How Much Should the Rich Give to the Poor?

The world’s poorest countries will not reach the Millennium Development Goals (MDGs) unless they receive additional financing to fund their often-weak health systems. But exactly how much assistance should the rich countries give to the poor?

Gorik Ooms and colleagues from MSF propose an elegantly simple formula in PLoS Medicine to figure out how much the rich should give to the poor.

Their starting point is the report of the WHO Commission on Macroeconomics and Health, which estimated that a country needs to spend at least $US35 per person per year to finance adequate levels of health care.

Governments of poor countries, of course, have fewer resources at their disposal to help them reach this level of health financing. Nevertheless, they still have a duty towards their citizens to allocate a substantial proportion of their expenditure on health. What should this “substantial proportion” be?

Ooms and colleagues use the benchmark of 15% of total government expenditure adopted by African states in the 2001 Abuja Declaration.

And so, in Ooms and colleagues’ formula, if 15% of a government’s expenditure is insufficient to reach the $US35 per person per year needed for health financing, this state has the right to claim the remainder from rich states as Official Development Assistance (ODA) for health.

Table 1 in their Essay shows how much ODA the low income countries need to receive in order to achieve US$35 per person per year government health expenditure. Ethiopia, for example, needs $2bn.

How, then, do we determine which rich countries should step up to the plate, and how much each should give? Here Ooms and colleagues suggest a burden-sharing mechanism based on adjusted gross national income, a sort of “sliding scale” in which the richest give the most.

The amounts of additional funding required for the poor countries to reach the MDGs might seem fanciful, but the amounts are entirely within our reach. The Princeton philosopher Peter Singer (not to be confused with the PLoS Medicine board member Peter A. Singer) showed in the New York Times magazine last week just how easy it would be to raise $404bn from just 10% of American families–who would barely notice any hardship in their lives from giving a way a proportion of their wealth.

Singer’s calculations also used a sliding scale, in which the “super rich” give away the greatest proportion of their income:

* There are 14,400 people in the US earning an annual average of $12,775,000; the minimum annual income of this group is over $5m. Singer says that it would be reasonable for them to give away a third of their income–they could surely still live a comfortable life with at least $3.3m annual income.

* Then there are 129,600 people earning an annual average of $623,000 (and a minimum of $407,000). They could give away 20% of their income and would still have at least $325,000 annual income.

* The next bracket are the 719,900 people with an average annual income of $327,000 (and a minimum of $276,000). “They could comfortably afford to give 15 percent of their income,” says Singer.

* Finally, there are almost 13 million people in the US who earn at least $92,000 annually and who could give the traditional tithe and still have $83,000 a year to live off.

Singer writes that he was astonished by his calculations. “I double-checked the figures and asked a research assistant to check them as well,” he says. “But they were right. Measured against our capacity, the Millennium Development Goals are indecently, shockingly modest.”