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Bastian Stern

The $/DALY Illusion: Part I - Comparing Improvements

Imagine the following situation: Two of your friends, Jack and Jill, are each about to donate $1000 to two different charities. You know that both of them are on their way to their closest letter box, with the intention of posting their cheques to those charities. Unfortunately, neither of them has heard of the idea of cost-effective giving, and you know that you only have time to call up one of them convince one of them of directing their donation to a more cost-effective charity instead before they have reached the letter box to and it is too late to do that. You know that is costs $1000 to avert a DALY by donating to Jack's preferred charity, A, and that the best charity you could convince him to donate to instead, B, would allow him to avert a DALY for only $50. Jill's preferred charity, C, allows her to avert a DALY for $20, but you know of an even better charity, D, that would allow her to avert a DALY for only $10, and you have reason to believe that you could convince Jill to donate to D instead.

A tempting first guess is that you should call up Jack: The difference in A's and B's cost-effectiveness measured in $/DALY (1000 $/DALY- 50 $/DALY=$950 $/DALY) dwarfs that between C and D (20 $/DALY-10 $/DALY=10 $/DALY). (Call this the "linear method" of evaluating the relevant differences.)

A tempting second guess would be to look at what we might call the proportional improvement in cost-effectiveness of the changes from A to B and from C to D. On the most natural understanding of this approach, the proportional improvement between A's and B' cost-effectiveness measured in $/DALY is (1000 $/DALY - 50 $/DALY)/(1000 $/DALY)=95% and the proportional difference in C's and D's cost-effectiveness measured in $/DALY is (20 $/DALY - 10 $/DALY)/(20 $/DALY)=50%. Again, this would seem to strongly suggest that calling up Jack is much better than calling up Jill. (Call this the "proportional method" of evaluating the relevant differences.)

In fact, simple calculation shows that both lines of reasoning are mistaken. By donating the $1000 to A, Jack would avert 1000/1000=1 DALY, whereas donating to B would allow him to avert 1000/50= 20 DALY. This means that calling him up allows you to avert 19 additional DALY. In contrast, donating her $1000 to C would allow Jill to avert 1000/20=50 DALY, whereas by donating to D she could avert 1000/10=100 DALY. This means that calling her up allows you to avert 50 additional DALYs. Accordingly, calling up Jill allows you to have more than twice the positive impact!

What went wrong when we made our first and second guesses, which turned out to be so radically misleading? The answer is that when you are interested in how much good you can do by redirecting a given amount of money between different causes, you are interested in how many more DALYs you can avert by giving to one cause rather than another, i.e. differences in their cost-effectiveness reported DALY/$.

Where "x" is the cost-effectiveness of charity X reported in $/DALY, and "y" the cost-effectiveness of charity Y reported in $/DALY, the improvement in cost-effectiveness in moving from X to Y reported in terms of DALY/$ is given by (1/x)-(1/y), or, equivalently, by (y-x)/xy (which, as you can check for yourself, delivers the correct result in the case above, namely that the improvement in moving from C and D is 50/19≈2.6 times greater than that between A and B.)

This also shows what was wrong with our first two guesses. Our first guess was to evaluate the improvement from X to Y's cost-effectiveness as y-x (which I called the linear method), our second guess as the proportional improvement between y and x, i.e. as (y-x)/y (which I called the proportional method). However, these latter two functions evidently fail to be related in a strictly increasing way with (y-x)/xy (i.e. fail to be related in such a way that whenever (y-x)/xy increases, these latter functions increase, too), which is why both the linear and the proportional methods give the wrong answer.

The linear method misled us because it simply ignores the denominator of (y-x)/xy, xy, altogether. The proportional method misled us because it omits part of the denominator of (y-x)/xy, namely x. Both methods systematically overvalue improvements in cost-effectiveness between less effective charities (like A and B), and, by the same token, systematically undervalue improvements in cost-effectiveness between especially effective charities (like C and D).

Note that had we reported the cost-effectiveness estimates in DALY/$ from the outset, these complications would not have arisen.

