Preliminary Benefit-Cost Assessment for 11th Session OWG Goals
In a world of limited resources, we can’t do everything, so which goals should we prioritize? The Copenhagen Consensus Center provides information on which targets will do the most social good (measured in dollars, but also incorporating e.g. welfare, health and environmental protection), relative to their costs. Some of the world’s top economists have assessed the targets from the 11th session Open Working Group document into one of five categories, based on economic evidence:
PHENOMENAL – Robust evidence for benefits more than 15 times higher than costs
GOOD – Robust evidence of benefits between 5 to 15 times higher than costs
FAIR – Robust evidence of benefits between 1 to 5 times higher than costs
POOR – The benefits are smaller than costs or target poorly specified (e.g. internally inconsistent, incentivizes wrong activity)
UNCERTAIN – There is not enough knowledge of the policy options that could reach the target OR the costs and benefits of the actions to reach the target are not well known
This document was put together over two weeks after the draft of the targets for consideration of the 11th session of the OWG were released on Friday 18 April 2014. Given the short turnaround, the assessments should be considered preliminary, and much nuance explaining the rationales has been omitted. Nevertheless, we hope that the assessments are informative and will help focus the Open Working Group on the targets that will yield the most social benefit relative to cost. The decision on choosing goals will rest on a number of factors, not just economics – but knowing the costs and benefits provides an important piece of information. The Copenhagen Consensus will present full, peer-reviewed economic evidence over the coming half year.
Just think: if we could prioritize a goal that saves 10 lives for every $250,000 spent, over another goal that saves 1 life for the same amount, we could do billions of dollars more good over the next 15 years!
The assessments were put together by interviewing 16 of the world’s top economists in their respective fields. They were asked to consider the economic costs and benefits associated with the strategies that would be available to implement the targets. As much as possible non-economic considerations such as rights based arguments and political considerations were ignored. This is not to imply that these other considerations are not important – only that the intention of this document is to focus purely on the costs and benefits. In many cases, the targets were not specific enough to assess a benefit and a cost, however we urged the economists to err on the side of providing a recommendation, even if it would not normally reach the very high confidence required of academic articles.
It should be noted that the benefits and costs do NOT solely reflect money. In line with standard welfare economics principles, all benefits and costs have been considered (such as improved health, environmental impacts) – which have subsequently been converted into a dollar value.