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Cost estimates

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This page is a just a bin for collecting estimates from different sources about the costs of solving different problems. We're just getting started, so there's not much here yet.

Contents

Overall

  • "A rough guess puts the donor needs until 2015 at around $40 billion for sub-Saharan Africa, and perhaps twice that, or $80 billion for the entire developing world." (Sachs 2005, page 295)
  • "Charitable giving accounts for about 2.3 percent of the country's gross domestic product (AAFRC, 2003) and more than 80% of the money raised by charities in this country come from individuals. Yet, only one in 10 Americans believe that charities use donations honestly and ethically, according to the research group at Harris Interactive." (Sue Dragisic)
  • "some 35 percent of total assistance should go to the health sector, 35 percent to energy and road infrastructure, another 15 percent to education, 2 percent to water and sanitation; and the rest to other components of the core package." (Sachs 2005, page 296)
Unmet needs
(estimated additional annual cost to achieve universal
access to basic social services in all developing countries) 		Basic education for all $6 billion USD
Water and sanitation for all $9 billion USD
Reproductive health for all women $12 billion USD
Basic health and nutrition $13 billion USD
Less basic needs
(annual expenditures) 		Cosmetics in the USA $8 billion USD
Ice cream in Europe $11 billion USD
Pet foods in Europe and the USA $17 billion USD
Cigarettes in Europe $50 billion USD
Alcoholic drinks in Europe $105 billion USD
Military spending in the world $780 billion USD
(UN Development Programme, Human Development Report 1998, page 37)
  • "Contrary to popular perception, the amount of aid per African per year is really very small, just $30 per sub-Saharan African in 2002 from the entire world. Of that modest amount, almost $5 was actually for consultants from the donor countries, more than $3 was for food aid an other emergency aid, another $4 went to servicing Africa's debts, and $5 was for debt relief operations. The rest, $12, went to Africa. Is it really a surprise that we do not see many traces of that aid on the ground? If we want to see the impact of aid, we had better offer enough to produce results." (Sachs 2005, page 310)
  • "The United States is spending thirty times more on the military than on foreign assistance in 2004, $450 billion compared with $15 billion." (Sachs 2005, page 329)
  • "Many of the chapters value Disability-Adjusted Life Years (DALYs) at the average per capita income of the relevant country or region, usually around $1,000. The panel quickly agreed that this figure was far too low. An ethical principle suggested by one panel member was adopted instead: to value a life as the individual herself would value it. To arrive at a figure, one estimates how much people are willing to spend, out of their own pockets, to reduce the risk of accidental death. Individuals in developed countries evidently value their lives at around five times their lifetime earnings. For an annual income of $1,000 and a discount rate of 5 per cent, this leads to a figure of 5 x $1,000/0.05 = $100,000." (Stokey 2004, page 639)

Death

  • "the average cost of saving a human life for one year in the third world is just $62." (Hahn 1996, page 236, as cited in Lomborg 2004, page 2)
  • "Viscusi and Aldy concluded that estimates of the value of a statistical life, based on workers' willingness to accept a greater risk of death in return for higher salaries, ranged from 100-200 times GDP per capita." ... "it suggests that the value of GNI per capita used by M&S (Mills & Shillcutt 2004) as the value of averting a DALY is too low." (Viscusi and Aldy 2003, as cited in Evans 2004, page 119)

