Aid to Africa and revealed preference
I’ve been reading the article on Bill Gates and his efforts to fight disease in Africa from the October 24 New Yorker. (Not available online, although they do offer a slideshow on the effects of malaria in Tanzania.) Michael Specter writes about how shocked Gates was to learn that there were public health investments that weren’t being made where the cost per life saved was in the hundreds of dollars.
Specter quotes Kent Campbell, a former chief of the malaria branch at the US Centers for Disease Control as saying:
"I would love to believe that in the United States this effort is being driven by a decent desire to help, but I don’t think most Americans give a rat’s ass about the death of millions of African kids each year. I don’t think they ever have."
The argument in favor of this is based on what economists call "revealed preference," the idea that you can tell what option people prefer by the choices that they actually make. If we let millions of African kids die each year, we must prefer the world in which millions of African kids die to the one in which we pay higher taxes and provide more public health aid, or else we’d do something different. QED.
But, there’s some evidence that people behave in ways that aren’t explained by revealed preference. The best example I know of comes from studies of how much people choose to save in 401k and similar retirement plans. One of the things that researchers have found is that people are much more likely to participate if the default option is that a small percentage of their salary, 3 or 5 percent, is invested than if the default is non-participation. This isn’t terribly surprising when you think about it; many people find the whole concept so hard to think about that they just go with the default.
As a country, we tend to go with the default too. In fact, I’d be willing to argue that much of the structure of Congress (especially the budgeting process) is designed to make it hard to move away from the status quo. And it’s designed to make it a lot harder to accomplish things that a lot of people want, but aren’t passionate about, than it is to do things that a smaller group desperately cares about.
Some useful links:
November 4th, 2005 at 9:59 am
Can you elaborate on what structures (and why) impede change made by popular majorities yet to promote changes by passionate minorities? I’ve been fascinated by participatory budgeting, proportional representation, etc. and their effects, but don’t understand why we seem to always choose the opposite structures.
November 5th, 2005 at 9:12 am
Have you looked at Jeffrey Sachs’ book “End to Poverty”. For a guy who impoverished 30 million Russians with “shock therapy” economics, he has come a long way. He is passionate eloquent and convincing on how little it would take to lift the world’s poorest out of the abject poverty that kills 20,000 people a day.
Get some sleep