New cost estimates for AMF’s 2012 distributions
In a blog post in February, we noted that we had missed some costs in our estimates that were incurred by AMF’s distribution partner, Concern Universal. We undertook an assessment of these costs through discussion with Concern Universal.
In the course of our assessment, we re-visited our estimate of all other distribution costs as well, and decided that the most informative cost estimates for donors are 2012 projected distribution costs. The reason for this is that as of November 2011, AMF has shifted to larger-scale distributions which it will continue in 2012; these distributions are more cost-effective than previous distributions.
We have now calculated the 2012 projected costs. The total cost per net is lower than our previous estimate, even including the extra distribution partner costs mentioned above. We estimate a total cost of $5.54 per net for 2012 distributions, compared to a previous estimated total cost of $6.31 per net. This figure includes estimates of all costs incurred by all organizations participating in the distribution, including AMF, AMF’s distribution partners and local actors that work with AMF’s distribution partners.
The bulk of the change is due to the fact that AMF expects to distribute a million nets in 2012 – over twice the number it distributed in any previous year – while its organizational costs are likely to remain stable. Another contributor to the lower cost is that the equivalent cost of the donated services that AMF receives has decreased (both in the past year and projected for 2012). See our updated AMF review for full details.
We also calculated the marginal cost per net, which is projected to be $5.15 per net for 2012. The marginal net cost excludes AMF organizational costs, because we believe that these are unlikely to rise as additional nets are distributed (details in our updated AMF review.) The marginal cost per net is slightly higher than our previous estimate (which was about $5 per net), since it includes an extra $0.15 costs incurred by the distribution partners (for details on these costs, see below.)
Updated cost per life saved
Using the 2012 projected costs per LLIN, we estimate the cost per child life saved through an AMF LLIN distribution at about $1,600 using the marginal cost ($5.15 per LLIN) and about $1,700 using the total cost ($5.54 per LLIN).
See our spreadsheet analysis for details of our cost per life saved estimate.
Missing distribution partner costs
We have now gathered information on the missing costs from AMF’s distribution partner, Concern Universal. These missing costs have added an additional $0.15 per net. They consist of costs for salaries and office overhead that were incurred by both Concern Universal and by the Malawi government (which pays the salaries of health workers who assisted in the net distribution). Concern Universal did not initially tell us about these costs because they were costs that it incurred regardless of whether the distribution took place. However, we prefer to include all costs incurred to carry out a project, because we believe that this gives the best view of what it costs to achieve a particular impact (such as saving a life), and also avoids the lack of clarity and complications of leverage in charity.
Full details on these costs are available in our costs spreadsheet and our updated AMF review.
Comments
I have a question on the spreadsheet to which you link in this blog post. At the end of the spreadsheet, you make a comparison between one life saved using LLINs and the number of children under 14 treated for worms. However, only a certain fraction of those treated for worms actually would have contracted the disease without treatment, and I don’t see that estimate here. For each life saved with LLINs, how many cases of schistosomiasis could I have averted had I directed my charitable money there?
Thank you!
Colin: In our review of the Schistosomiasis Control Initiative, we discuss historical evidence from their large-scale programs. Reductions in STH and schisto prevalence vary widely by country and type, but are often in the 25-50 percentage point range.
In our main model of the cost-effectiveness of deworming (XLS), based on our corrections to the DCP2 model, we estimate that treatment eliminates negative health impacts of STHs and schisto in about 15% of people treated.
In addition, the severity of infections can vary widely and some infections may be completely asymptomatic, so “number of infections averted” is not necessarily a meaningful figure.
Hi. On the AMF website, they estimate the cost per life saved as $100. See http://www.againstmalaria.com/OneChild.aspx . Do you worry about the incorrect impression that this gives donors?
I believe Sam’s observation is fair.
$100 (or 20 nets at $5 per net) per life is based on the widely cited Lengler Cochrane-based review indicating 160 bednet years equates to one under 5 life saved (see http://www.againstmalaria.com/onechild.aspx and http://www.againstmalaria.com/onechild_netstatistics.aspx).
We accept 20 nets per life may now be an overestimate, particularly given the move to universal coverage campaigns where under 5s are not being targeted but the aim is an entire community under nets.
Some time ago we started gathering cost-effectiveness data so we can update this figure and we hope to do so in the next two months.
The impact of nets in terms of lives saved does vary from location to location according to the malaria burden so we are likely to publish a range.
Our current information, part way through data collection, indicates one life per 20 to 100 nets in place, which at $5 per net, gives a range of $100-500 per life.
We have changed the language on the AMF website to this effect.
We believe GiveWell’s estimate of $1,700 per life is too high due to input estimates being overly conservative.
For example, GiveWell use an estimated net life of 2.2 years, taking wastage into account. We believe the value is higher, and above three years. We hope study data will give further clarity on this key input in the coming several months.
GiveWell’s number is more correctly ‘$1,700 per under 5 life saved’ and does not include the deaths of those over 5 years of age. Malaria does not just kill the under 5s. It seems reasonable to us to include the over 5s in the calculation given the entire community is covered in universal coverage distributions. The percentage of under 5s that make up the mortality figures is frequently cited as 70%. If this is taken as the under 5 percentage this would seem to adjust GiveWell’s number to ‘$1,190 per (any) life saved’.
Givewell also use a total cost per net figure of $5.54. As well as the cost of the net, this includes shipping, pre-distribution, distribution and post-distribution costs. AMF uses just the cost of a net, $5 in our estimate of the cost per life. On this basis, the $1,170 would further reduce to $1,055 if to be compared to our current estimated range of $100-500.
We accept there is more work to be done to update these figures and will contribute further in several months.
Hi all,
We believe that the figures Rob cites in the comment above are overly optimistic, as is the current figure on the website. We have raised this issue with Rob and expressed our hope that the website figure will be changed.
Responses to Rob’s comment above:
including multiplying the cost per life saved by 70% in order to account for potential lives saved among people over 5 – would result in a figure of $738.50 (this is just 70%*$1055 where $1055 is Rob’s figure after making other adjustments). $738.50 is still well outside Rob’s range of $100-$500.and additionally multiplying the cost per life saved by 1/2 in order to reflect an assumption that nets last twice as long as our estimate indicates – would result in a figure of $527.50 (this is just (1/2)*$1055 where $1055 is Rob’s figure after making other adjustments). $527.50 is still outside Rob’s range of $100-$500. We have not seen analysis supporting the $100-$500 figure.Holden
I like your more conservative approach to figures. Too often charaties minimise costs and maximise results which results in serious discouragement among doners.
I would like to see some figures on health care costs with and without bednets. There are obvious health care costs to the famiies and government which bednets prevent. Any rough idea of what these costs are?
Holden,
Rob says “GiveWell’s number is more correctly ‘$1,700 per under 5 life saved’ and does not include the deaths of those over 5 years of age,” which you then agreed with: “It is true that our “cost per life saved” includes only under-5 lives saved.” While you then went on to discuss how statistics of over-5 deaths are disputed, the labeling of the cost per child saved went unadressed. The AMF review still states that the cost of a child saved is $1700, and it seems to me that the dollar amount should be clearly and explicitly tied to under-5 deaths only in the review.
Perhaps I missed it in your analysis, but beyond the $1,700 it costs to save a child’s life, how many total cases of malaria does that $1,700 prevent? In children under 5 and otherwise?
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