Marginal Aid and Effective Altruism
Hello Everyone!
I’m new to this forum but work in Global Health and evidence-informed prioritisation.
I recently wrote a paper which argues that global health donors should not target the most cost-effective interventions. Instead they should do more to recognise the primary role of national institutions in countries receiving aid and focus on financing services at the margin.
I would say our proposed approach is still aligned with the philosophy of Effective Altruism (i.e. doing the most good that you can), but perhaps disagrees with the focus on giving to the most cost-effective causes, at least for the financing of health services in low-income countries.
You can find summary blog and link to the full paper here: https://www.cgdev.org/blog/putting-aid-its-place-new-compact-financing-health-services
And for those of you who like to think about things such as cost-effectiveness thresholds, see this too: https://f1000research.com/articles/12-214
Interested to hear your thoughts.
Tom
EDIT: As requested I’m including the abstracts for each of the papers I mention below.
Reimagining Global Health Financing
Abstract
Health aid has helped domestic financing achieve historic gains in global health but there is much still to be done. Six major issues currently prevent aid from being more effective, fit for the future, and aligned with country priorities, namely: funding volatility, aid fragmentation, the displacement of domestic finance, ineffective prioritization, the lack of transition planning, and the lack of country ownership.
We propose a new model that aims to address these challenges: that domestic finances should support essential health services and health aid should primarily be used to expand the package of affordable services at the margin. Instead of targeting the most cost-effective interventions, donors should support countries to have strong and effective prioritisation processes and direct any additional financial support for health services to those that would otherwise not be covered by domestic funds. A marginal aid approach would address issues of volatility, fragmentation, and fungibility, and encourage better planning and prioritisation by countries and donors, leading to more overall health for the money. As countries’ health financing improves, health aid focused at the margin is naturally crowded out, offering a seamless aid exit strategy for thriving countries and ensuring the sustainability of financing for countries that continue to need support. Perhaps most fundamentally, a marginal aid approach empowers national decision makers and national policy processes.
Why cost-effectiveness thresholds for global health donors differ from thresholds for Ministries of Health (and why it matters)
Abstract
Healthcare cost-effectiveness analysis is increasingly used to inform priority-setting in low- and middle-income countries and by global health donors. As part of such analyses, cost-effectiveness thresholds are commonly used to determine what is, or is not, cost-effective. Recent years have seen a shift in best practice from a rule-of-thumb 1x or 3x per capita GDP threshold towards using thresholds that, in theory, reflect the opportunity cost of new investments within a given country. In this paper, we observe that international donors face both different resource constraints and opportunity costs compared to national decision makers. Hence, their perspective on cost-effectiveness thresholds must be different. We discuss the potential implications of distinguishing between national and donor thresholds and outline broad options for how to approach setting a donor-perspective threshold. Further work is needed to clarify healthcare cost-effectiveness threshold theory in the context of international aid and to develop practical policy frameworks for implementation.
Hi Tom, welcome to the forum :)
A suggestion: perhaps you could edit your post to include the key arguments/lines of thinking. Both articles seem pretty interesting—you might get more engagement if the key points are included in the main post rather than requiring people to click away and read through the documents.
From the abstract of the first article:
My understanding is that GiveWell sort of take into account how donations can influence government spending through the ‘leverage’ and ‘funging’ components of their models (e.g. see here). However, I don’t know to what extent (if any) they adjust their recommendations based on discussions with a country’s government or health service.
I suspect your proposed model is perhaps more suited to megadonors and government aid, rather than small donors (except perhaps where those donors are influenced by the same recommender, e.g. GiveWell), because I’m not sure how individual donors would be able to know which services would otherwise not be covered by domestic funds?
Also, one challenge on adjusting based on discussions with a country’s government or health service is that you’re going to lose some efficiencies/economies of scale. Each country has different priorities and resources, so different programs will be at the margin in each.
Jason, agreed that there are some scale advantages for certain multilaterals. However it could be possible to retain these with a shift to a marginal aid approach. For example, even if countries were to move to support vaccination through domestic financing, Gavi might continue to provide support on pooled procurement.
Thanks Matt, I’ll check out these links.
You say:
“I suspect your proposed model is perhaps more suited to megadonors and government aid, rather than small donors (except perhaps where those donors are influenced by the same recommender, e.g. GiveWell), because I’m not sure how individual donors would be able to know which services would otherwise not be covered by domestic funds? ”
To me this underlines the point that individual donors aren’t best placed to set priorities for what a countries or population needs. If the donor doesn’t have confidence in giving options with more structure, I could see a rationale for cash (such as Give Directly) but the problems that earmarked aid create for countries are increasingly well understood and this is no less of true for small donations than large. We summarise six key issues in the paper: volatility, fragmentation, fungibility, weak prioritisation, exit strategy and local autonomy.
To be clear I think cash is a low bar for effective giving and there are many better options, but I would suggest that it is crucial that we strengthen, rather than undermine, national institutions in the process.
In other words, I would love to see different narratives around giving with a focus on strengthening effective cause prioritisation in countries—rather than this prioritisation being done in London, SF, Geneva etc—and organisations that seek donations from individuals to provide technical assistance and top-up financing.
