Evaluating the Cost of Global Problems

October 22, 2013

Bjørn Lomborg, an adjunct professor at the Copenhagen Business School, along with 21 of the world's top economists, recently developed a scorecard spanning 150 years to compare across all areas of human existence to see if the world really is doing better or worse. The scorecard focused on 10 areas -- including health, education, war, gender, air pollution, climate change and biodiversity. They sought to find the answer to what was the relative cost of these problems in every year since 1900, all the way to 2013, with predictions to 2050.

Using classic economic valuations of everything from lost lives, bad health and illiteracy to wetlands destruction and increased hurricane damage from global warming, the economists show how much each problem costs.

Consider gender inequality.

  • In 1900, only 15 percent of the global workforce was female.
  • What is the loss from lower female workforce participation?
  • Even taking into account that someone has to do unpaid housework and the increased costs of female education, the loss was at least 17 percent of global gross domestic product (GDP) in 1900.
  • Today, with higher female participation and lower wage differentials, the loss is 7 percent -- and projected to fall to 4 percent by 2050.

Health indicators worldwide have shown some of the largest improvements.

  • Human life expectancy barely changed before the late 18th century.
  • Yet it is difficult to overstate the magnitude of the gain since 1900: in that year, life expectancy worldwide was 32 years, compared to 69 now (and a projection of 76 years in 2050).
  • In economic terms, the cost of poor health at the outset of the 20th century was an astounding 32 percent of global GDP. Today, it is down to about 11 percent, and by 2050 it will be half that.

Most of the topics in the scorecard show improvements of 5 percent to 20 percent of GDP. And the overall trend is even clearer. Global problems have declined dramatically relative to the resources available to tackle them.

Of course, this does not mean that there are no more problems. Although much smaller, problems in health, education, malnutrition, air pollution, gender inequality and trade remain large.

Source: Bjørn Lomborg, "A Better World Is Here," Project Syndicate, October 16, 2013.

 

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