The GiveWell Blog

Cost-effectiveness is in the eye of the beholder

Broadly-speaking, we think of “cost-effectiveness” as referring to how much of value is accomplished for a given amount of money. If two interventions are both proven and scalable to similar degrees, the more cost-effective one is a better investment because it allows the same donation to accomplish more of value. However, “value” means different things to different donors: to some, $200 to save a child’s life might be a great deal, while others may prefer $450 to repair a fistula.

We prefer to leave major judgment calls to our donors when practical. This means that rather adopt a single definition of value (such as Disability-Adjusted Life-Years), we hope to find the most cost-effective interventions for several different definitions of value. We can’t cover every possible notion of what’s worth funding, but we hope to be of use to as many donors as possible within the cause of developing-world health (our current focus – we will be moving on to economic empowerment later).

The following are several philosophical goals – i.e., definitions of what results make an intervention “valuable” – that we think will appeal to many donors.

  1. DALYs averted. Although it isn’t our favorite measure of value, the Disability-Adjusted Life-Year is a widely used metric that considers all forms of mortality and morbidity. Some donors may feel most comfortable aiming to avert as many DALYs as possible for their donation.
  2. Economic benefits. Health problems impose an economic burden, not just a moral one. There are sometimes attempts (such as the “benefit:cost ratio” used by the Copenhagen Consensus and some versions of the social return on investment metric) to combine economic and moral benefits into a single figure, measured in dollars.
  3. Life-years saved – for those who put a lot of weight on being alive vs. not alive (and less weight on quality of life). Interventions that focus on infant mortality are likely to be cost-effective in terms of saving life-years.
  4. Lives saved.
  5. Adult lives saved. It is common to value adult lives more than children’s lives. In addition, adults are more likely to have dependents, making their deaths arguably more tragic (in a way that DALYs could capture in theory, but that DALY estimates generally don’t capture in practice).
  6. Cases of extreme suffering prevented/rectified. This goal has several subcategories, for different conceptions of what constitutes extreme suffering. One that jumps to mind is fistula (and other deformities associated with ostracization).
  7. People brought to a normal standard of health and potential productivity. In some ways the opposite of the cause immediately above, in that it focuses on helping those with high potential rather than helping those with high need. (There are different places one could draw the line for “normal health and potential productivity” – is it enough to prevent/cure someone’s blindness, or is it also important that they be adequately nourished and have reasonable job opportunities?)
  8. Unwanted pregnancies averted / population growth slowed. Some donors might see births averted as a negative; others might feel that it is the key to better quality of life and sustainability.

Some of these metrics are highly well-defined and relatively easy to find or form cost-effectiveness estimates on. Others are far less so. We aren’t necessarily going to be conducting a separate search on interventions for each, but we think it’s productive to get as many appealing “goals” on the table as possible before beginning to narrow down the programs we’re focusing on. We hope that we won’t leave out programs whose potential effects are highly appealing to a large/important set of donors, even if they fail a “cost-effectiveness test” based on other metrics.

If you feel that we’re leaving out any important ones, please let us know. (We will also be consulting with our supporters and Advisory Board on this question.)


  • Ron Noble on September 5, 2008 at 3:22 pm said:

    I’d just add that #7 could be extended to include bringing some people to a higher than normal standard of health and productivity. I suspect that in thinking of “normal,” most people will reading this blog will use the United States as their reference point. But what is normal in the United States may be much better than normal in many low-income countries.

    Obviously, “adequate nourishment” and “reasonable job oppotunities” are also arguably arbitrary.

  • Ron Noble on September 23, 2008 at 5:04 pm said:

    Another thought: Someone might think that more than one of the categories above is important, and a given charity is likely to have impacts in more than one category. DALYs, and economic benefits (if a dollar value is placed on years of life and quality of life) appear to be the only measures listed that attempt to deal with this problem. If I care both about saving lives and improving quality of life, I need some method of weighing the relative benefits of these, I think.

  • Personally, I prefer to look at the estimates of what an intervention can be expected to produce among the several dimensions I care about, then use my own weighted average (even a rough, intuitive one) rather than the weights that the DALY metric prescribes for me.

    Either approach ultimately comes down to weighting different outcomes (improved life vs. prolonged life, for example) using pure intuition; the question is whether I’m using my own intuitions or a number taken from other people’s. I prefer the former approach but there are reasonable arguments for the latter, as we’ll be discussing in future posts.

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