Thursday, March 26, 2015

Development Targets: 169 or 19?

Back in 2002, the United Nations established a set of "Millennium Development Goals," which were phrased as a combination of overall "goals" and more specific "targets." For example, the first "goal" was "Eradicate Extreme Poverty and Hunger," but the first specific target under that goal was "Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day." (Thanks in large part to the explosive growth in the economies of China and India, this target was in fact reached five years earlier.) Many of the specific targets used the year 2015 as an end-date, and so the UN has been engaged in thinking about what the next set of goals or targets should be. Last summer, it settled on a list of 17 goals that include 169 targets.

The UN list seems open to two overall criticisms.  First, 169 targets is unwieldy--more a wish-list than a considered policy agenda. However, apparently now that it has been agreed upon altering the of 169 targets is politically impossible. More important, the UN list of goals and targets seems to imply that if we just agree on the 169 targets, we don't really need to discuss what actual policy choices would do the most to accomplish those goals and targets. But of course, if two policies seem likely to reduce poverty or improve health or protect the environment to the same extent, but one policy has much lower costs than the other, it makes sense to concentrate on the the cost-effective approaches first.

The Copenhagen Consensus Center has been taking on the job of commissioning research to evaluate policies to achieve the targets, when then draw on existing research about the costs and benefits of these policies. Based on these studies, which are available here, a group of three prominent economists--Finn Kydland, Tom Schelling, and Nancy Stokey--have just recommended a set of 19 policies and targets that all appear based on the existing research to have benefits that are at least 15 times greater than costs.

Here is the list of 19 priorities, quoted from the March 26 press release from the three economists. he underlying research papers with details about policies, costs, and benefits are available here.
1) Lower chronic child malnutrition by 40%. Providing nutritional supplements, deworming, and improving the balance of diet for 0-2 year olds will cost $11bn and prevent 68m children from being malnourished every year
2) Halve malaria infection. Distributing long lasting insecticide treated bed-nets and delaying resistance to the malaria drug artemisinin will cost $0.6bn, prevent 100m cases of malaria and save 440,000 lives per year.
3) Reduce tuberculosis deaths by 90%. Massively scaling up detection and treatment of tuberculosis will cost $8bn and save up to an additional 1.3m lives per year.
4) Avoid 1.1 million HIV infections through circumcision. Circumcising 90% of HIV-negative men in the 5 worst affected countries will cost $35m annually and avert 1.1m infections by 2030 with the preventive benefit increasing over time.
5) Cut early death from chronic disease by 1/3. Raising the price of tobacco, administering aspirin and preventative therapy for heart disease, reducing salt intake and providing low cost blood pressure medicine will cost $9bn and save 5m lives per year.
6) Reduce newborn mortality by 70%. Protecting expecting mothers from disease, having skilled medical staff support their deliveries, and ensuring high quality postnatal care will cost $14bn and prevent 2m newborn deaths per year.
7) Increase immunization to reduce child deaths by 25%. Expanding immunization coverage to include protection from forms of influenza, pneumonia and diarrheal disease will cost $1bn and save 1m children per year.
8) Make family planning available to everyone. Allowing women to decide if, when, and how often they become pregnant will cost $3.6bn per year, cut maternal deaths by 150,000, while allowing more attention and education to remaining children.
9) Eliminate violence against women and girls. Right now, every year 305 million women are domestically abused, costing the world $4.4 trillion in damages.
10) Phase out fossil fuel subsidies. Removing fossil fuel subsidies will lower carbon emissions and free up $548bn in government revenue to spend on for example, health, infrastructure and education.
11) Halve coral reef loss. Protecting marine habitats will cost $3bn per year but will prevent the loss of 3m hectares of coral reef, providing natural fishing hatcheries and boosting tourism.
12) Tax pollution damage from energy. Air pollution is the world’s biggest environmental killer, causing more than 7m annual deaths. Taxes proportional to the damage from air pollution and CO₂ will reduce environmental impacts efficiently.
13) Cut indoor air pollution by 20%. Providing more clean cookstoves will cost $11bn and prevent 1.3m deaths per year from indoor air pollution.
14) Reduce trade restrictions (full Doha). Achieving more free trade (e.g. the Doha round) would make each person in the developing world $1,000 richer per year by 2030, lifting 160m people out of extreme poverty.
15) Improve gender equality in ownership, business and politics. Ensuring women can own and inherit property, perform basic business needs like signing a contract and be represented in parliament will empower women.
16) Boost agricultural yield growth by 40%. Investing an extra $8bn per year in agricultural R&D to boost yields will reduce food prices for poor people, mean 80m fewer people go hungry and provide benefits worth $82bn per year.
17) Increase girls’ education by two years. Ensuring girls receive more education will increase their future wages, improve their health, reduce their risk of violence and start a virtuous cycle for the next generations.
18) Achieve universal primary education in sub-Saharan Africa. At a cost of $9bn per year, this target will ensure 30m more kids per year attend primary school.
19) Triple preschool in sub-Saharan Africa. Pre-school instils within children a life long desire to learn. Ensuring pre-school coverage rises from 18% to 59% will cost up to $6bn and will give that experience to at least 30m more children per year
What's the single best policy in terms of benefit-cost ratio? The background research paper by Kym Anderson suggests that completing the Doha talks for greater trade liberalization would have benefits for developing countries that are 2,100-4,700 times greater than costs. As Anderson points out, a growing body of work in international trade in the last couple of decades has pointed out that the static gains from trade--say, the U.S. trading wheat-for-oil with Saudi Arabia--are relatively small in the contest of an overall economy. Instead, the big gains from trade arise because of how trade leads to increases in productivity. For example, trade leads to spillovers of knowledge, or the spread of improved methods of management. Trade can stimulate international investment and growth of a financial sector, which has spillover effects for other firms. Global supply chains let producers specialize in the very specific areas where they have the greatest advantage. It lets producers in small countries take advantage of economies of scale when the produce for bigger markets, and lets consumers in small countries benefit from economies of scale when they import from other countries. Trade can provide an additional incentive for national governments to follow sensible macroeconomic and regulatory policies--which again can help all producers in an economy, not just exporters and importers.

I haven't read all the background paper, much less all the research cited in those papers, and so I don't have strong opinions about whether this list of 19 targets is necessarily the best one. But if the choice is between spreading out the scarce resources of time, money, and enthusiasm that are available for development efforts across 169 targets, or focusing those resources on the much smaller number of targets and policies with high payoffs, I know which approach is likelier to benefit low-income people around the world.