Monday, October 3, 2011

Skewed to make us feel good


At a party at the muzungu house last weekend I had the pleasure of meeting a Norwegian medical student called Shetel. We were discussing his work and he lamented on the lack of basic supplies like syringes and bandages at the hospital. As an example, he told me about a man being asked to go to the local store to buy a little rubber tube and a pair of disposable rubber gloves that were essential for his treatment procedure. This is a tube worth 10k shillings while the man probably walked from his village to save 5k on matatus.

Bill Easterley in his book talks about the Principle/Agent problem. In aid, unfortunately the 'principle' is the people in the first world country and not the citizens of the developing country. What the people in the developing country want is not important as they don't vote in the 1st world country's elections.

HIV/AIDS is sexy. The population in the 1st world is willing to accept their tax dollars being diverted to to it as they feel good inside fighting this big bad disease. Who wants their money being spent on rubber tubes and disposable gloves, no matter how lifesaving they might be? In the developing world, ARVs cost about $100 a year for first line and around $400 a year for second line. The prevalence of HIV in PNG is around 1% and AusAID is committed to provide over $110 millions over 5 years to combat this disease. As heartless as it sounds, is the question not "How many lives can you save per dollar" or maybe "How many lives can you save over the next 10 years per dollar"?

I do not wish to trivialize HIV. I am well aware of the economic impacts of this disease and how quickly and easily this epidemic can spread. God knows that the 1st world was way too late to respond (party because of the Principle/Agent problem). All I wish to highlight is that there is a real skew towards what looks good in an AusAid brochure instead of what is really required. Such is the nature of foreign aid.

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