I previously mentioned that individuals can make a large difference in the lives of others through donations, as long as they choose very cost-effective charities. However, while our donation does make a difference to a few people, there are also massive institutions working to make much bigger differences in the well-being of those in other countries — through foreign aid.

Foreign aid aims to eliminate extreme hunger, extreme poverty, and disease from the world altogether and usher everyone into lives in which they can be happy and live to their potential. Because foreign aid is perhaps the biggest attempt to make the world a better place, it is important to me that we get this right.

Unfortunately, we haven’t gotten it right quite yet. Fifty years of foreign aid efforts later, and extreme poverty, extreme hunger, and disease still exist. While it may seem wildly idealistic to believe that extreme poverty, extreme hunger, and disease can be eliminated soon, Peter Singer in his book The Life You Can Save argues that the elimination of all three plights is within our reach if only we studied foreign aid, looked at its failures, and made some modifications. In this essay, I explore his chapter on foreign aid.

How much aid?

Peter Singer starts off by quoting a prominent foreign aid critic, William Easterly, who makes the following argument:

The West spent $2.3 trillion on foreign aid over the last five decades and still had not managed to get twelve cent medications to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get four-dollar bed nets to poor families….It’s a tragedy that so much well-meaning compassion did not bring these results for needy people.

However, as Peter Singer notes, $2.3 trillion on foreign aid over five decades is $46 billion a year, which distributed over all developed nations works out to $60 per person per year, or 0.3% of the economic output of these nations (30 cents per $100). In 2011, America was one of the least generous developed nations, giving 0.18% of GDP — though America still gave the most at the dollar by dollar level, sending $32 billion overseas. Other nations, like Sweden, give closer to 1% of their GDP.

Misconceptions about the quantity of aid

Still, billions of dollars a year sounds like an awful lot, though it’s also equally fair to describe it as $90 per person, per year — less than people tend to typically donate on their own from their after tax income, and much less than people give up in taxes.

Interestingly, the American population feels like a lot more goes to foreign aid than 0.18% of the GDP. Peter Singer quotes a poll done by the University of Maryland, which asked 848 respondents “What percentage of the federal budget goes to foreign aid?”. The median answer was 25%, or $900 billion annually (the US budget has typically been $3.6 trillion per year), or $3000 per person — more than 33 times larger than the actual budget.

More interestingly, these same respondents were asked how much they thought the government should spend on aid. Here, the median response was for the government to slash the aid budget down to 10%, or 13 times larger than it actually is. At 10% of GDP, the aid budget would work out to $360 billion annually, or $1200 per person.

The actual cost of aid

Whether $900 billion annually or $27 billion annually, these numbers for aid — both potential and actual — mean little without a baseline to compare them to. Just how much would it actually cost to do what William Easterly suggests — use medications and bednets to prevent half of all malaria deaths?

To consider the cost, Peter Singer looks to a more broad initiative — the United Nations Millenium Goals, a UN-lead project to “Eradicate extreme poverty and hunger; Achieve universal primary education; Promote gender equality and empower women; Reduce child mortality rates; Achieve universal access to reproductive health; Combat HIV/AIDS, malaria, and other disease; Ensure environmental sustainability; and Develop a global partnership for development”. One of these subgoals is to prevent half of all malaria deaths.

The World Bank has estimated that in order to meet these goals, it would require around an additional $60 billion per year for twenty-five years, though this is a rough guess.  However, for the United States to do this alone, this would work out to $200 per person per year, or require roughly 0.4% of US’s GDP.  This is even more doable when we internationalize the issue – for all nations in the Organization for Economic Cooperation and Development, it would be $50.36 per person per year, or roughly 0.13% of the combined GDP.

So even if our aid was solely focused on the Millenium Development Goals, it still would fail because it is simply not large enough. However, Peter Singer does spend some of his chapter arguing that the way America picks its foreign aid targets isn’t really all about aid. Instead, it’s all about… politics.

Continue to part 2