I’d Love to Change the World

This week two sound bites from the 18th (or in superbowlish:  XVIII) International AIDS Conference underway in Vienna (AIDS Conference) caught my ear.  The first was our former president Bill Clinton who was widely quoted in the media:  “In too many countries, too much money goes to pay for too many people to go to too many meetings … every dollar we waste today puts a life at risk.”  And in his address at the same meeting, Bill Gates also mentioned a need to improve efficiency in AIDS aid:  “If we push for a new focus on efficiency in both treatment and prevention and we continue . . . to create new tools, we can drive down the number of infections dramatically and start writing the story of the end of AIDS.”  (e.g., Washington Times article).  Of course, concern about the inefficiency in the world war on HIV/AIDS and in international aid in general is not news (see my spin in postings of January 1 and April 15, 2010), and, of course, their comments will generate much commentary by the academic and professional global health experts, mostly con since they compose the largest segment of  the professional grant-getters and meeting-goers.  Are there more efficient methods?

By chance, the Bills’ quotes coincided with me reading about a relatively new direction in international aid:  giving money directly to people to help them meet their daily expenses, to save up for an income-generating effort, to encourage healthier behavior, or to provide a service more typically given by a charity organization. Drake Bennett in an article in last Sunday’s Boston Globe (“Free Money”, Boston Globe article) provides a survey of the some of the programs that have involved hundreds of millions of recipients and billions of dollars in dozens of nations (e.g., Brazil, Mexico, India, China, South Africa) over the past ten years.  Some of the cash transfer programs are conditional (e.g., recipients or family members must attend regular preventive health checkups or school), others are more like pensions or child-support payments.  According to the proponents and several academic studies he cites, the demonstrated benefits include improving the health and education of poor children, increasing microenterprise, improving crop yields, and expanding consumption and markets.

As an example of the potential efficiency in this type of direct aid, as reported in the New York Times at the end of last year, a program in Malawi that made direct payments to families to care for related and unrelated  orphans was found to be 10-12 times more cost-efficient than orphanages (as measured by the number of children being cared for) (NY Times Dec article).  Another NYT article reported on a cash transfer program the Bills may like given their statements at the AIDS conference; it reduced the prevalence rate of HIV/AIDS from 3 to 1.2 percent in young Malawian women when they and their families received small monthly payments if they stayed in school (NY Times Jul article).   This study, as well as one run in Tanzania in which adults were paid to reduce their unsafe sex (World Bank PR (World Bank press release), were conducted by the Bank’s Development Research Group.  The Group’s main preoccupation is generating reams of macroeconomic statistics for the Bank’s customers and donors, but they also direct a Knowledge for Change Program (World Bank program) which has a mission to support  “data collection, analysis, and research supporting poverty reduction and sustainable development.”  Actionable stuff similar to the work of Abdul Latif Jameel Poverty Action Lab at MIT, “Translating Research Into Action” (Poverty Action Lab).

But I can hear the fingers wagging already:  giving poor people money creates dependency and saps their will to work.  My suggestion to the waggers is first to get a better idea of who are the world’s poor and how they make the most of the limited resources they have.  I’m no expert but recommend a recent (but somewhat biased) documentary called “Good Fortune” that was shown on non-commercial television recently (WGBH programs).  Then read about the longest running and largest cash transfer  programs, Programa Bolsa Família (PBF), which covered 11.1 million Brazilian families (46 million people) living below the poverty line in 2006.   In his June posting from Maceio, Brazil, Seth Kugel gives a detailed description of how several families use the minimal subsidies of the PBF (Global Post story).  A study he cites and is worth skimming is by the International Policy Center for Inclusive Growth that concluded that the PBF has a “nil average effect on probability of working and a marginal reduction in the supply of labor hours,” i.e., no moral hazard dependency (IPC report).  The World Bank, one of the BPF’s partners, has also found the PBF to be effective, and efficient, reaching 94% of the country’s poorest citizens (40% of the population) (World Bank PBF).  If one wants an example in North America, there is Oportunidades, a Mexican program started in the 1990s and funded in part by the World Bank (Oportunidades website and Wikipedia article).

Clearly, cash transfer programs do not apply to making the treatment of HIV/AIDS more efficient since there are no treatment options (the struggle is just to get treatment), but they may help in changing behaviors needed for prevention and delivery of the support needed by the afflicted and their families.  International aid is resource transfer from those with more to those with less and it helps both sides for the transfer to be transparent,  efficient, and effective.  Which reminds me of the no-so-PC song “I’d Love to Change the World” by the British group Ten Years After:

Tax the rich, feed the poor

Till there are no rich no more

I’d love to change the world

But I don’t know what to do

So I’ll leave it up to you


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