The philanthropic bias

Not every billionaire philanthropist can tackle problems single-handed

Owen Barder points to a new WSJ article on Bill Gates’s fight against polio. In it, the author seems to suggest that Gates is rethinking his strictly vertical approach to tackling global health problems:

Is humanity better served by waging wars on individual diseases, like polio? Or is it better to pursue a broader set of health goals simultaneously—improving hygiene, expanding immunizations, providing clean drinking water—that don’t eliminate any one disease, but might improve the overall health of people in developing countries?

The new plan integrates both approaches. It’s an acknowledgment, bred by last summer’s outbreak, that disease-specific wars can succeed only if they also strengthen the overall health system in poor countries.

Despite this, Gates seems adamant about eliminating diseases, even at the expense of other priorities:

Dr. Pate showed a slide of a cartoon steam-engine train with cars labeled “Education” and “Disease Control.” Polio should be just one car in that train, he said.

Mr. Gates didn’t disagree—certainly Nigeria needs a functioning health system, he said in interviews. But it was a matter of priorities, he said. With the world so close to killing polio, countries like Nigeria should make eradication a top priority, he said. Victory would free up millions of dollars to pay for broader health improvements.

Gates really, really likes the idea of using vertical funds to tackle (and eliminated) diseases one by one, rather than taking a more gradual, measured approach. Why do the big philanthropists (Gates, and by proxy, Buffet) prefer to take such a direct approach, circumventing governments?

The easiest explanation is through personality or experience: Gates is an entrepreneur, used to getting smart people in a room together to solve problems; private solutions for important problems. Governments have, if anything, been a source of irritation for him, lobbing the occasional anti-trust action at Microsoft.

This sort of ‘get it done’ mentality that smart entrepreneurs foster is admirable, and clearly lacking in the public sector, but it occasionally short-sighted. It favors ahistorical, short-term solutions that are more likely to produce measurable results. At a micro level, this can be a fantastic way to tackle local problems – they make excellent “searchers,” to borrow Easterly’s vague label. However, when it comes to global solutions, this inherent drive to play whac-a-mole with individual problems can lead to a disregard for necessary, long-term processes, like investments in health systems.

Gates, Buffet, and major philanthropists clearly have the desire to do some good in the world before they expire. Despite this, ego is inevitably driving part of the story. Being “the man who funded health systems for fifty years” doesn’t have quite the same ring to it as “the man that eliminated polio.” One gets you a prominent place in the history books – the other doesn’t.

It’s also much more fun being alive when you achieve your greatest accomplishment – this desire to make the world a visibly better place before you fall of your perch creates an added incentive to tackle problems that have an obvious end, rather than putting money towards goals that are limitless in nature.

This sense of urgency is compounded by the good-natured desire of Gates and Buffet to see their estates dwindle over time. Buffet announced that the remainder of his estate should be used up within 10 years of his death (the Gates have set a more lenient 50 years timeline). This, combined with the already large incentives the Foundation has to spend money quickly (Buffet’s yearly contribution requires that the previous year’s contribution be spent), creates an enormous incentive to quickly identify easily-identifiable problems and to tackle them quickly.

The mortality and estate pressures also incentivise risk-taking: if the money has to be spent by a certain deadline (or if I’m going to be dead soon), there more to be gained from attempting high-return, high-risk projects, like vaccine development or disease elimination.

This isn’t necessarily a bad thing – Gates is right to point out that there are potentially large gains from eliminating certain diseases – although there should be more convincing evidence that  the payoffs to this are significantly higher than those of careful control, especially as the marginal cost of treatment usually starts looking asymptotic as we move closer to extermination.

I think it’s probably unrealistic to expect the Gates Foundation to start up a health SWAp anytime soon – the same factors that led to its creation will always drive it to tackle problems the way it does. What we should hope (and push) for is a commitment to “do no harm.” This means reverting to practices that do not distort health objectives on the ground (i.e. internal brain drain of qualified health staff, shifting the debate away from enforcing health systems to tackling single diseases). Working on vaccines, either through direct funding or advance market commitments, is a an example of high risk but less distortionary practice. The huge sums of money the Foundation juggles could also be used to create incentives for more general research into fighting tropical maladies, and then subsequently subsidise the price for needy countries.

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