Cost-benefit policy prioritization in a

developed country
Jan Kleňha
March 5, 2018

Hi guys! I would appreciate your opinions here.

I’m working on an EA-aligned project and would like to brainstorm how to improve my approach to it.
I think there is a lot of exploration value hidden in this project. It falls in the category of prioritization
research and improving institutional decision-making.

The project is called Czech Priorities, it will be run by the Copenhagen Consensus Center and the aim
is to identify the smartest solutions to the most pressing social and economic challenges in the Czech
Republic, with expected over-spill effects in the region and possibly across Europe.

Note: For the last 14 months I led the Czech EA Association. Lot of credit for it goes to my colleagues
and volunteers, especially for organizing EAGx conference, first two public CFAR workshops in Europe,
the Effective thesis project, or for receiving a donation that allows us to pay full-time staff in 2018. The
project I will talk about here is, however, run separately from our EA activities and we do not publicly
associate it with the Czech EA.

Project background

About a year ago, Copenhagen Consensus Center decided that it would be interesting to carry out a
national prioritization project in the Czech Republic. We knew a Czech philanthropist, who really likes
economic prioritization and lives on the same street in Prague as Bjorn Lomborg, president of the
Copenhagen Consensus Center, so we got them in touch. The donor committed to fund 1/5 of the
project, identifying couple of other potential sources of funding. The CCC has done full-scale national
prioritization projects in developing countries so far (e.g. Haiti, Bangladesh, India) and now we have a
methodology, infrastructure, will and the momentum to try it in a developed country as well.

Our goal is to raise the remaining 2 million USD in 2018, hire a team, spend two years doing world-
class cost-benefit analysis on the most promising local (state or non-governmental) interventions, and
create public awareness by disseminating the results (list of top national priorities with “price tags”)
through popular media (something like: „WOW, 1 extra Koruna invested into pre-school education can
bring 17 Korunas of benefits!“). Previous projects show, that this is a very effective way to create a
pressure on politicians, who eventually realize it’s both rational and politically smart to take at least
some of those priorities, include them in their program and actually support them from the taxpayer´s
money.

Pilot in a developed country

Global priorities research and improving institutional decision-making are very effective causes (they
have indeed been listed on the 3rd and 4th spot in the 80k Hours´ list of priorities last year). But when
I started working for this project, just to be completely compliant with EA thinking, I decided to look
for funds only from sources that would not otherwise be used to fund AI Safety, promoting effective
altruism or specific projects in third world countries, where the bang-for-the-buck ratio would likely
be higher. Having worked on the project for four months, I came to realized that Czech Priorities could
have enough positive international over-spill effects and worth for the EA community, that it might
actually be one of the most effective projects to fund, across the spectrum.

Will McAskill spent a large part of his closing speech at the 2017 EA Global conference in London talking
about the importance of global priorities research. I talked to him, Richard Parr or people from Global
Priorities Institute about this during the conference. Global Priorities Institute is, for example, at the
moment doubling-down on philosophy and economics in their research. The comparative advantage
of Copenhagen Consensus Center is, that Bjorn Lomborg knows how to work with politicians and get
things going. Personally, I am a big fan of Global Priorities Institute´s philosophical work, and I am
aware of the issues with external validity, causal inference, extrapolation and other deficits of RCTs
and cost-benefit analyses. On the other hand, my background from political studies leads me to
believe, that there might be surprisingly lot of additional value in orchestrated efforts towards actual
political implementation of and advocacy for good enough ideas and effective policies.

Exploration value

Making a good use of prioritization research often seems to imply changing incentive structures of
entire political systems, so that the most effective programs start getting implemented. Of course it
would be most effective to do it globally, but is that even possible with our current resources? In
its Post-2015 Consensus project, the CCC carried out great cost-benefit studies on UN´s Sustainable
Development Goals. It generated lot of attention, but the structure of funding of SDGs remained
mostly intact on an international level. There are a lot of initiatives trying to prioritize globally, but isn´t
the whole planet a little too big of a playground to start at?

Wouldn´t it be more effective to start with prioritizations locally and then systematically scale-up,
replicate, and localize the findings to other regions in the world, and then slowly work up to an
international and global level? Wouldn‘t it be more applicable and politically acceptable to create deep
understanding of priorities for each specific country and region, and only then prioritize among those
priorities at an international level?

Why the Czech Republic

Here is a summary of why I think the Czech Republic would be the perfect guinea-pig among developed
countries in which to test the effectiveness of a national prioritization project (this is my
understanding, not a statement of the Copenhagen Consensus Center):

Characteristics of the Czech Republic:

 High potential for policy improvement – Growing economy (fiscal surplus, world´s best monetary
policy) but the tide seems to be about to turn (see here or below). Basic needs of people are mostly
covered, but social inequality is increasing and the country is vastly underperforming neighboring
Germany and Austria in indexes of well-being and opportunity.
 Attractive to foreign investment - bridge between Western and Eastern Europe, increasingly
attractive for living and business, unused global advantage in IT and R&D (low-cost, good quality
researchers and developers).

 Size – with 10 million people, it’s relatively easy to have an impact on institutions (especially with
this government), very little institutional and private money invested in strategy and prioritization so
far, good track-record of public “lobby“ initiatives.