GDP

Aid

  1. "This study confirms a strong and robust relationship between economic growth and poverty reduction in sub-Saharan Africa. Employing a panel of 46 countries covering a period 1972-97, the analysis finds that a 10 percent increase in per capita GDP leads to a 1 percent increase in life expectancy, a 3-4 percent decline in infant mortality rates, and a 3.5-4 percent increase in the rate of gross primary school enrollment. The results are robust for high- and low-income, as well as fast- and slow-growth, countries." (Moser & Ichida 2001, page 1 -- also posted here)
  2. "aid raises the growth rate" ... "extra aid worth 2 percentage points of GDP ... raise the growth rate by 0.2 percentage points" (Collier & Hoeffler 2004, page 138)
  3. The GNI per capita in SSA in 2005 was US$ 745 (UCSF HIV InSite)
  4. "life expectancy in sub-Saharan Africa" ... "for female babies ... 46.3 years. For males ... 44.8 years" (WHO 2000)
  5. In 1997, SSA had an IMR of 105 per 1,000 live births; had 25,218,000 births; and had a total population of 592,348,000. (UNICEF 1999)
  • So, from the previous five facts:
    1. development aid worth 10% of GDP will raise the growth rate by 1%
    2. a 10% increase in per capita GDP in SSA leads to a 1% increase in life expectancy, a 3-4% decline in infant mortality rates, and a 3.5-4% increase in the rate of gross primary school enrollment
    3. per capita GNI in SSA is about US$ 745
    4. life expectancy in SSA is 45.5 years
    5. IMR is about 0.0045 per capita (one infant death per 225 people)
    6. which means that development aid of US$ 745 saves 0.455 YLLs and saves 0.00016 infant deaths (which is another 0.007 YLL) and increases primary school enrollment by 0.006 students (UNESCO 2001)

Cell phones

  • "from the Economist (Nov 15, 2007): Leonard Waverman of the London Business School has estimated that an extra ten mobile phones per 100 people in a typical developing country leads to an extra half a percentage point of growth in GDP per person" (xigi.net 2008)
  • So, from the above:
    1. a 0.5% increase in per capita GDP in SSA leads to a 0.05% increase in life expectancy, a 0.15-0.2% decline in infant mortality rates, and a 0.175-0.2% increase in the rate of gross primary school enrollment
    2. life expectancy in SSA is 45.5 years
    3. IMR is about 0.0045 per capita (one infant death per 225 people)
    4. which means that distributing 10 cell phones within a community of 100 people saves 2.275 YLLs and saves 0.0007875 infant deaths (which is another 0.0345 YLL) and increases primary school enrollment by 0.03 students

Global Warming

  • "The Kyoto Protocol has a BCR of 0.23, assuming a 3% rate of pure time preference, which means a DCR of about 4.5%. Cline's proposed optimal carbon tax strategy would have a BCR of 0.26, assuming a 3% pure time preference and a DCR of about 4.5%." (Cline 2004, page 37)

Health

Also of interest:

Food

  • "Hunger is the number one killer of African children, more than any single disease condition. The simple lack of food, which weakens the immune system, plays a role in more than half of childhood deaths (World Health Report 2002). Hunger plays a 78% contributing factor to diarrheal disease, 65% to lower respiratory infection, 82% to malaria, and 50% to measles (2004 World Food Security Report, Food and Agriculture Organization). Food is the single most needed "medicine" in Africa, with the largest potential human impact ("Selected Major Risk Factors and Global and Regional Burden of Disease," Majid Ezzati et al, Lancet 2002)." (One Acre Fund website)

Water

  • "Every year, more than two million children die of diarrhea and other sicknesses caused by dirty water and a lack of "access to sanitation." ... more than a third of the world’s people — 2.6 billion — have no decent place to go to the bathroom, while more than a billion get water for drinking, washing and cooking from sources polluted by human and animal feces. ... The report's authors estimate that it would cost $10 billion a year to halve the percentage of people without access to safe drinking water and to provide them with simple pit latrines." (Dugger, New York Times 2006)

Cost comparisons

Cost per YLL or DALY Cost per death averted
Malaria Package of malaria interventions Int$ 98 Int$ 2,622
HIV/AIDS Thai programme of prevention Int$ 437 Int$ 9,953
Package for prevention of HIV/AIDS, six regions (EAP, EAC, LAC, SEA, SAR, SSA) Int$ 89 Int$ 2,062
Basic health services Increased health expenditure, 13 HIPCs Int$ 659 Int$ 18,732
WDR (1993) Minimum package. Low- and middle-income countries Int$ 1,482 Int$ 28,017
(Mills & Shillcutt 2004, page 109)

