by Thomas R. Wells
According to the meta-charity GiveWell, the most effective charities can save a child’s life for between 3 and 5,000 US dollars. One way of understanding this figure is that whenever you consider spending that amount of money, one of the things you would be choosing not to spend it on is saving a child’s life.
Take the median of the GiveWell figures: $4,000. I propose that prices for all goods and services should be listed in the universal alternative currency of percentage of a Child’s Life Not Saved (%CLNS), as well as their regular prices in Euros, dollars, or whatever. For example, a Starbucks Frappucino might be priced at 5$ /0.13%CLNS. A Caribbean holiday cruise might be priced at $8,000/ 200%CLNS.
The justification for this would be to fix a gap in the way the price system functions. Normally we make our consumption decisions entirely in terms of a consideration of how much we want something and how much we can afford, a matter of prudence only. As economists have analysed, such exercises in constrained maximisation are all we need do to enjoy a flourishing economy since by responding to prices we automatically take into account the social cost to others of resources being used for what we want rather than for something else (so long as some wise and non-self-interested government steps in to correct for externalities).
Occasionally it is questioned whether merely responding rationally to the information revealed by prices is enough. For example, perhaps we should also be pushed to take account of the impact of our choices on non-human entities by explicit ethical warnings on animal products (previously). Read more »