Scarcity, Choice, and Foreign Aid Opportunity Costs

Danish statistician Bjorn Lomborg’s TED2005 talk Global priorities bigger than climate change has nearly 1.5 million views. Commenters can critics disagree with Lomborg and argue climate change should be the biggest priority.

Unlike many critics of “alarmist” climate research, Lomborg believes increasing CO2 emissions are a major problem and research on alternative energy should be increased. But Lomborg in his TED talk, is making a separate argument: resources are scarce. To address the many problems that cause death and misery in around the world, choices have to be made about where and how to invest scarce resources.

In his 2005 TED presentation, Lomborg outlines problems then asks how $50 billion dollars could best be prioritized over four years to work toward solutions. Where could the most lives be saved? He asks his audience to work with him in running the numbers with pencil and paper.

This foreign aid cost/benefit approach is updated for Lomborg’s 2014 book: How to Spend $75 Billion To Make The World A Better Place (Copenhagen Consensus Center, March 2014). It’s free to “Look Inside” on Amazon, and just $5 for Kindle. More on the book here on Copenhagen Consensus website.

Lomborg’s Copenhagen Consensus Center (CCC) gathered fifty economists and evaluated forty “investment proposals to address problems ranging from armed conflicts and natural disasters to hunger, education, and global warming” (from Introduction on Amazon “Look Inside”). Much as investment banks evaluate companies and projects to finance, the CCC scholars compared estimated costs and benefits for various projects. Sixteen with the highest return are listed. The top one is this nutrition proposal, with a 30 to 1 payoff ($30 benefit for every $1 spent):

• The highest ranked solution – meaning that it yields the most benefit for the least cost – is to spend $3 billion over four years, on a bundle of micronutrients and medicines to reduce under-nutrition and improve education in preschool-aged children.
• For about $100 per child, this bundle could reduce chronic under-nutrition by 36 percent in developing countries. More than 100 million children could start their lives without stunted growth or malnourishment.    
• Because these children will lead healthier, more productive lives as adults – a virtuous cycle of dramatic development – each dollar spent addressing chronic under-nutrition has a $30 payoff in economic terms. Ultimately, when all the benefits are translated into economic terms, every dollar spent on malnutrition will likely do $63 worth of global good.

How to Spend $75 Billion To Make The World A Better Place

Also recommended is Prioritizing Development: A Cost Benefit Analysis of the United Nations’ Sustainable Development Goals, Edited by Bjorn Lomborg (Cambridge University Press, 2018) Link here to Amazon with “Look Inside”. Link here to discussion on Bjorn Lomborg page.  

With these recommendations in hand debaters could argue effective global aid to developing countries could be increased four-fold, without spending any additional money:

Together, these analyses make the case for prioritizing the most effective development investments. A panel of Nobel Laureate economists identify a set of 19 phenomenal development targets, and argue that this would achieve as much as quadrupling the global aid budget.

Also valuable are the attacks on Bjorn Lomborg and on his Copenhagen Consensus Center. Lomborg has long upset established environmental organizations with his skeptical look at “the Litany,” the assortment of doomsday environmental claims made for decades. Again, even if all or most of these predictions of disaster (from overpopulation, resource depletion, pollution, deforestation, species extinction, global warming, etc.) are supported by research and data, still choices have to be made about which to address first, and how much money to deploy where.

For a fun history of how Lomborg, himself an environmentalist and Greenpeace supporter, got started with his research, see first the WIRED article about the earlier similar research of Julian Simon (author of The Ultimate Resource). Ed Regis tells this story in THE DOOMSLAYER (Wired, February 1, 1997), which begins:

THIS IS THE litany : Our resources are running out. The air is bad, the water worse. The planet’s species are dying off – more exactly, we’re killing them -at the staggering rate of 100,000 peryear, a figure that works out to almost 2,000 species per week, 300 per day, 10 perhour, another dead species every six minutes.We’re trashing the planet, washing away the topsoil, paving over our farmlands, systematically deforesting our wildernesses, decimating the biota, and ultimately killing ourselves.

The world is getting progressively poorer, and it’s all because of population, or more precisely, overpopulation. There’s a finite store of resources on our pale blue dot, spaceship Earth, our small and fragile tiny planet, and we’re fast approaching its ultimate carrying capacity. The limits to growth are finally upon us, and we’re living on borrowed time. The laws of population growth are inexorable. Unless we act decisively, the final result is written in stone: mass poverty, famine, starvation, and death.

Time is short, and we have to act now.

That’s the standard and canonical litany. It’s been drilled into our heads so far and so forcefully that to hear it yet once more is … well, it’s almost reassuring. It’s comforting, oddly consoling – at least we’re face to face with the enemies: consumption, population, mindless growth. And we know the solution: cut back, contract, make do with less. “Live simply so that others may simply live.”

