Fixing the World - Bang for the Buck Edition

One of my favourite podcasts is Freakonomics Radio.  Their episodes usually have, as you might guess from the name, an economics bent, they're entertaining, informative and, importantly, based on real-world data.

In a show from December 14, 2015, titled: "Fixing the World - Bang for the Buck Edition", the show's writer and host interviewed Bjorn Lomborg, who runs the Copenhagen Consensus Center.

"The Copenhagen Consensus Center is a think tank that researches and publishes the smartest solutions for the world's biggest problems. Its studies are conducted by more than 100 economists from internationally renowned institutions, including seven Nobel Laureates, to advise policy-makers and philanthropists how to spend their money most effectively."

 Fixing the world would seem to be a mammoth undertaking, and it is, but real progress can be achieved if good choices are made - by getting the best "bang for the buck".

During this program, there was a brief discussion about extending educational opportunities to more people, particularly poor people.  Education, obviously, is of prime importance in lifting people out of poverty.

In the USA's current election campaign, one issue has been the cost of post-secondary education.  One of the candidates for the Democrats, Bernie Sanders, has suggested that university education should be free.  You have to admit that it's an attractive option.

The Copenhagen Consensus Center has a different perspective.  It's contention is that the people attending university are mostly wealthy (in a relative sense), so free education at that level would really just be (another) subsidy for the well-off.  Far better, the Center believes, would be to offer many more scholarships, something that would direct funds to people who really need it.

LOMBORG: Yeah, the problem is that the way it’s formulated, they want to promise, and this is typical for these sorts of documents, they want to promise everybody to be able to get into, for instance, university. It’s a beautiful idea, but the problem is for most countries it ends up being a way to subsidize rich people’s kids to go to college. If you make college free, because most of the attendees at universities are from the high classes, that is effectively a subsidy to rich people’s kids. Instead what you should be doing is if you want to get more poor kids into college, you should be giving them scholarships. That’s a much cheaper much more directed way to make sure that you get a better socio-economic profile in college. But let’s not kid ourselves. This is not what makes productivity dramatically rise in the first 30 or 50 years of development. That’s much more about getting everyone educated so they can read and write.

The discussion then moved on to climate change, specifically fossil fuel subsidies and increasing the share of renewables by 2030.

 DUBNER: Let me ask you about a phenomenal and a poor ranking the Copenhagen Consensus Center has given for two goals in the climate change arena. Phenomenal mark goes to the proposal to “by 2030 phase out inefficient fossil-fuel subsidies.” But a poor mark to the proposal to “double the share of renewable energy in the global energy mix by 2030.” At first blush those might seem to be contradictory. Explain why one gets phenomenal the other poor.

The answer might surprise you, so I'll leave it there and let you investigate the response for yourself.  The full transcript of the interview can be found here.