How should we compare their (CCC’s) cost-benefit estimates to GiveWell’s (GW’s) results?
I quickly spot two differences:
GW’s benefit estimates are in units of doubling of consumption (interventions are compared to direct cash transfers through Give Directly, itself measured in terms of doubling of consumption), whereas CCC’s estimates are in units of value of a statistical life.
CCC’s analyses are for large-scale government operations, so
they don’t account for counterfactual investments,
they encounter diminishing returns (compared to GW’s focus on the marginal dollar).
Points 1. and 2.a. are both indications that CCC’s cost-benefit ratios are higher than GW-esque’s cost-effectiveness ratios, while 2.b. goes to the other direction.
From the Tuberculosis paper, regarding value of a statistical life (VSL):
The GDP growth in this group of countries outpaces the population growth, so that the VSL grows rapidly over time. In constant 2020 US$ values, the benefit of an averted death is US$ 98,700 (2020), US$ 149,800 (2025), US$ 212,000 (2030), US$ 276,300 (2035), US$ 338,100 (2040), US$ 396,800 (2045), and US$ 456,000 (2050).
In comparison, GW estimates that one can save a life (or have equivalent impact) at about $5000. That’s a factor of ~20. [I think this is misleading, so I’d be interested in a more careful comparison here, directly comparing VSL to doubling of consumption].
I’m also not sure how exactly to account for the differences in 2.
GW’s benefit estimates are in units of doubling of consumption (interventions are compared to direct cash transfers through Give Directly, itself measured in terms of doubling of consumption), whereas CCC’s estimates are in units of value of a statistical life.
I think which metric to pick will depend on one’s preferred heuristic for contributing to a better world (somewhat related draft; comments are welcome):
Units of doubling of consumption appear more strictly connected to improving nearterm welfare (as proxied by e.g. quality-adjusted life years).
Units of value of a statistical life, roughly proportional to units of consumption, appear more strictly connected to economic growth (as proxied by e.g. gross world product).
they [the papers] don’t account for counterfactual investments,
The papers focus on large scale interventions with massive benefits, so the counterfactual benefits will be pretty small in comparison? There is a chance governments or international organisations go ahead with the interventions funded by GiveWell, but a seemingly much smaller chance that a big government investment has no counterfatual impact due to the potential intervention of other actors?
In comparison, GW estimates that one can save a life (or have equivalent impact) at about $5000. That’s a factor of ~20. [I think this is misleading, so I’d be interested in a more careful comparison here, directly comparing VSL to doubling of consumption].
Your BOTEC looks good to me. GiveDirectly’s unconditional cash transfers have a benefit-to-cost ratio of 2.4, and GiveWell’s cost-effectiveness bar is 10 times that, which suggests a bar for the benefit-to-cost ratio of around 24 (= 10*2.4). So one should expect the cost-effectiveness of the interventions supported by GiveWell to have benefit-to-cost ratios in that ballpark. I agree a more careful comparison would be useful.
How should we compare their (CCC’s) cost-benefit estimates to GiveWell’s (GW’s) results?
I quickly spot two differences:
GW’s benefit estimates are in units of doubling of consumption (interventions are compared to direct cash transfers through Give Directly, itself measured in terms of doubling of consumption), whereas CCC’s estimates are in units of value of a statistical life.
CCC’s analyses are for large-scale government operations, so
they don’t account for counterfactual investments,
they encounter diminishing returns (compared to GW’s focus on the marginal dollar).
Points 1. and 2.a. are both indications that CCC’s cost-benefit ratios are higher than GW-esque’s cost-effectiveness ratios, while 2.b. goes to the other direction.
From the Tuberculosis paper, regarding value of a statistical life (VSL):
In comparison, GW estimates that one can save a life (or have equivalent impact) at about $5000. That’s a factor of ~20. [I think this is misleading, so I’d be interested in a more careful comparison here, directly comparing VSL to doubling of consumption].
I’m also not sure how exactly to account for the differences in 2.
Also, CCC are using a discount rate of 8% (compared with 4% that’s common at least for CE)
Thanks for commenting, Edo!
I think which metric to pick will depend on one’s preferred heuristic for contributing to a better world (somewhat related draft; comments are welcome):
Units of doubling of consumption appear more strictly connected to improving nearterm welfare (as proxied by e.g. quality-adjusted life years).
Units of value of a statistical life, roughly proportional to units of consumption, appear more strictly connected to economic growth (as proxied by e.g. gross world product).
The papers focus on large scale interventions with massive benefits, so the counterfactual benefits will be pretty small in comparison? There is a chance governments or international organisations go ahead with the interventions funded by GiveWell, but a seemingly much smaller chance that a big government investment has no counterfatual impact due to the potential intervention of other actors?
Your BOTEC looks good to me. GiveDirectly’s unconditional cash transfers have a benefit-to-cost ratio of 2.4, and GiveWell’s cost-effectiveness bar is 10 times that, which suggests a bar for the benefit-to-cost ratio of around 24 (= 10*2.4). So one should expect the cost-effectiveness of the interventions supported by GiveWell to have benefit-to-cost ratios in that ballpark. I agree a more careful comparison would be useful.