USAID CSHGP

Basic Health Services

  • "We ... examine the impact of ... public spending on health ... in determining child (under-5) and infant mortality. There are two striking findings. First, the impact of public spending on health is quite small, with a coeffcient that is typically both numerically small and statistically insignificant at conventional levels. Independent variation in public spending explains less than one-seventh of 1% of the observed di€erences in mortality across countries. The estimates imply that for a developing country at average income levels the actual public spending per child death averted is $50,000-100,000. This stands in marked contrast to the typical range of estimates of the cost e€ectiveness of medical interventions to avert the largest causes of child mortality in developing countries, which is $10-4000. ... Second, whereas health spending is not a powerful determinant of mortality, 95% of cross-national variation in mortality can be explained by a country's income per capita, inequality of income distribution, extent of female education, level of ethnic fragmentation, and predominant religion." (Filmer & Pritchett 1999)


  • "Reviews of the cost effectiveness of preventive and primary curative interventions suggest that a significant fraction of under five deaths could be avoided for as little as $10, and in many cases under $1000, per death averted (Jamison et al., 1993). However, in practice, cross-national differences in public spending on health account for essentially none (one seventh of 1%) of the differences in health status. This extremely small actual association estimated from the cross-national data implies that the typical public spending on health per child death averted in developing countries is $50,000 to 100,000. This is a striking discrepancy between the apparent potential and actual performance." (Filmer & Pritchett 1999)


  • "...the estimates on the socio-economic variables are consistent with results reported elsewhere. The elasticity of child mortality with respect to income of around -0.6 ... is consistent with previous findings using cross-sectional or time series national level data ... The estimates imply roughly 10% lower mortality per additional year of female schooling. This suggests that having four more years of female education than the current average (5 years) is associated with 39% lower under-5 mortality. This is remarkably consistent with the 36% lower under-5 mortality among secondary educated mothers as compared to primary educated mothers..." (Filmer & Pritchett 1999)


  • "Our results suggest that at the mean level of inequality, a 1% increase in inequality is associated with a 0.5% increase in mortality. This implies that a country with the high inequality of Brazil (Gini of 0.60) compared to that of Sri Lanka (Gini of 0.30) could expect mortality to be 38% higher." (Filmer & Pritchett 1999)


  • "The probability that two citizens speak a di€fferent native language is associated with higher mortality... Moving from the very low level of diversity in Costa Rica (0.07) to that of Bolivia (0.70) is associated with a rise in mortality of about 40%." (Filmer & Pritchett 1999)


  • "The coefficient on 'predominantly Muslim' is very strong for child mortality, implying a child mortality rate higher by 45%, however it is insignificantly associated with infant mortality. This pattern of higher child but not infant mortality is consistent with the pattern of much higher mortality for girls aged 1-4 years (but not aged under 1) in some Muslim countries such as Pakistan and Egypt..." (Filmer & Pritchett 1999)


  • "Some variables thought to be important, such as the percent of the population that is urban, whether the country is 'tropical' (where populations are more exposed to certain diseases) and most surprising, the percent of the population with access to safe water are not found to have significant explanatory power for under-5 mortality." (Filmer & Pritchett 1999)


Cost of averting a death derived from different specifications of health status regressions
Source of estimate Increasing public expenditures on health Increasing non-health GDP
Two-stage least squares 47,112 USD 1,025,398 USD
OLS 66,680 USD 871,894 USD
Median regression 100,850 USD 863,107 USD
(Filmer & Pritchett 1999)


  • Factors that reduce U5M and MM: "We expected the sign on the sanitation variable to be negative and significant for both the indicators. However, the coefficient is not significant in any of the estimations. A similar result (of non-significance) was observed elsewhere as well (Wagstaff, 2002b; Filmer and Pritchett, 1999). By contrast, the coefficients on the education and roads variables have the correct sign and are statistically significant. A 10% reduction in illiteracy reduces U5M by 0.81% and MM by 2.4%. Similarly, a 10% increase in the network of paved roads per unit area of the country reduces U5M by about 0.65% and MM by about 1.1%." (Bokhari, Gai, and Gottret 2007)