Also note that there are cases in which straightforwardly taking the differences (i.e. using the linear method) does tell us what we are interested in. For instance, imagine that both Jack and Jill want to avert exactly one DALY (rather than spending a fixed amount of $1000), and your primary interest is to advise them so that they save as much money as possible. In that case, it really is the case that x-y is what you should be interested in. By averting 1 DALY by giving to B rather than A, Jack can save $950, and by averting 1 DALY by giving to D rather than C, Jill can only save $10, which would suggest that, in this altered scenario, you should call up Jack.

However, whilst this latter sort of situation is what we typically encounter when making day-to-day purchases (e.g. when you want to buy exactly one chocolate bar, and you are interested in comparing how much money you can save by choosing between various shops), it is clearly not the sort of situation donors are typically faced with in the context of charitable giving. Donors are usually interested in the differences in how much good they can do with a given amount of money, rather than the differences in how much money they can save for a given amount of good they want to do.

In the next post, I will discuss complications the $/DALY metric gives rise to when we talk about cost-effectiveness averages.

[1] The phenomenon I am about to describe is analogous to the well-known MPG Illusion: People tend to be misled about the value of improvements in car fuel efficiency when efficiency is reported in miles per gallon (instead of a unit that allows us to state efficiency in terms of volume per distance traveled, e.g. liters per 100 kilometers). Reporting efficiency in terms of MPG also gives rise to complications associated with evaluating average efficiency analogous to those I discuss below.

[2] The Disability-Adjusted Life Year (DALY) is a metric that is commonly used to quantify and compare the benefits of different interventions. DALYs are a measure of lost health due to illness. One DALY represents the equivalent to losing a year of life at full health. Each illness has a disability weight assigned to it, representing the amount it reduces a person's quality of life. For example, a year of life spent with blindness counts for 0.6 DALYs.

[3] I take this to be "most natural" given that basing one's comparison of two improvements in cost-effectiveness on the comparison of the corresponding reductions in cost per unit effect (which this "proportional method" amounts to) appears to be the best analogue of a mistake some people make when asked to compare the improvements in car fuel efficiency reported in MPG. In the latter case, people sometimes (mistakenly) think that, where the improvement comes about by moving from car A to car B, they need to calculate the "proportional improvement" given by (Efficiency(B)-Efficiency(A))/Efficiency(A), and compare improvements by comparing "proportional improvements". 

Julia Wise

The Way It Was

In thinking about problems that currently affect developing nations, I try to remember that the United States 

Malaria once plagued the American south and Midwest. It's the reason English colonists abandoned the Jamestown, Virginia settlement for somewhere with fewer mosquitoes. In 1946, the Centers for Disease Control were formed to fight malaria. Five years later, malaria was eradicated in the United States. (

, Laura Ingalls Wilder describes her family's experience with the disease in 1870: 

Laura tried to get up, but she was too tired. Then she saw Ma's red face looking over the edge of the bed. Mary was all the time crying for water. Ma looked at Mary and then she looked at Laura, and she whispered, "Laura, can you?" "Yes, Ma," Laura said. This time she got out of bed. But when she tried to stand up, the floor rocked and she fell down. . . . She knew she must get water to stop Mary's crying, and she did. She crawled all the way across the floor to the water-bucket. There was only a little water in it. She shook so with cold that she could hardly get hold of the dipper. But she did get hold of it. She dipped up some water, and she set out to cross that enormous floor again.

It drives me crazy when people say child mortality is saving us from environmental disaster. Do they wish that for their own families? Do they feel they have too many siblings, too many cousins, and we really ought to get some contaminated water or intestinal parasites around here to deal with the problem?

No one wants that for their family. We want low child mortality and reasonable family size. Developed nations made that transition, but it took a while.

Hans Rosling does an excellent job at making public health statistics understandable to non-statisticians. I recommend his talk on "

", especially for its comparison of child mortality rates across nations (at 8:40). Rosling notes that his home country of Sweden had a high child mortality rate in 1800, twice as high as anywhere now. Over time, with better education and better public health, the rate declined to its current low level. Most countries are currently on this journey of decreasing family size 

 child mortality, many of them progressing faster than Western countries ever did. (The site 

 lets you play with the charts yourself.)

