Aggregating resources (part two)

In Part One of this post (Aggregating resources, part one - scroll down to next posting) I introduced the approach to problem solving posited by Bjorn Lomberg, a controversial Danish economist. Lomberg brought nine really smart people together (all economists, four of whom have won the Nobel prize in their field) and had them run cost-benefit analyses on proposals to address major global problems from AIDS to global warming. The experts came up with ranked proposals and price tags for achieving major change. See

I asked about the validity of the approach - why don't we bring smart people together to vet proposals for major change. Everyone would win, theoretically: those who have a vested interest in promoting the change, those affected by the issue, and those who either directly or indirectly provide the financial resources to funders of such efforts (taxpayers - directly through government revenue or indirectly through tax subsidies for private philanthropy).

Now I want to add a twist. If nine people are so smart, what about 9 billion? After all free markets, the lottery, race track bets, football odds - all depend on the widsom of many. They rely on the understanding that groups as a whole are smarter than the smartest person in them. James Suroweicki, financial columnist for The New Yorker, shows us how this works in his book, The Wisdom of Crowds. We all actually now that it works (and rely on it to do so) whenever we agree to pay market price for retail goods, buy stocks on the exchange, or place a bet on the odds-on favorite.

So what if we really brough democracy and philanthropy together and used "decision markets" to rank proposals for funding social programs? Perhaps we let the experts pull together the proposals and then use the rest of us to vote on the proposals.

Perhaps we would find out, once and for all, that all those experts really do now how to make smart decisions for allocating resources. Or erhaps it would work out like the old saw about monkeys and dart boards making better decisions than stock brokers and fund managers. Either way, I say its worth a try.

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