Monday, July 08, 2013

How immigration could make AMF more cost-effective

Summary: charities that save the lives of the global poor have more economic impact than one might think because a portion of the very poor may emigrate to other countries and enormously increase their productivity, and this portion may greatly increase if some developed countries open their borders.

Charity evaluator GiveWell's top recommendation is Against Malaria Foundation, which distributes insecticide treated nets to prevent malaria in developing countries. This can improve the health of people who would otherwise spend time sick with malaria, and can prevent the deaths of children who would have died had they been infected with malaria. At the time of this post GiveWell's nominal current estimate of cost per life saved is as follows:

Using the 2012-2013 cost per LLIN, we estimate the cost per child life saved through an AMF LLIN distribution at just under $2,300 using the marginal cost ($5.15 per LLIN) and just under $2,500 using the total cost ($5.54 per LLIN).59This does not include other potential benefits of LLINs (non-fatal cases of malaria prevented, prevention of deaths in age groups other than under-5 year olds, prevention of other mosquito-borne diseases, etc.).
Disclaimer: the trend has been for GiveWell to increase its estimates of cost per life saved, and GiveWell suggests that its estimate should be expected to be too optimistic, and the expected cost should be worse.

Still, AMF looks reasonably good as a way of extending lives in the short to medium term. A child who survives thanks to AMF gets to grow up and enjoy life for a rather low cost per quality-adjusted life year (QALY), especially compared to health interventions in the developed world. But in dollar terms AMF's advantage is less, since the people it saves are extremely poor and tend to earn low incomes and contribute little to national or global economies. Impacts on economic activity may be more relevant than QALYs if we are thinking about flow-through effects on things like technological advance, institutional quality, and peace.

Examining the beneficiaries of AMF in that light, research on place premium effects is very relevant. Page 11 of "The Place Premium: Wage Differences for Identical Workers across the U.S. Border" gives ratios between earnings of workers from particular countries, and workers matched for visible characteristics such as education and field who had migrated from that country to the United States. Ratios include: Nigeria at 14.85, Sierra Leone at 7.43, Ghana at 7.12, Cameroon at 6.53, Uganda at 4.38, and Ethiopia at 4.35.

So if even a moderate portion of people saved by AMF manage to migrate to developed countries, the increase in earnings could be double or more what one might naively expect by looking at current incomes in the countries where AMF distributes bednets.

At the moment, this is not a large effect because developed countries largely do not accept migrants with low education from developing countries. Table 2 of this paper shows the difference between national income per capita of countries and income per natural for a large assortment of countries. For poor sub-Saharan African countries this difference is mostly under 20%, although it already gives a 26.7% boost for the Republic of Congo, 51.8% for Liberia, 30% for Sierra Leone, and 29.1% for Somalia. One gets a similar or larger boost in expected impacts on income from the possibility of sustained catch-up growth.

If one thinks there is a substantial chance that some sizable developed countries will open their borders to unlimited numbers of guest workers or permanent migrants from poor countries in coming decades, then the conditional effect would be dramatic, enough to deliver a meaningful boost in expected economic impact of AMF via the chance at increasing the number of migrants.

Of course, other effects of migration besides earnings changes could increase or decrease the costs and benefits, the place premium might fall with increased immigration, and perhaps the chance of radical immigration liberalization in appropriate places is negligible. But this channel for impact from interventions like AMF seems worth noting.

No comments: