In their March 9, 2008, column in the Times Magazine, Dubner and Levitt ask: why can’t a charity be run more like a business? They look at two philanthropies that have adopted unorthodox business models. Smile Train, which performs free cleft-repair surgery for poor children around the world, started training local doctors rather than flying in U.S. surgeons; this has helped make Smile Train one of the most productive charities, dollar-for-deed, in the world. The second philanthropy, proposed by a world-class poker player, wants to create a $10 billion “cure cancer” prize with a hitch: a cash dividend paid to the people who donate the $10 billion. Below is some of additional information about the column.
1. Smile Train has performed more than 280,000 cleft surgeries around the world in the past eight years. Here is a country-by-country breakdown. Below is a photo of Smile Train president Brian Mullaney and “Soccer Boy,” who was the catalyst for Mullaney and others deciding to change the way a cleft-surgery philanthropy is run.
2. This paper by the economist Robin Hanson (“Patterns of Patronage: Why Grants Won Over Prizes in Science”) and this masters thesis by Jüri Saar (“Prizes: The Neglected Innovation Incentive”) chronicle some famous prize incentives, from the Longitude Act of 1714 to the X-Prize. This interesting article by the Times‘s David Leonhardt discusses Netflix’s effort to improve its “Cinematch” rating system by offering a $1 million prize to whoever beats the existing system by at least 10 percent.
3. Rafe Furst, a World Series of Poker champion and proud member of “the Tiltboys,” explains his vision for a new kind of philanthropy on his blog. Dubner wrote previously about Furst’s new prediction market “Truth Markets.” Furst has also contributed to this blog on the subject of why there are so few Indian-American poker players.
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You know what would encourage philanthropy? Remove the tax exempt status of organizations that spend disproportionate amounts of money on meaningless/wasteful enterprises (such as building magnificently useless churches), acquiring land or other long-term assets, or who spend significant percentages of their funds on staffing and overhead.
Countless doctors in other countries help patients around the world, but their own co-patriots have decent civilized lives. In other words, one doesn’t have to victimize millions to help someone else.
One just have to have a civilized set of values, instead of utterly barbaric “the rich are rich because they deserve to be rich.”
Look at the street of New York and the roofs of New Orleans, hypocrites.
About the prize thing. I think it is a free rider problem. Some gouvernment are paying researcher to work about Machine Learning, and these People can choose their precise subject within the theme of their research. By proposing a prize, you are using public goods (the time of research) for you personnal benefits. That’s free riding. And that’s wrong. If researcher weren’t allowed to receive the reward, because their employers would confiscate it (which i find quite fair) they wouldn’t do the research.
Government, run by endless compromise and committess, is inherently incapable of making breath-taking, breakthrough programs. It is left up to the common man. That’s why I am excited about the development of “prizes.”
A $10 Billion Cancer Prize is just the sort of advanced thinking we need. My only addition to it would be that such a cure not go through the standard pharmaceutical process of being very expensive until it becomes generic. Instead, the cure would be provided relatively cheaply (perhaps no more than a 15% profit, say?) and that and the $10 billion would be enough to make everyone happy (except the pharms!).
I can only shake my head in wonder at President Bush…. We can spend BILLIONS each year in Iraq…but we can’t put together a $20 Billion Alternative Energy Prize? One that is clean, renewable, safe, and–get this–implementable within 3 years?
Nope. Apparently not. That might mess up our need for oil.
Maybe I missed it but I didn’t see this in the story – did soccer boy ever get his surgery?
John H –
You wrote:
How about a $1 Million prize and spending $9,999,000,000 to support MORE research or better yet, to provide care for the millions in this country that have serious illnesses and cannot afford treatment.
This totally misses the intent of these types of prizes which is that the prize money will inspire much more research in total than the prize itself is worth. For example, the X-prize was for $10 million. Much more than that was actually invested by teams competing for the prize. According to Wikipedia (http://en.wikipedia.org/wiki/Ansari_X_Prize), the amount invested was over $100 million. If a similar multiplier happens with this cancer research prize that will be over $100 billion for research.
I think the more interesting question is how will the prize be awarded. “Cancer” is actually many different diseases. Curing one may not cure another.
AaronS#12
Clearly you’re a smart guy. Why, do think, most people in the world believe that Americans are idiots? Do they all know you?
To respond to Nick M’s comment:
I don’t think I missed point of the $10B prize, it just seems to be to not be a very effective way to spend $10B to cure cancer (which I did not explain very well in my previous post). I think there are a couple of points to be made here. First, The fact that the Ansari X Prize of $10M prize spurred spending beyond the value of the prize (let’s agree for argument’s sake that it generated 10X in spending) does not necessarily indicate that a $10B prize will have the same impact on cancer research. I just don’t think it follows that if a $10M prize was effective that a $10B prize will be, well, 1,000 times as effective. This is just opinion, but it seems to me that this is not a linear relationship and that at some point every dollar spent on the prize becomes less effective in generating investment. I’m not sure exactly what the curve looks like, but I am pretty sure that Mr. Furst could get a pretty good bang for his buck in incenting cancer research with way less that a $10B prize. As I said in my previous post, I think a prize is a good idea, it just strikes me that a $10B prize is likely to be a pretty ineffective use of capital if the goal is to cure cancer. Frankly, a $10B prize sounds more like throwing money at a problem than “thinking like a business”. However, I’ll concede that a $50M prize might do more to achieve the goal than a $10M prize but I have a hard time going beyond that (admittedly a completely arbitrary boundary).
But the other key point here is that there is a moral issue at play. Finding a cure for cancer is in an entirely different moral realm than launching a rocket. The fact is that people are suffering from and dying from cancer now. I think any application of $10B to this problem has to take into account the suffering that is taking place now, today, with real people. This is not a moral issue that a rocket project has to contend with. To conclude the point, if I were thinking “like a business” and had $10B to spend and wanted to have a real impact on finding a cure for cancer I think a far more effective use of the $10B would be to create a significant prize, say $10M-50M, and spend the rest directly supporting research and providing treatment.
As an aside, I think it is worth noting that cancer research is a very big business (and in may cases seems to be “thinking like a business”) and I’d be willing to bet that even a $10M prize would have some unintended and unanticipated consequences on the current establishment that would leave the individual offering the prize rethinking their approach.