Problems to solve:

 Still urgent post-communist social problems - 1 in 10 people living under poverty line, most middle
class considered poor by EU standards, 10% of citizens under property distraint

 Felt need for changes – country is not run effectively (too much bureaucracy, corruption, e-
government initiatives becoming obsolete, etc.), economy is based on industries with low long-term
potential (car industry, mechanical engineering, transit etc).

 Fear of Czexit – strong political propaganda against EU, pro-EU part of the political spectrum is
broken, populist parties are seriously talking about referendum for Czexit, the president is openly pro-
Russian and pro-Chinese (this is a very emotional issue for Czech people, who feel that we need to
improve something as soon as possible. If Czexit happens, the country will likely fall back to the level
of Bulgaria and the concept of the EU will be seriously undermined in the region).

Why national prioritization should work here:

 Environment is ready – we are in contact with the largest Czech economic institutions and
politicians across the spectrum, have informal pre-commitment from the Ministry of Finance, much
non-financial support from the NGO sector and a notable media attention by now.

 Ability to implement the outcomes – Current Prime Minister is pragmatic and opportunist (populist
to some extent) but likes data-based politics, the research must not be associated with him until it´s
done, but he has the political will power to implement the outcomes.

 Ability to assess impact - Economic performance historically related to Germany (traceable indiators
of progress), member of Visegrad group of countries (similar cultural background – good for
counterfactual testing, effects of policy changes are regionally comparable and measurable).

Expected outcomes:

Scenario 1 (positive): A new or existing political party agrees to implement our outcomes and consults
the program with EA and Copenhagen Consensus Center. A first political party in Europe with an EA-
aligned evidence-based program could be created. It could be an interesting case study. Strong effects
of the supported interventions and/or good performance of the party would build strong arguments
for prioritization projects to be implemented in other developed countries.

Scenario 2 (positive): Economy and politics keep improving on their own. Media disseminates the
outcomes and politicians eventually implement at least some of the recommendations. Robust impact
assessment methods are applied. As above, lives of citizens are effectively improved, compared to
counterfactual. The cost-benefit ratios can be used for new experimental projects such as prediction
markets for the well-being of citizens or a ground for voting in a DAO democracy (Some Czech
entrepreneurs would likely want to take up the challenge of being the first country to experiment with
decentralized voting/democracy, similarly as Estonia did with e-government and finance).
Scenario 3 (neutral): Most results don´t get implemented or become suddenly outdated (due to
political shifts, economic crisis, etc.). In this case, at least a part of the outcomes can be used by the
NGO sector or in other countries to better fight system ineffectiveness. Cost-befit prioritization
methodology will be better localized, fine-tuned to approach problems in developed world.

Scenario 4 (negative): Outcomes cannot be implemented at all (very low cost-benefit ratios come up,
methodology fails to reasonably assess long-term and overspill effects, project is seriously discredited
etc.) In this case, we learn that national prioritization projects in developed countries need to be done
more carefully/are not effective/are difficult or impossible.

A bit of Murphyjitsu

I am also trying to build a mental model of this: Would it have made sense to invest into such projects
during the 20th century, when we could have prevented countries from falling to spheres of influence
of expansive authoritarian regimes? A bit of nudging towards rationality seemed to work well in Greece
or Italy after WW2. Should we have done that more in Eastern Europe? How about North Korea or
Vietnam? Iran? Cuba or Venezuela? Geopolitics is extremely complex, of course, but some
general historical shifts repeat throughout history. Speaking of Italy, it decided to take the irrational,
populist political road literally today.

I am wittingly neglecting lot of variables here, but what if we wake up 15 years from now, and see that
countries of the former Soviet bloc have naturally (and suddenly) gravitated back to some form of
authoritarianism (mentality is hard to change in one generation) and the Western world spends billions
of dollars on development aid to previously developed areas, which deeply rooted problems have been
underestimated? Would we be shocked? And what if in times of optimism, a couple of smart projects
could spread the critical mass of political rationality across the region? Will it look obvious 15 years
from now, that we should have done exactly that? Being very difficult to measure and predict, the
probability of sudden authoritarian surges in Eastern Europe might be higher than available data would
indicate. At least my inner-sim tells me, that I wouldn´t be too shocked if something like that happens.

Summary

I suggest that national, cross-sector cost-benefit prioritization project in a small, regionally important
developed country could be a great thing for EA donors to fund at the moment, especially for it´s
exploration value. To improve institutional decision-making and international prioritization, it seems
to be best to start locally, implement, measure, and then scale-up, replicate and localize the findings
to other regions in the world and only then work up to global level. From a long-term view, by focusing
national prioritization only on the poorest regions of the world, we are likely to miss out some
important international over-spill effects coming from solving neglected structural problems in more
developed countries.

At this point, Copenhagen Consensus Center has proven EA-aligned methodology, infrastructure for
local prioritization projects, it works around the world, and the Czech Republic seems like a great place
to start in Europe. We have spent 6 months preparing the environment and this opportunity for a case
study shouldn´t be passed.

I´ll be happy to hear your views and ideas on how to make such national prioritization project take off.

Also, please refer me to any studies that argue for or against this kind of reasoning.