There’s just one problem with The Litany, just one slight little wee imperfection: every item in that dim and dreary recitation, each and every last claim, is false. Incorrect. At variance with the truth.

The Doomslayer article was a WIRED cover story with Julian Simon pictured with little devil’s horns. Bjorn Lomborg happened to see the cover at an airport and after reading the various claims thought he could easily disprove them. (Lomborg didn’t know then that Julian Simon also had a statistics background and had starte much the same way, trying to document environmentalists doomsday predictions.):

In February 1997 Bjørn Lomborg, a young Danish statistics professor and self-described “old left-wing Greenpeace member,” read an article by Ed Regis in Wired magazine about Julian Simon (the article, entitled “The Doomslayer,” is archived online at www.wired.com). Simon, a professor of business administration at the University of Maryland who died in 1998, argued in a series of books and articles that the standard gloomy assessments of the state of the world had no basis in fact. …

Lomborg was provoked by the Wired article into creating a study group to thoroughly examine Simon’s data, expecting to show that it was “simple, American right-wing propaganda.” But to his surprise, Simon’s points largely stood up to scrutiny. The Skeptical Environmentalist is the result. In it, Lomborg analyzes the elements of the Litany…

Enviro-Skepticism, (Hoover Policy Review, December 1, 2001)

See also New York Times and Washington Post reviews of Lomborg’s The Skeptical Environmentalist:

• SCIENTIST AT WORK/Bjorn Lomborg; From an Unlikely Quarter, Eco-Optimism (NYT, August 7, 2001). News from environmental organization is always bleak (so donate now!):

So it is a surprise to meet someone who calls himself an environmentalist but who asserts that things are getting better, that the rate of human population growth is past its peak, that agriculture is sustainable and pollution is ebbing, that forests are not disappearing, that there is no wholesale destruction of plant and animal species and that even global warming is not as serious as commonly portrayed.

Strange to say, the author of this happy thesis is not a steely-eyed economist at a conservative Washington think tank but a vegetarian, backpack-toting academic who was a member of Greenpeace for four years. He is Dr. Bjorn Lomborg, a 36-year-old political scientist and professor of statistics at the University of Aarhus in Denmark. Dr. Lomborg arrived at this position, much to his own astonishment, through a journey that began in a Los Angeles bookshop in February 1997.

Dr. Lomborg was leafing through an issue of Wired magazine and started reading an interview with Dr. Julian L. Simon, a University of Maryland economist who argued in several books that population was unlikely to outrun natural resources.

But Dr. Simon, who died in 1998, is more widely known for his solution to the airline overbooking problem (having airlines pay passengers to take a later flight) and for a 1980 bet with Dr. Paul Ehrlich, president of Stanford University’s Center for Conservation Biology. Dr. Lomborg bet that any five metals chosen by Dr. Ehrlich would be cheaper in 1990; Dr. Ehrlich lost on all five.

Bjorn Lomborg; From an Unlikely Quarter, Eco-Optimism

• And Greener Than You Think (Washington Post, October 21, 2001):

That the human race faces environmental problems is unquestionable. That environmental experts have regularly tried to scare us out of our wits with doomsday chants is also beyond dispute. In the 1960s overpopulation was going to cause massive worldwide famine around 1980. A decade later we were being told the world would be out of oil by the 1990s. This was an especially chilly prospect, since, as Newsweek reported in 1975, we were in a climatic cooling trend that was going to reduce agricultural outputs for the rest of the century, leading possibly to a new Ice Age.

Bjorn Lomborg, a young statistics professor and political scientist at the University of Aarhus in Denmark, knows all about the enduring appeal — for journalists, politicians and the public — of environmental doomsday tales, having swallowed more than a few himself. In 1997, Lomborg — a self-described left-winger and former Greenpeace member — came across an article in Wired magazine about Julian Simon, a University of Maryland economist. Simon claimed that the “litany” of the Green movement — its fears about overpopulation, animal species dying by the hour, deforestation — was hysterical nonsense, and that the quality of life on the planet was radically improving. Lomborg was shocked by this, and he returned to Denmark to set about doing the research that would refute Simon.

He and his team of academicians discovered something sobering and cheering: In every one of his claims, Simon was correct. Moreover, Lomborg found on close analysis that the factual foundation on which the environmental doomsayers stood was deeply flawed: exaggeration, prevarications, white lies and even convenient typographical errors had been absorbed unchallenged into the folklore of environmental disaster scenarios.

So… for debaters researching foreign aid reform and researching international terrorism policy, Bjorn Lomborg CCC research and analysis, along with earlier research by Lomborg and before him Julian Simon, can help better prioritize the billions of dollars spent each year by churches, charities, foundations, companies, and government foreign aid programs.