Imagine that a person approaches you on the street and asks you to invest SEK 500 in her company. Few of us would say yes outright. First, we would ask for more information about the company’s operations, employees and future prospects. We would probably also like to think about the matter in peace and compare the possibility with other potential placements.
This feels obvious to our private finances, but when it comes to doing good, we rarely evaluate what “return” we can expect for the resources we “invest” in world improvement. Local fundraisers can make us feel great empathy for the causes they represent and assure us that only a small part of the business’s costs goes to administration. But what is rarely talked about is what we should ask ourselves first: what world improvement can you achieve with my money? Is it better than other possible options? If the goal is to improve the world, rather than to alleviate our feelings of guilt, this question should be central.
How do you compare the effect of different health interventions?
Health economics is a field of research that analyzes how resources in healthcare should be used to improve people’s health the most. Governments, agencies and international organizations like the WHO regularly need to choose how to allocate funds to do the most good, and such decisions are not made blindly. Well-being can be measured in many different ways, but some established measures are quality-adjusted life years (QALY) and disability-adjusted life years (DALY). They make it possible to compare the effect of different interventions by weighting together time and quality of life. These types of quantitative measures do not capture all aspects of well-being and there may be other factors that are important to consider. But they can be a good starting point and in combination with further analysis they can be used to try to make the best estimates possible.
Exercise
It’s often hard to know what interventions are the most effective before actually testing them in reality. Below are five different interventions to reduce HIV and AIDS. Can you guess which ones are most cost-effective (improves lives the most for every dollar spent)? Drag and drop to rank the options.
- Hand out condoms
- Surgical treatment for Kaposi’s sarcoma (a type of cancer)
- Educate high-risk groups
- Prevent transmission of infection during pregnancy
- Antiretroviral treatment (slow medication)
Read more
Cost-effectiveness – article by GiveWell
Doing Good Better – book by William MacAskill
The Moral Imperative toward Cost-Effectiveness in Global Health – article by Toby Ord
Health economic evaluations – article by the Swedish Public Health Authority
Disability-adjusted life years (DALYs) – article by WHO