Getting the Most From Our Money
In 2020, according to the World Health Organization, traffic fatalities will be the second leading cause of deaths in the world. Moreover, in the U.S. alone, approximately 57 million birds are killed by cars annually. (from Cool It, p. 154)
So, asks Bjorn Lomborg, would you be willing to use existing technology to solve the problem? Probably not since the solution is a 5 MPH speed limit.
Lomborg’s example relates to his support of a micronutrient program for the developing world. Getting swept up by emotions, we tend to ignore the cost of a solution. As a result, we “feel good” rather than “doing good.” Here, he tells us that adding crucial nutrients, Vitamin A and zinc, to a child’s diet in Kolkata, India would cost $2.20 a year. He estimates that $10 spent on Vitamin A would reap a $170 benefit in “health and long-term prosperity.” By contrast, he believes that $10 spent on carbon offsets would result in a $3.00 benefit.
The Economic Lesson
We might not agree with Dr. Lomborg’s numbers. But, as economists, we should agree with his approach. Thinking at the margin, he compares the extra benefit ($170) to the extra cost ($10.00) in order to make a decision.
His approach also reminds us of scarcity. Because resources are limited, we have to make choices. Doing more of one thing means less of something else.
Correction: More recent WHO data indicates that by 2030, traffic fatalities will rank five among the causes of death in the world.