Thanks for the reply and for the edits made to your post.
I agree with this, but I don’t know what this implies in terms of my decisions about where to donate.
An example: let’s assume that, if we ignore the six key issues discussed in your paper, a donation of £5000 to the Against Malaria Foundation (AMF) will (in expectation) save one life.
If we now take into account the six key issues, what does that imply? If I understand correctly, the implication is that donations are creating negative externalities due to the impact on the institutions and decision-making of the recipient country.
Perhaps this means that donating to global health charities generally is (e.g.) 20% less cost-effective, and therefore for AMF we should assume it actually takes £6000 (in expectation) to save one life. That would be somewhat worse—but still very cost-effective compared to many donation opportunities. I’m not sure it would change the minds of individual donors interested in improving global health.
Alternatively, perhaps it is much, much more serious . Perhaps supporting charities like AMF are actually doing more harm than good overall, i.e. the six key issues causes by donations mean that donations are causing net harm—more lives and QALYs are lost because of donations. If true, this clearly should change the mind of every individual donor.
From very quickly skimming over your paper, I can’t tell where the reality lies. What would be your intuition? Mine is very much leaning towards the first position—assuming that donations are possibly a bit worse than the intervention-specific estimate implies, but not dramatically so (and, if GiveWell’s models take into account the influence on gov spending, perhaps their estimates have already partly adjusted for this).
Thanks again Matt. Yes, negative externalities could be a helpful way to think about at least some of those six challenges.
To your question, in the short term I wouldn’t advise individual small donors to change their behaviour. In absence of a coordinated effort to improve donor harmonisation, I support giving based on cost-effectiveness principles and my intuition is not that this kind of giving is a net harm. Our pitch is perhaps to global health institutions—including EA orgs like GiveWell and Open Phil—that we could do better. We don’t yet have the institutions that would allow individuals to support the kind approach we outline (essentially TA + harmonised support to marginal services), but perhaps that’s something we need… Of course that’s a trickier sell but I’m sure some smart strategic comms folk could help.
I assume that the presence and/or significance of the six key issues will vary significantly based on the nature of the aid-funded program, the country involved, and the actions of other major donors.
The most critical is probably fungability—would bednet distribution, vitamin A, vaccine incentives, etc. be funded by developing countries absent EA earmarking its funding for those purposes? The argument against is that these activities weren’t funded at the time EA started doing them, and that governments aren’t consistently funding similar, nearly-as-effective opportunities that EA doesn’t reach because its funding runs out. I think that might be different in a world where the bulk of foreign health aid followed your preferred paradigm . . . but I think that goes back to Matt’s point about governments and megadonors.
In other words, I think the idea that EA should switch paradigms is significantly stronger where the condition “governments and megadonors are making the same switch with the vast majority of non-EA aid” is satisfied. If only a minority of all aid funders (by donation volume) switch paradigms, it’s not clear to me how much of the benefits of a switch actually accrue vs. a very high risk that the formerly-funded effective programs don’t make the cut.
I say fungibility is probably most critical because I think it influences many of the others. Even assuming EA funding is more volatile than domestic funding, that seems less important when applied to an activity that wouldn’t otherwise be happening. I think fragmentation risk is intervention-specific; some interventions certainly get in the way of domestic efforts, while others should be able to run much better in parallel. I am inclined to think global-health EA does a fairly good job with prioritization—the heavy quantitative/empirical emphasis makes political considerations less likely to affect outcomes, or splashy programs to get funded. Classic EA organizations generally work in very low income contries, where I don’t think an exit strategy for dependence on foreign aid is realistic anytime soon (vs. some middle-income countries where transition planning is more much timely). Local autonomy seems a mixed bag to me—it could be a plus in some cases, but a drawback if the national system doesn’t have an established history of treating all residents of equal value vs. prioritizing a politicially favored class (e.g., those living in more populated or wealthy areas).
As your paper notes, foreign funders also have to decide how to allocate resources among countries. A country-based prioritization scheme can’t make decisions on between-country allocation. If EA were evaluating marginal services proposed by each developing country, it would be rather difficult to evaluate them with the rigor that EA evaluates its global-health initiatives in which it currently funds in large quantities. There would just be too many of them to spend several million dollars and several years evaluating each. Plus there’s still a potential incentive to designate something really important as marginal to beat out other countries’ proposals. The increased overhead costs of a marginal approach, both at the national level and the donor level, as opposed to the current EA approach seem pretty considerable if the total funding stream for the marginal approach is in the high millions to low billions.
There might be ways to get around some of that, such as allocating something like block grants for approved marginal programs (without dictating which marginal programs) to countries based on the country’s economic resources and level of healthcare needs rather than based on specific marginal programs. But I suspect any potentially viable workaround would require buy-in from a large fraction of donor money to work.
So all that is to say that I think there’s a good chance your idea is correct in some circumstances, but I’m struggling to figure out how it applies to most EA-style interventions in very low income countries in 2023, at least unless and until bigger fish are on board with the idea.
Thanks for this considered response Jason.