  • "...the mean value of MM is about 345 deaths per 100 000 live births and of U5M is 73 deaths per 1000 live births while the mean value of illiteracy is about 21% among population aged 15 years or older. This implies that in a given country, reducing the illiteracy rate from 21 to 18.9% would reduce the maternal mortality by about 8.28 deaths per 100 000 live births, and under-five mortality by about 0.59 deaths per 1000 live births or about 59 deaths per 100 000 live births." (Bokhari, Gai, and Gottret 2007)


  • "For a 10% increase in Gh the change in MM is typically 1.6–1.7% more than the change in U5M. Thus, for instance, for Bangladesh, a 10% increase in government health expenditures implies that they will increase from the current observed value of Int $26 per capita to Int $28.6 per capita. This in turn would give 3.41% reduction in U5M and 5.13% reduction MM, which in absolute terms takes U5M from 82 per 1000 (8200 per 100 000) to 79.2 per 1000 (7920 per 100 000) and MM from 380 per 100 000 to 360.5 per 100 000." (Bokhari, Gai, and Gottret 2007)


  • "To reach the Millennium Development Goals for health, influential international bodies advocate for more resources to be directed to the health sector, in particular medical treatment. Yet, health has many determinants beyond the health sector that are less evident than proximate predictors. ... In order of importance, GNI/capita, young female illiteracy, and income equality (Gini index) predicted 92% of the variation in national IMR whereas public spending on health and poverty rate were non-significant determinants when adjusted for confounding. In low-income countries, female illiteracy was more important than GNI/capita. Income equality (Gini index) was an independent predictor of IMR in middle-income countries only. In high-income countries none of these predictors was significant." (Schell et al. 2007)


  • "Our models gave slightly different results when we used U5MR as a measure of health instead of IMR. With LE as the health outcome, GNI/capita remained the strongest predictor, and young female illiteracy the second strongest, although the importance of the latter was slightly lower for both U5MR and LE compared with when IMR was the dependent variable. Poverty rate rather than the Gini index was the third most important predictor of health measured as U5MR while public spending on health remained non-significant regardless of whether IMR, U5MR, or LE was used as the measure of health." (Schell et al. 2007)


  • "The importance of female illiteracy rates in our models suggests that investing in female education might be a rational intervention to prevent avoidable infant deaths in both low- and middle-income countries and possibly also in high-income countries with large gender disparities. For female illiteracy, we found stronger correlations with IMR than with LE as health outcome, which could support the common view of women as vectors of basic health skills, and explain why female (rather than overall) illiteracy is more associated with child health [31]. However, a literate woman who lacks influence cannot exert her knowledge. Our finding that female illiteracy correlates better to IMR than literacy rate (using logarithmic scales) is more than an academic exercise. It implies, perhaps against common prejudice, that a reduction in illiteracy from 10% to 5% is equally important as a reduction from 40% to 20%. Societies where it matters that all women are literate are probably more likely to emphasize gender equality. Previous research has shown that a woman’s control over household resources has a significant effect on pre- and perinatal healthcare usage [32] and that child survival is higher in countries where female representation in politics is high [33]." (Schell et al. 2007)


  • "Our study indicates that the available crude macro measurements of public health sector spending do not have an independent effect on health gains. This finding supports the growing awareness that, in order to reach the MDGs [4], more efficient health systems for service delivery are required [43], and without functioning health systems and adequate numbers of skilled human resources, the capacity to absorb funding aimed at vertical health programmes is limited in many low-income countries." (Schell et al. 2007)


  • "In a study of 60 low- and middle-income countries, Wang [29] found that intermediate and proximate level determinants such as immunization rate, knowledge of oral rehydration therapy, access to sanitation, and electricity had stronger correlations with child mortality than GNI/capita." (Schell et al. 2007)



