly)
18 Peace-keeping in post‐conflict situations
19 HIV combination prevention
20 Total sanitation campaign
21 Improving surgical capacity at district hospital level
22 Microfinance
23 Improved cooking stove
24 Large, multipurpose dam in Africa
25 Inspection and maintenance of diesel vehicles
26 Low sulfur diesel for urban road vehicles
27 Diesel vehicle particulate control technology
28 Tobacco tax to deal with disease
29 R&D and mitigation to counter Global Warming
30 Mitigation only for fighting global warming

For more details and background papers on the project go to http://www.copenhagenconsensus.com/Home.aspx

Of course the methodology, purely economics cost-and-benefit analysis, was criticised. But others pointed out that this is exactly the right kind of exercise for assigning aid money. You be the judge.