While it's clear that large family size is correlated with child mortality, I'm not as convinced as Rosling is that lower child mortality is the main 

 of smaller families. I gather it's a combination of fewer child deaths, female education, access to birth control, and urbanization.

The Ingalls family were typical 19th-century Americans - they had five children, one of whom died in infancy. I come from a typical 20th-century American family with two children, both still alive. I'm 

 we made this demographic transition. My hometown no longer has malaria. I'm educated, I drink clean water, and I control my own fertility. When I choose, I will raise one or two children who will probably also be quite healthy.

We've come a long way. Now I want this life for everyone.

Rob Wiblin

Can we evaluate political advocacy?

', which advocates for greater government spending to tackle tuberculosis (TB). Research volunteers Nick Beckstead, Rossa O'keeffe-O'donovan, and Gordon Irlam of the 

Back of the Envelope Guide to Philanthropy

, all deserve a great deal of credit for their help with this work. We also appreciate the assistance of the folks at RESULTS, in particular Jennifer Maurer, for providing detailed feedback on an earlier version. Whether or not RESULTS ultimately beats our current recommended charities, they are working hard to make a difference on crucial issues in global health.

This is the first time we have released our preliminary research on a topic in this way, and quantifying the good done by political advocacy raised novel challenges for us. We not only have to establish whether the advocacy efforts have generated additional spending, but also try to work out what the additional money has ultimately been spent on and whether it is likely to have worked. Unlike when we consider the Against Malaria Foundation, we cannot just request the relevant data from the charity delivering the programme. Nonetheless, I am excited that we are stepping beyond the more familiar bounds of direct health interventions. Many members have requested that we do so, and if we can identify the right campaigns to get behind, political advocacy offers the potential to move large sums towards programmes that really work to help the world's poorest people.

We are hoping that posting this document will encourage people with experience in the following areas to talk with us:

• Evaluating the effectiveness of political advocacy;

• Experience with RESULTS/ACTION or similar organisations, and their influence in Washington;

• Understanding of bilateral US aid for TB, and the funding mechanisms used by The Global Fund and GAVI;

• Understanding of the cost effectiveness of further spending on TB diagnostics, treating multi-drug resistant strains, and patients with both HIV and TB.

If you know about these issues and are willing to help, please email 

, or Skype me personally at robertwiblin.

We will continue to try to answer our remaining questions and build our model over Christmas and New Year to reach a decision about whether to recommend RESULTS in January. In the meantime, I will continue to update the version available on the website as we correct problems and improve our model.

Without further ado, here is the executive summary. Happy reading!

RESULTS is a charity that advocates for improvements to public policy to reduce poverty. This report focuses on ACTION USA, a project of RESULTS, which has appeared to achieve significant policy successes in the past, through a campaign for increased spending on the treatment of tuberculosis (TB). We believe that RESULTS' past cost effectiveness in terms of years of healthy life for each dollar spent has been high, possibly higher than our current top recommended charities. It continues to advocate for greater spending on TB, and now also vaccinations, both areas which include some very effective projects as measured by the years of healthy life (QALYs) they generate per dollar spent.

Unfortunately, the evaluation of advocacy charities is very difficult. It is not usually possible to confidently attribute the passage of a piece of legislation to a particular organization. The addition of further links to the chain between your donation and the ultimate outcome you want (e.g. additional people being cured of TB), creates the opportunity to generate 'leverage' as you potentially influence the way billions of dollars are spent. On the other hand, it means you cede some control over how that money is spent. It also exposes you to the risk that the impact of your donation will be nothing, either because the legislation you desire fails to pass, or because one of the organisations through which the funding passes choses not to, or could not, make effective use of the additional money. Finally, politics is a strategic and rapidly changing activity which can make it hard for outsiders such us Giving What We Can to accurately model what is occurring.

While we may recommend RESULTS, or a similar charity, in the future, we currently have insufficient information to do so with confidence. We are releasing this draft in order to solicit information which can help us answer the remaining questions, which are critical to our estimate of future cost effectiveness. In the meantime, we see ACTION is a highly promising option for those who seek to help people in developing countries through political advocacy.

