Does charity ignore causes of global poverty?
In an essay published last month in The Guardian, 15 leading economists — including the Nobel laureates Angus Deaton, James Heckman, and Joseph Stiglitz — criticized what they call “the ‘aid effectiveness’ craze” on the grounds that it leads us to ignore the root causes of global poverty.
I advocate assessing the effectiveness of aid and providing resources for interventions shown to be highly cost-effective. To that end, I founded The Life You Can Save, an organization that gathers evidence about which charities give donors the most bang for their buck and encourages people to donate to them. The Life You Can Save recommends proven interventions because we think donors are likely to do more good by helping individuals with unmet needs than by aspiring to eliminate the root causes of poverty without a realistic strategy for achieving that goal.
Deaton, Heckman, Stiglitz and their colleagues begin by telling us that global poverty “remains intractable.” This statement reflects and reinforces the gloomy view that we are not making any progress in reducing poverty.
But that is not the case. The World Bank classifies people as living in “extreme poverty” if they lack the income needed to provide reliably for sufficient food, shelter, and other basic needs. The bank’s most recent estimate is that there are 768.5 million people, or 10.7 percent of the world’s population, living in extreme poverty. The figure was 12.4 percent in 2012. The long-term trend is clearly positive.
The economists’ essay then tells us that the supposed failure to make progress in reducing global poverty comes despite “hundreds of billions of dollars of aid.” No time period is specified, but many readers will assume that the world gives “hundreds of billions of dollars” of aid each year. In 2017, official development assistance (ODA) from all the world’s advanced economies was US$146.6 billion, or less than US$1 of every US$300 earned in these countries.
If all of this money went to the 768.5 million people living in extreme poverty, it would amount to US$191 for each of them. In fact, only 45 percent of ODA even goes to the least developed countries. Much of it goes to programs for which there is little evidence of effectiveness.
As noted, the economists’ major objection to charity effort is that it leads us to focus on “micro-interventions” that do not tackle the underlying causes of poverty.
What do they suggest? They say the poor need “access to public education and health care” and that there should be coordinated public policies to prevent climate change. To make real progress in agriculture, we must end the excessive subsidies paid by rich countries.
Other recommendations include stopping tax avoidance by multinational companies, regulating tax havens and developing labor regulations to stop globalization’s “race to the bottom.”
The ultimate goal is to change the rules of the international economic system to make it “more ecological and fairer for the world’s majority.”
These are laudable aims. But who are the economists addressing? If the arguments are addressed to governments, however, would better data lead to better outcomes?
While we wait for our politicians to tackle the root causes of global poverty — and it could be a long wait — let’s concentrate our spare resources on effective aid that helps people in extreme poverty lead the best lives they can.
Peter Singer is Professor of Bioethics at Princeton University and Laureate Professor at the University of Melbourne. Copyright: Project Syndicate, 2018.