Best Things First

by Bjørn Lomborg

Perhaps the most pervasive feature of schooling around the world is that students are grouped according to age — with 8-year-olds in one class, 9-year-olds in the grade above, and so on. The idea is that pupils of the same age will be at approximately the same level and can therefore benefit from the same instruction. This assumption is often wildly wrong. In many classes, especially in the poorer part of the world, the educational ability of children in the same grade varies widely.

One of the very best investments in education circumvents this vicious cycle: Teach according to students’ learning level rather than age.

Surprisingly, in rich countries, poverty and malnutrition played less of a role: maternal mortality rates tended to be higher in the upper social classes because mothers experienced more unnecessary interference from physicians, especially with cross-infections in hospitals.

Even adjusted for inflation, a promise of a hundred dollars in a year is worth less than getting a hundred dollars today. So, any policy benefits that arrive next year have to be adjusted with a discount rate to account for that drop in value. This might seem counterintuitive: Whether today or in a year, it’s the same amount of money. But there are four factors to consider. First, waiting introduces risk. If you accept my hundred-dollar bill now, you’re sure to get it. In a year, I might have forgotten our deal, we might have fallen out, I could have gone bankrupt, or either of us could have died. Second, waiting a year means losing out on investing the hundred dollars now so that you’ll have more in the bank by this time next year. Third, if you live in a fast-growing economy, you will probably be richer next year. If making $100 for a job feels right today, by next year, $100 will likely feel too little. Fourth, we’re all just impatient. We would simply rather have $100 of opportunities now rather than next year. A discount rate tries to take into account all these facts and tell us how much $100 in a year is worth now. In rich countries, the discount rate is typically somewhat lower, and in poorer countries, it is somewhat higher.

It bears repeating that our willingness to spend some but not all resources to save lives is not an indication that we are monstrously self-absorbed or uncaring. It simply reflects the reality that we live in a world with limited resources and infinite spending opportunities.