As previously announced, I have been selected to receive the 2015 Erik K. Fernström prize. Today, I’ve decided to give it away.
Don’t get me wrong, I’m very proud to receive the award. The list of previous recipients is humbling, and I am extremely honored to have my name added to this list. Just a few examples from the last few years: Kirsty Spalding, who pioneered the use of carbon-14 dating to measure cell turnover in human tissues; Luca Jovine, who has unraveled the molecular events that lead to fertilization; Emmanuelle Charpentier, who surely is on the shortlist for the Nobel Prize for her discovery of the Crispr/Cas9 gene editing system; Kerstin Lindblad-Toh, who is Sweden’s leading genomics researcher; and I could go on and on.
So the award is a great honor, but it also comes with a personal cash prize of 100,000 SEK ($12,000). It feels a bit like helicopter money, dropped on my head out of the blue. The question then is what to do with it? I could burn it. No, but I guess I could buy something expensive for myself, but since I’m already among the 0.09% top richest people in the world (by income), the marginal utility of that is pretty low.
Therefore, I’ve decided to give the money to somebody who really needs it. With the refugee crisis gripping Europe at the moment, it would seem obvious that I should donate to the UNHCR, the Red Cross or the International Crisis Group. However, being a scientist I’m always conscious of possible bias. Just because the refugee crisis dominates the news doesn’t mean that it’s the most pressing need. War is raging across the Middle East, and it goes without saying that we can and should take care of refugees. We should also invite a much larger number of UNHCR quota refugees, to be resettled from refugee camps near conflict zones. Those people may have no way of reaching Europe, but are no less in need of a sanctuary. Besides, there is strong evidence that rich countries are able to absorb a large influx of immigrants with no adverse economic impact on the natives, but a huge positive effect on the immigrants.
But I think a cash donation can have an even greater impact elsewhere.
Traditionally, international charity has been about funding specific projects, such as building schools, distributing food packages, drilling wells, or providing reproductive health education. One thing these projects have in common is that they are imposed, from the outside. There is an element of condescension, of white man’s burden, which reeks of colonial times. While there is no doubt that international charity does enormous good, it seems that there should be a way of helping the poor that doesn’t involve telling them what to do.
And there is. The main problem poor people have is that they lack money (duh). “The rich are different from you and me,” F. Scott Fitzgerald said to Ernest Hemingway. “Yes,” replied Hemingway. “They have more money.” Of course, this goes both ways. (Actually, the quote is apocryphal)
It would seem then that the most efficient way of helping poor people is to give them money. This is a radical idea, but it works incredibly well. For example, a randomized controlled trial showed that giving poor people in rural Kenya a single, lump-sum transfer of about $1000 led to a 34% increase in income, 54% increase in assets, and their children starved 42% less often. These changes stick - in other words, they get money once, and their lives improve permanently.
“But”, you say, “won’t poor people just waste the money on cigarettes and whiskey?” No, the same study showed a 0% change in alcohol and tobacco consumption. It turns out that poor people - same as rich people - know their own best interests. They just don’t have any money but if they get some, they use it to improve their lives in ways that are best adapted to their particular circumstances. Maybe that’s getting a tin roof, buying a plot of land, a cow or paying for their daughter’s education. Whatever it is, they themselves will know.
Therefore, I’ve decided to donate my prize money, all of it, to Give Directly, a charity that transfers cash to poor people incredibly efficiently using cell phone text message (extremely poor people have phones? Yes). 91% of the money donated to Give Directly ends up in the hands of very poor people, who then freely decide what to do with it. It’s a helicopter drop on those who need it the most, and it makes perfect sense. Give Directly is one of the most highly rated charities, one of only four recommended by GiveWell (who have ranked hundreds and hundreds of charities using rigorous and transparent criteria). They operate in Kenya and Uganda, where the average beneficiary lives on a daily income of less than $1, and they are both ambitious and transparent.