  • "Increased overall public spending on health in HIPC group (Int$ 1,470)" would have a BCR of 2.1. ... "Each child death was associated with 28.41 YLLs" (Mills & Shillcutt 2004, page 100)


  • "Bobadilla et al. (1994) estimated that the 1993 World Development Report package would cost Int$65 per person in low- and middle-income countries and would reduce the disease burden by 25 per cent. Based on 2002 estimates from the Global Burden of Disease database, this package would be expected to avert 227,456,368 YLLs each year." ... For a population of 5,173,100,000 that would have a BCR of 2.6. (Bobadilla et al., 1994, as cited in Mills & Shillcutt 2004, page 101)
    • that works out to about Int$1,468 per YLL


  • "The WHO Commission on Macroeconomics and Health (CMH) ... in 2001 ... calculated that donor aid ought to rise from around $6 billion per year to $27 billion per year (by 2007) ... The commission showed, on the best epidemiological evidence that such an investment could avert eight million deaths per year." (Sachs 2005, pages 204-205)
    • that works out to about $3,000 per death averted
    • if each person who's death was averted lives an additional 30 years, then that works out to a cost of $100 per YLL

AIDS

  • "their model predicted that 63 per cent of (HIV) infections would be averted if an expanded response costing Int$1.42 per capita were put in place. We applied an estimate for the number of YLLs lost per HIV infection (23.08)..." (Mills & Shillcutt 2004, page 95)


  • "...measures to prevent the spread of HIV/AIDS. Spending assigned to this purpose would yield extraordinarily high benefits, averting nearly 30m new infections by 2010. Costs are substantial, estimated at $27 bn." (Bhagwati et al. 2004, page 606)
    • That works out to 900 USD per averted HIV infection. Assuming an estimate of 23.08 averted YLLs per averted HIV infection (see above), that works out to $39 per YLL averted.



  • "Brown ... estimated that 200,000 infections were averted between 1993 and 2000. ... Discounted at 3 per cent, the programme cost Int$1,820 m in 1993-2000." (Mills & Shillcutt 2004, pages 94-95)
    • That works out to about Int$9,000 per infection averted.


  • "When interventions are packaged according to those that complement each other, the cost-effectiveness improves further. A 2003 study shows that integrating TB and HIV services can be done for $1 per person under favourable assumptions. Further, the cost effectiveness of many interventions has been shown to improve as programmes mature." (Mills & Shillcutt 2004, page 95)

Malaria

  • Macroeconomic models of malaria control estimate a BCR of 4.7 given a DCR of 3% (Gallup 2001, as cited in Mills & Shillcutt 2004, page 79)
    • With slightly different assumptions, they get a BCR of 3.7, 5.4, or 6.2, also for a DCR of 3%
    • Using a DCR of 6% reduces net benefit by 25%, for a BCR of 3.7


  • A study of social marketing of treated mosquito nets in Tanzania found that in the first year of the program, the cost per treated-net year was US$13.38. "The cost per death averted associated with treated nets was US$1559 and the corresponding cost per DALY averted was US$57; these figures fell to US$1018 and US$37, respectively, when the costs and consequences of untreated nets were taken into account."([1])


  • "Based on estimates from macroeconomic models, we predicted that the ANB of eliminating 50 per cent of malaria between 2002 and 2015 would be Int$10-37 bn, with BCRs of 1.9-4.7." (Mills & Shillcutt 2004, page 63)


  • Macroeconomic models of malaria control estimate a BCR of 1.9 given a DCR of 3% (McCarthy, Wolf, Wu 2000, as cited in Mills & Shillcutt 2004, page 79)
    • With slightly different assumptions, they get a BCR of 1.5 or 2.6, also for a DCR of 3%
    • Using a DCR of 6% reduces net benefit by 30%, for a BCR of 1.7


  • Distributing insecticide-treated nets (ITNs) has an estimated BCR of 10 given a DCR of 3% (Mills & Shillcutt 2004, page 81)
    • Using a DCR of 6% has no significant shift on the BCR
    • If you assume a DALY value of Int$3,830 you get a BCR of 25