I would summarise your overall message as “we’re not ready for this yet” and I would partly agree. But EA community and orgs could be part of developing the solution and influencing other donors. We shouldn’t consider EA orgs as separate from bilateral, multilateral or other philanthropic donors. At this point, EA is not an insignificant voice in the global health ecosystem. Also the shift doesn’t need to happen for the sector as a whole, it could be country by country and some countries probably are ready for such an approach. We’re discussing it with a couple.
To some of your more specific points:
I disagree that fungibility is the biggest challenge. Excepting cases of corruption, this simply means the country is effectively choosing the spend on other priorities. Indeed some folks in CGD have argued against the marginal aid approach precisely because they favour the fungible quality of current donations. This isn’t my view but it speaks to an opinion I do share, which is that, in many cases, countries should be given more control over healthcare priority setting.
Of course a common concern is whether country institutions are good faith actors and have the necessary capabilities to adopt a marginal aid approach. This will differ between countries and can be considered on a case by case basis—and will change over time (inc with donor support to strengthen priority setting capabilities, ensure comprehensive delivery on the core package etc). No country administrations are perfect, including in many donor countries, but we need a better framework for how countries transition from receiving support to deliver essential health services to doing so themselves. This is an active process in many countries today (inc where EA supported orgs operate) and has been exacerbated by the recent squeeze on global development financing.
Lastly, you touch on some practical challenges with funding marginal services. I agree that donors with country presence will be best placed participate in the coordination mechanisms necessary for a marginal aid approach, but EA individuals or orgs could i) choose to support intermediaries. There are none at present but it’s not hard to imagine existing organisations adopting the approach. For example, the Global Financing Facility (GFF) has done much to work with countries and donors on better coordinated and prioritised investments (with some success and some challenges). ii) they could also choose to support catalytic investments to strengthen country capabilities rather than earmarked aid for specific services.
I would challenge EAs to rethink the rationale for doing global level analysis to set health priorities in low income countries. In absence of local prioritisation it can be better than nothing, and initiatives like the Disease Control Priorities Project have been helpful. But such approaches are both technically and philosophically limited, and inferior to building local capabilities. Before too long, and with the growing decolonisation/localisation movements, I expect this top-down approach will seem increasingly out-dated.
I just want to flag how happy I am to see CGD people on the forum. Welcome.
Thanks Ryan!
I see you like the capability approach—I’m a fan too
Hi Tom welcome to the forum!
I read the policy paper a few weeks ago and found it super interesting, that said I had some questions over what implementing marginal aid would look like in practice.
One would need to ensure national institutions take up the cost-effective programs aid now would opt not to fund, no? I suspect this coordination would be pretty difficult. Alone getting well-resourced western governments and multilaterals to spend aid cost-effectively has been a continuous fight fought by organizations such as CGD, I don’t see why we should expect an under-resourced government to make much better decisions.
I think an interesting follow up study could be to interview some of the people involved in negotiations on health service funding. Why did they opt to earmark for cost-effectiveness? Had they not earmarked, what do they expect the government would have funded instead? Had they funded marginally, do they expect the government would have taken up the cost-effective program themselves?
I worry that in practice it would just result in fewer cost-effective programs being funded. That said I can see there being a place for marginal aid in some funding of government health services.
EDIT: just looked at the pdf again and saw there was a section on implementation in practice, so apparently I didn’t read all of it! Apologies if you already answered some of the questions in that section, will give it a read later today.
Thanks Mattias, glad to know you’d already seen the paper! I would say that absolutely I think governments in many countries can and are working towards improved evidence-informed priority setting. Sure some still have some way to go (including many high-income countries btw) but many countries with less resources are developing strong prioritisation capabilities. Thailand is the classic example though several other countries have engaged in ambitious whole-health-benefits-package assessments including Ethiopia, Malawi and Pakistan. We wouldn’t expect a shift to a marginal aid approach overnight, or for all countries at the same time, but we need to imagine what the transition between the current situation and a world where countries do have effective flourishing health systems. In my view that means strengthening local priority setting and reducing fragmentation (etc) in how we provide financial support for service delivery.
Thanks for the comments on the potential value of gathering additional info, we are indeed hoping to do some work along these lines, including interviewing country officials as well.
Thanks for sharing, Tom! Could you say a little more about how you see the “classic” EA global health programs fitting into your paradigm? These programs tend to do one thing—like hand out anti-malarial bednets—and aim at doing that very well. EA funders try to be very careful not to fund things that the government (or a non-EA funder) would have otherwise funded. So that would suggest classic EA interventions are “marginal” rather than “core” in your framework. On the other hand, they have a very high return for each dollar invested, which suggests you might classify them as “core.”
Hi Jason, you’re right that our proposal is that donors would shift away from funding these kinds of programmes directly but that instead they would not only finance services at the margin but also provide technical support to prioritise and then deliver on those local priorities. I guess it’s the health policy version of the “teach a man to fish” principle. Sure, giving bed nets or antiretrovirals does some good, but helping to build an effective health system is better. And I’m not at all convinced that governments wouldn’t fund these high value services instead. I would say it’s more that administrators take whatever help is being offered and then try to run a health system around it, but managing these donations takes work and makes it harder to strengthen the national system.