Easterly, Pogge, and the Health Impact Fund

            Easterly has a strong and convincing argument and motif in the Searchers and Planners debate. More than most of the economists we have read so far, I found myself thinking of readings from previous PPE courses, most notably Sen, Pogge, as well as some of themes of guardian democracy (questions of local/uneducated vs. centralized/trained). Easterly has a strong case pointing out a variety of failures in the current alphabet soup of international aid and poverty release.

            I was a bit disappointed with Easterly’s suggestions for how to better organize aid efforts going forward. If I agree (and I think it is certainly worth trying) that it is better to encourage bottom-up aid in a piecemeal fashion on a variety of problems and in accordance to market principles with understanding of underlying institutions, it is less than entirely clear how to practically employ these policies. A large portion of Easterly’s work is on the unintended consequences of focusing on an appealing idea without enough concerns for real world, measurable impact. It is somewhat understandable that this area is left somewhat scarce in the last few pages of Easterly’s work, its difficult and the nature of the proposals that Easterly is in favor of don’t lend themselves to a one size fits all policy framework.

            Easterly does briefly mention two policy ideas: “GlobalGiving” and “Development Vouchers.” Both are interesting ideas, although I think there are severe flaws in both. GlobalGiving is not as crazy as Easterly might make it out to be: it has worked for other small scale funding (see kickstarter.com and a variety of other sites). My worry with this policy framework is scale. The money spent through it may be more efficient given the decentralization of decision-making. This is plausible, although somewhat questionable. If it consists of the general population trying to choose a charity, there would have to be a lot of feedback and information in the market. There are also worries of scale: would this platform generate enough participation without more government involvement? The Development Vouchers are interesting as well: the problem is that there aren’t services for the impoverished because the poor have no ability to pay for them. Granting the ability for the individuals to pay for services through vouchers or even direct transfers solves this ability to pay problem. I am concerned with the same worry Easterly mentions: the countries’ infrastructures and corruption would interfere with the market forces and be misappropriated by corrupt officials.

This got me thinking about other ideas that might fit into Easterly’s framework. Although Pogge and Easterly would likely disagree on a fair amount, Pogge’s argument in regards to pharma patent innovation seems to fit many of Easterly’s requirements for smart policy. The gist of Pogge’s suggestion (http://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2809%2961296-4/fulltext) is to create an organization that pays for pharma for positive impact on world health. The proposed organization is called the Health Impact Fund. It follows many of Easterly’s suggestions: although it is funded by governments, it is driven by private firms. This ties profit-seeking behavior to actual impact on the lives of individuals, in terms of health impact. Additionally, the nature of the payout of the organization is driven by empirical results, creating the feedback of information that Easterly seeks. Some of this measurement is through statistical analysis, while other portions are confirmed by asking those who are using the product; both policies Easterly is explicitly in favor of. While there are a variety of potential weaknesses to the program, the HIF offers a solution in the vein of Easterly’s argument, it is voluntary, market-based, feedback orientated, and market driven. This type of structure seems to have a variety of advantages, and may lead to another alterative to vouchers or Globalgiving: namely a prize system where certain measurable improvement to quantifiable health/well-being incentivizes firms to actively fight poverty. While this policy path is by no means perfect (governments are still setting the goal i.e. you get paid for slowing the spread of malaria; there are measurement issues; there may be other unintended consequences), it is an important policy option that appears to fit well into Easterly’s Searchers framework.