  • Switching from SP to ACT treatment has an estimated BCR of 39 given a DCR of 3% (Mills & Shillcutt 2004, page 84)
    • Using a DCR of 6% decreases the net benefit by 23%, for a BCR of 30
    • If you assume a DALY value of Int$3,830 you get a BCR of 85


  • Scaling up ACT treatment has an estimated BCR of 19 given a DCR of 3% (Mills & Shillcutt 2004, page 85)
    • Using a DCR of 6% decreases the net benefit by 17%, for a BCR of 16
    • If you assume a DALY value of Int$3,830 you get a BCR of 42

Malnutrition

  • "Reducing the prevalence of iron-deficiency anaemia by means of food supplements, in particular, has an exceptionally high BCR" ... at a cost of $12 bn. (Bhagwati et al. 2004, page 606)

War & Civil Conflict

  • "Ghobarah, Huth and Russett (2003) use data on twenty-three major diseases and find significant adverse effects of civil war. Using WHO data, they estimate that during 1999 then-current wars were causing the loss of 8.44 million DALYs, and that a further 8.01 million DALYs were lost as a legacy effect of the civil wars that had ended during the period 1991-7." ... "the typical civil war incurs around 0.5 million DALYs a year of loss during the conflict. These losses persist for some time after the conflict." (Ghobarah et al. 2003, as cited in Collier & Hoeffler 2004, page 132)
  • "we will assign the obviously arbitrary value of $1,000 to a DALY. This is approximately the 'purchasing power parity' (PPP) level of per capita annual income in many of the countries at risk of conflict" (Collier & Hoeffler 2004, page 133)
  • "it is useful to sum the various costs" ... "loss of GDP to the country directly affected is 105 per cent of initial GDP" ... "loss of GDP to neighbours, being equivalent to 115 per cent of initial GDP" ... "diversion of spending into the military in the country directly affected, costing the equivalent of 18 per cent of GDP and finally the same diversion in neighbours, costing the equivalent of 12 per cent of GDP" ... "the total cost is the equivalent of 250 per cent of initial GDP" ... "The average GDP of conflict-affected low-income countries just prior to conflict was $19.7 bn. To this must be added the health benefits, which we have already estimated directly in dollars to be around $5 bn. The total benefit of averting the typical civil war in a low-income country would thus be around $54 bn." ... "once a country has had a civil war it becomes much more likely to have a further war." ... "If the peace is maintained, the risk gradually fades: it takes around fifteen years for the risk to revert to its pre-conflict level." ... "yields a 'conflict trap' effect of around $10.2 bn. This has to be added to the $54 bn, yielding a cost of $64.2 vn." (Collier & Hoeffler 2004, pages 134-135)
  • "aid raises the growth rate" ... "extra aid worth 2 percentage points of GDP ... raise the growth rate by 0.2 percentage points" ... "The benefits of such growth in terms of conflict prevention are ... approximately $16 bn." ... "the extra aid programme would cost $24 bn annually." (Collier & Hoeffler 2004, page 138)
  • "One study (Luechinger, Stutzer and Frey 2004) has been able to measure the effect of civil war and terrorism on individual utility. The estimates suggest that the effect on life satisfaction is substantial. Thus, for example, the inhabitants of Paris would, on average, be equally well off with 14 per cent lower income if the level of terrorist activity is reduced to the level in the rest of France. The population of Northern Ireland would even be prepared to accept 40 per cent lower income if the civil war activities were as low as in the rest of the UK. These estimates are only preliminary and should be taken only as indicative, but they suggest that in future research on world challenges this method can be used, provided that more data on individual life satisfaction than currently available will be produced." (Fogel 2004, pages 615-616)
    • Frey, B.S., S. Luechinger and A. Stutzer, 2004: Valuing public goods: the life satisfaction approach, Institute for Empirical Research in Economics, Working Paper, 184, University of Zurich
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