The net economic impact of social programs may be positive or negative for society or the government. This is an important prioritization consideration for both domestic and international altruism. Prioritizing programs that save money for society or improve the economy increase the money available over the long term for social programs that have net costs. This is the primary reason why many development economists feel that low income countries will be better off over the long term with aid targeted at industrializing, or improving their economies, rather than “anti-poverty” programs which don’t produce economic benefits.
CEAS classifies social programs into 4 tiers based on how they affect the economy.
Tier 1: Programs with Neutral or Positive Economic Returns for Society
These are programs that actually save money for society, or at least recover their costs. The cost of a Tier 1 program is less than the money it saves society overall. It does not include programs that theoretically would save money if better systems were in place. For example, a cancer prevention initiative may be a Tier 1 program in a rich country with universal healthcare, but not in a poor region that lacks cancer treatment.
A classic example of a Tier 1 program is education. Closing down all schools in a state would result in a great deal of direct savings. In time, however, the economy would crash due to lack of educated people, and the society would become poorer than if it had maintained the school system. There are also many preventative health measures that fall into this category, such as sex education to avoid expensive AIDS treatment.
An ethically run business that provides considerable social benefit without producing negative effects, falls into this category. This is because business can provide a social good while creating employment and tax revenue, all without using up limited philanthropic funds. For instance, a company that makes affordable generic medications or a fitness centre can be Tier 1 programs.
Reasons for Limited Take-up of Tier 1 Programs
- Start-up capital. There is usually a delay in seeing returns from any investment. It may take years before positive returns begin, until which time the program may use up a lot of resources. For instance, a developing country can expect to become wealthier by investing in high quality post-secondary education. However, the capital required to build and maintain these institutions before positive returns are seen is significant. Many extremely poor farmers in Africa can expect to multiply their income by purchasing a drip irrigation system, but cannot come up with the money for it.
- Externalized benefits. An private employer in a country with public health insurance won’t benefit from improving working conditions that result in health care savings, so long as their workers’ health doesn’t affect their performance. Externalized benefits also applies to public institutions. For instance, the Ministry of Education has nothing to gain by investing in after-school programs that prevent crime but don’t affect scholastic attendance or achievement.
- Lack of knowledge. Often, government or an institution will not be aware of a particular way of saving money, especially in poor countries. For instance, a small employer may stand to save money by investing in health promotion of its employees, but may either not be aware of that fact, or may not know how to implement the health promotion initiative.
- Culture, values, and psychological barriers. Attitudes and convention may prevent people from taking what appear to be logical actions. For instance, a low income country with low status of women could benefit economically by giving women more rights, and educational and economic opportunities. However, they may not be prepared to do this even if they understand the economic benefits because they don’t want to change their culture. Another example of a values-based barrier is the belief that treatment is more than prevention. For example, if there is limited money to put into HIV in a country, and treatment is far less cost-effective than prevention, the government may nevertheless prefer to put it into treatment. Being too psychologically or philosophically difficult to allow more people to go untreated, they assign a lower priority to prevention, despite recognizing that it will result in more people with AIDS overall.
- Political or institutional will. Governments respond to the demands of their constituents, and organizations respond to their members and funders. Without the public putting pressure upon institutions, they often won’t make positive changes on their own. For instance, a Ministry of Health may neglect public health promotion such as an anti-smoking campaign, if it doesn’t feel like the government cabinet or the public expects it to perform such a role.
- Institutional dysfunction. Finally, none of the above factors may come into play, but due to under-developed, dysfunctional, or corrupt systems, no action is taken. In low income countries, this is often a factor.
Examples
- School-based social emotional learning, including anti-bullying programs
- School-based human deworming medication programs
- Regulation of pesticides
- Manufacturing feminine hygiene products
- Screening for alcohol abuse in primary health care
Tier 2: Highly Cost-Effective Programs
In this category, social programs do not cover their costs, but their cost is very low for the amount of benefit they provide. Tier 2 programs can be funded, at least in part, using the money saved or generated in Tier 1 programs.
Examples
- Community counseling
- Cleft or fistula surgery
- Water purification tablets in a developing country
- Building latrines in a country in which open defecation is common
Note: The last two examples may in fact yield a positive economic return due to decreased prevalence of infections.
Tier 3: Moderately Cost-Effective or Problematic Programs
These initiatives don’t offer the great deals of Tier 1 and 2, are prone to creating complications such as dependency, or are prone to corruption. People may be pursue them because they affect their community or are causes that they particularly care about on a personal level. This tier includes businesses that provide minor social benefits. Tier 3 programs don’t constitute effective altruism and are not promoted by CEAS.
Examples
Donations of goods to developing countries. This is generally advised against because it tends to harm the economy in the recipient country. For instance, Kenya used to have a thriving clothes manufacturing industry, but it is now dead due to clothing donations from abroad.
- Taxi or ride-sharing company.
- Handouts of food or income.
Tier 4: High Cost Interventions
These are socially productive activities that have large per-person costs. In low income countries, they are typically performed by government. In high income countries, they are also performed by nonprofits.
Examples
- Health care in high income countries
- Income assistance in high income countries