• How large was ACTION's role in achieving the observed policy successes?

• What are additional appropriations in the US being spent on, by the time funding is passed through to health providers? How effective are those activities at improving health, in QALYs/$?

• How valuable is the government or private spending crowded out by any resulting appropriations?

• What is the marginal effectiveness of RESULTS' advocacy in the USA in the event of an expansion of operations?

• Are there strategic considerations (for instance, re-categorisation of spending, or misleading attributions of credit) that could be causing us to misunderstand what is going on?

Letting Myself Care

Recently I was talking with friends about what role emotion should play in giving decisions. Some said we shouldn't let emotions muddle our thinking.

We're emotional creatures (some more than others). Personally, I'm pretty high on the bleeding-heart scale. One thing I loved about Oxfam is that they do a great job documenting their work in articles and photography, so I could feel really connected to the people they work with. (

 is also very good at this-ed.) I put their pictures on my wall. I wanted to see their faces."But I want to have an emotional connection to the people I help," another said. I found myself agreeing with both sides.

Of course, I don't want to choose a cause based on how emotionally connected I already am to it. I don't want to pass up an excellent opportunity to help because I felt more pulled to a less effective cause. When it comes to choosing a cause, I want to act based on 

, not sentiment. At the end of the year I'll reevaluate which charities to support, and I don't want to be muddled when I do that.

But once I've chosen a cause, I give myself permission to fall in love with it. What I care about, after all, is not the cause itself but the human lives at stake. (For you, it might be animal lives as well, or the lives of people not yet born. But you get the idea.) So I look for a way to connect. (For example, seeing how DtW help the individuals they treat 

 posts photos of most of its bednet distributions. It's a way to document that they're doing what they say they are - but for me, it's also a chance to see the human face of the work they do. The work I help them do.

Seeing her face is a way of overcoming the blind chance that put me in the US and her in Mali. It's a way of making us neighbours.

It's hard to feel warm and fuzzy about our donations going to dozens of distribution points around the world. We didn't evolve to feel an emotional glow about numbers. It can feel like we're sending money into some kind of oblivion. It's hard to feel motivated about that.

That's why I imagine it going to her. I imagine how glad her family will be to see her reach her eighth birthday, eleventh birthday, twentieth birthday. I imagine all the things she can do now that she's not sick. That kind of glow is what my heart was made for.

Sebastian Farquhar

Christmas gifts, goats and cash-transfer charities

It’s getting closer to Christmas, and we’re running out of time to get presents for friends and family. It can be hard to work out what presents people will actually enjoy. An increasingly popular option is to make a donation on behalf of someone else as a present.

When it comes to presents, it seems like a thoughtful gift is better than a gift certificate, and a gift certificate is better than a thoughtless gift. It’s a lot like that for charity gifts too. Your best options are likely to be donations towards 

. And in last place will be the unasked for gift of a goat.

What was originally a fairly uninspired set of options for charity gifts has since turned into a wide range of charitable choices for the holidays. Oxfam alone lets you select gifts from 

But the old stand-by is sending farm animals to developing countries. This seems unlikely to be motivated by effectiveness. I googled “Give a _____ for christmas” for a bunch of farm animals and wrote down the estimated number of search results.

Now, it’s possible that goats are just much much more valuable to rural people living in developing countries than any other sort of animal. Alternatively, it’s possible that the alliteration of “g” in “Give a goat” makes for catchier headlines. I don’t know for sure, but I have my suspicions.

There are also some decent reasons to think, as 

donations of livestock might be a particularly ineffective way to help the developing world.

 They seem to be quite a lot like cash transfers, but with a bunch of extra question marks.

(which is currently GiveWell’s second recommended charity after AMF)

 you empower people to make a decision about what they want most and buy it. That is, cash transfers are like the gift certificate of the charity world.

There are some real problems with cash transfers. For example they can lead to resentment and arguments when some people receive the transfer and others don’t or have distorting effects on local economies.

