Despite having a substantial public budget, the Philippines does not have enough funds to do everything its citizens would like. It, therefore, has to prioritize among many worthy opportunities.
In every country, the main role of the government is to prioritize policy options and investments. Hopefully, these policies will deliver the greatest benefit for each peso spent. These could well be effective investments in health such as rotavirus vaccinations, or in education such as structured teacher plans.
However, policies everywhere are often driven by other considerations that can dramatically reduce effectiveness. There are special interest groups and vocal minorities highlighting their preferred options. For instance, fertilizer subsidies help the individual farmer, but overall, such a policy delivers only small returns for society. And media will often push exciting interventions, even if their returns are dubious. For instance, giving each child a cheap laptop was long seen as a crucial pathway to educating children in the 21st century. Now, studies conclusively show that not only is this an expensive option, but also one that delivers zero benefits — the children possibly become slightly less attentive.
Data and economic science can provide a really useful input to help governments and citizens cut through the noise from interest groups, and assist with allocating resources to improve the budgeting process.
Cost-benefit analysis is rarely used by any government in the world in a broad, transparent fashion. Why? It requires large numbers of academics, well-organized inputs, and the collection of considerable data while creating analytical results that can upset some vested interest groups.
My think tank, Copenhagen Consensus, has been working for the past decade to improve this situation. We have worked in countries, including Denmark, Bangladesh, Haiti, India, Ghana, and Malawi to introduce rational, data-driven input to help countries in setting priorities.
These projects have helped state and national governments zero in on the most powerful investments. Local inputs make sure that the policies examined are the most relevant to each country.
The findings of our projects have shifted policies in ways that help people: the Haitian government, with support from the United States Agency for International Development, launched the country’s first food-fortification project. The UK used our research to support a global initiative to end undernutrition. Colombia quadrupled the size of a marine reserve. The Danish government spent millions more on HIV/AIDS based on our findings.
We are now undertaking a project for the Bill & Melinda Gates Foundation to investigate how nations can best spend resources within the conversation of the so-called Sustainable Development Goals.
What could such an investigation achieve for the Philippines? The country has huge opportunities ahead — but also challenges that could impact prosperity if not navigated carefully.
A rapid assessment we just undertook for Uganda points to the types of research that could help the Philippines. We worked with Uganda’s National Planning Authority to examine each of the interventions suggested in the new Uganda Budget Strategy, undertaking a rapid assessment to quickly evaluate the costs and benefits of each initiative, based on the academic literature.
This report highlighted the vast benefits of opening schools unconditionally and keeping them open to improve children’s future earnings. The research also showed the huge benefits from prioritizing health care spending on specific communicable diseases, like malaria and tuberculosis. Among all the competing claims on the health care budget, there is enormous value in focusing additional resources on these areas where relatively tiny investments can generate vast results.
It also showed areas that shouldn’t be prioritized such as software skills development training, which sounds sensible and often attracts attention, but typically has low returns, given the huge global competition in this area.
Showing where each peso does the most good does not offer the last word in budgetary decision-making. Nor does it supplant politicians. It merely ensures that citizens and politicians are better informed. Decisions on how to allocate scarce resources should always remain the domain of elected politicians.
But this input means that the politicians and their officials can pick more of the really effective programs and slightly fewer of the less so, with additional data from economic science. The Philippines should consider embracing the same opportunity. Let us bring together Filipino and international academics to start mapping out what really works, and highlight where the next peso can be spent best.
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Dr. Bjorn Lomborg is president of the Copenhagen Consensus, and visiting fellow at Stanford University’s Hoover Institution.
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