Making Government Smarter

How to Set National Priorities

Villagers, displaced by a tidal wave, wait for food in the Sundarbans delta, Bangladesh, June 2009. Parth Sanyal / REUTERS

These days, people for the most part believe that governments should try to promote the general welfare of the populations they serve. The disagreements come over how to do that—what goals to focus on, what policies to adopt, and so on. These questions are usually approached through broad intellectual frameworks, such as political ideology or religion, and much time is spent debating the finer points of various doctrines. Often overlooked, however, is a simple and easy way to make lives better: use routine cost-benefit analysis to compare the expected returns from alternative policies and then choose the more effective ones.

Effectiveness sounds dull. But what if an extra dollar or rupee in a budget could feed ten people instead of one? Or if $100,000 of international aid spending could be tweaked so it would save ten times as many lives? When the stakes are this high, efficiency in spending becomes a moral imperative. Moreover, unlike debates over ideology or religion, debates over efficiency can actually get somewhere, because there is a straightforward mechanism for resolving them: compare the predictable costs and benefits of different courses of action and see which yields more bang for the buck.

Surely, this is just common sense, one might say, and governments must do it all time. Maybe they should, but in the real world, they rarely do—partly because this analysis involves a lot of work, but mostly because the results can be inconvenient, showing that a preferred policy is inefficient or even that elements of existing government bureaucracy may be unnecessary. Unsurprisingly, nobody wants to be the superfluous official—whether in a government, an international organization, a nongovernmental organization, or even a private philanthropy. 

This means that decisions are affected by other factors. One town in rural Virginia, for example, holds an annual fair to support local charities. Each year, an animal-rescue organization brings a bald eagle to its booth as a prop, and each year, it receives more donations than other groups—which

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