But with animals you lose most of the benefit of cash-transfers - you’re just deciding for people what you think they’ll want. You also avoid many of the benefits of the best non-cash transfer charities. Buying someone a goat for Christmas is like getting someone chocolate. You didn’t ask them what they wanted, you don’t really know them too well personally, so you just got the first thing on the shelf that looked like a present. The difference is that chocolate won’t poop on your floor.

But that doesn’t mean we have to just cave in and do the charity equivalent of a gift certificate. What’s the analogue to a really nice thoughtful gift that suits someone perfectly?

It turns out, you can get a thoughtful gift and donate to the most effective charities at the same time! Giving What We Can has it all. 

 lets you make a donation to one of their top recommended charities.

Adam Casey

Does Oxfam Help?

Oxfam is placing itself at the forefront of the push towards evidence-based charity. This is a very encouraging sign from one of the world's largest non-governmental organisations.

In general, one problem that charity evaluators like us encounter is that not enough studies have been done to measure the effect of different projects. The main reason cited by charities for this is that properly conducted 

 (RCTs) are prohibitively expensive. We are regularly asked what our view is of Oxfam, and have previously had to say that we just don't know, because not enough information is collected to assess their impact. This is why we are very glad to see Oxfam releasing data from its new Effectiveness Review.

In September 2011 Dr Karl Hughes published a 

 asking how charities could demonstrate they were being effective without bankrupting themselves. This year Oxfam answered his question by publishing the first results from a new "Effectiveness Review". Oxfam randomly selected a small group of interventions and studied them in depth to get a sense of how effective "typical" Oxfam work is.

Oxfam is currently running 362 "mature" projects. Of these they selected 26 spread across all categories of intervention Oxfam is involved in. 12 community based projects were analysed quantitatively with RCTs and 9 policy interventions were analysed by qualitative methods. Humanitarian projects were analysed in terms of how well they kept to recognised quality standards; 5 interventions were analysed in this way. In addition there are plans for 3 pilot studies looking into the accountability of projects.

Karl Hughes described the conclusions of the Effectiveness Review as "mixed". It is a testament to Oxfam's commitment to transparency that they have published even the unfavourable results. The general conclusion is that most Oxfam interventions make things better, but only on some measures. With further study it is reasonable to hope that Oxfam could dramatically improve their interventions, focusing on projects (like a 

 in Pakistan) which have very strong evidence of effectiveness. Furthermore, they might stop altogether projects that have low or even negative impact, freeing up resources for those projects that work.

The Effectiveness Review was an initial attempt, and it leaves plenty of room for improvement. For instance Oxfam did RCTs only in 12 of the 26 projects they studied. This suggests that there is room to expand the use of the "gold standard of evidence" much further.

The effectiveness review also failed to address the key question that Giving What We Can seeks to answer: How much good can we do at how great a cost? This is a very important point that we hope Oxfam's next Effectiveness Review will consider in detail. However, getting evidence of a positive effect is a very important first step.

There is a lot of good in this report. At the very least, it demonstrates that on average Oxfam has a positive effect. But more than this it tells Oxfam where to focus its efforts. Oxfam now needs to look at the very effective Pakistan disaster risk-management programme and try to replicate its success elsewhere. They also need to look carefully at one of the livelihood projects studied and try to understand why the control group ended up better off than the intervention group.

More generally, this report demonstrates that organisations like Oxfam can take evidence seriously without compromising their work on the ground. It is estimated that each study cost only £10,000 excluding staff time. This is very little, compared with the quarter of a billion that the organisation spends each year. Hopefully this first attempt will inspire Oxfam and other large charities to investigate their effectiveness more systematically. If these studies help Oxfam use its money 1% more effectively, then they will have paid for themselves many times over.

This Review also provides good examples of how to get useful evidence despite difficulties on the ground. In an RCT it is important for the control and intervention groups to be as similar as possible. But this is very hard in practice. For instance in the case of the Pakistan flood risk-management project there were statistically significant differences in the average age, population and distance to market between the two groups of villages. However, Oxfam demonstrated that this need not make the RCTs worthless. By using linear regression and other statistical techniques the report attempted to correct for these discrepancies.

This review was very preliminary, but it offers hope for the future. Key improvements would be a focus on quantified cost/benefit analysis and an expansion of the use of RCTs to a wider range of projects. But the fact that Oxfam has run and published such an extensive study, at a reasonable cost, is a milestone for effective charity. Hopefully other charities will follow their example.

Stephanie Crampin

The Sunday Times: Oxford don sparks floods of charity cash

Giving What We Can’s latest media appearance was this morning, in the latest edition of the Sunday Times, written by Nicholas Hellen. Buy a paper copy or read it 

. See below for a glimpse of what this feature contains:

“A PHILOSOPHER at Oxford University who decided to give half his earnings to charity has, over three years, inspired an international movement of generous-minded members of the public to pledge donations totalling £62.4m.

“Toby Ord, 33, a research fellow in ethics earning £39,300 a year, initially promised to give away everything he was paid over £20,000. He has since chosen an even simpler life, giving away everything above £18,000 after tax “because I really don’t need that much”. His wife, Bernadette, a doctor, has also signed the pledge.”

Hellen goes on to illustrate the importance of cost-effectiveness when making charitable decisions, explaining the QALY metric and using the example that the money required to train a guide dog could also cure over 2,000 people of blindness in developing countries. He mentions Toby’s discussions with Oxfam, as well as 10 Downing Street and Andrew Mitchell.

Becky and Owen Cotton-Barratt are also featured. Becky’s decision to donate 1% of her income to Deworm the World and SCI, as a student, and Owen’s to donate 10% of his income are explored, as is the possibility of coordinating taking the pledge and raising a family.

Shaun Raviv

Migration as a possible way of helping the poor

This will be the first of several posts on labour mobility, in which I will be crunching the numbers and exploring an interesting way to help the poor. I will be looking further into the possibility and, eventually, the cost-effectiveness of giving to what may be an under-appreciated method of providing opportunity to the poor in developing nations.

Hundreds of millions of people in poor developing nations say they would move to rich nations such as the US and UK, if given the opportunity. However, developed nations only offer work permits to a small percentage of those who would like them. For example, in 2010, the US Diversity Visa Lottery had 13.6 million applications for 50,000 visas-272 applicants per slot. 

 Allowing people on low incomes to move to wealthy countries can benefit them in a number of ways, including:

Access to public goods such as law and order, or proper sanitation

Access to well-functioning political or cultural institutions.

Moving a person to a country that is better organized and makes use of more advanced technology can increase their economic productivity many times over. Reflecting this, the same taxi driver in Swaziland earns multiples of her previous income if she can do the same job in Switzerland. This is a faster and larger financial impact than that offered by any other health, education, or economic empowerment program I know of.

The effect on those who remain in the sending country is less clear. In addition to being pleased by the success of their friends and family, they will benefit economically from "remittances", which already come to 

 the total amount of aid spending worldwide. The sending country could lose out if its most talented members leave rather than stay and try to improve matters-usually called "brain drain"-though this is an area of active debate.

Of course there is also the feelings of the natives of the receiving country to take into consideration. Some in developed countries take a dim view of immigration, fearing that it will lower wages, or change the social and political culture in ways they may not like. Complementary policies that would help limit these potential problems have been proposed, but they would likely seem radical to the general public in our current political climate.

A more radical proposal, designed in part to avoid troubling locals in receiving countries, is to start new cities, which would adapt the legal and economic systems of well-functioning developed countries. These so-called "charter cities" would become magnets for migrants from developing countries seeking opportunities not available to them where they currently live.

So far this proposal has mostly circled among economists and a 

. The subject came to my attention initially from Michael Clemens of the Center for Global Development, who suggested in a 2011 

, "Economics and Emigration: Trillion Dollar Bills on the Sidewalk?", that strict migration limits were lowering the total wages earned worldwide by trillions of dollars. The paper also argues that while there may be small pay cuts taken by native workers due to increased immigration, they are minor compared to the benefits to the immigrants themselves. Lant Pritchett made a 