The Cost of Inaction


Launched by the FXB Center in August 2008, this landmark initiative explores the “cost of inaction” of a failure to respond appropriately to children. With Professors Amartya Sen and Sudhir Anand directing the project, economists and public health researchers address the complex challenges of enumerating and quantifying the multiple social and economic costs that follow when societies fail to address the pressing needs of their most vulnerable members, viz. children. This project responds to hitherto unaddressed questions in public health: what are the costs of inaction, and is the cost of inaction greater than the cost of action?

Inaction can lead to negative consequences for individuals, families, the community, the economy, and society as a whole. These negative impacts can be financial or economic, but more generally will also include health impacts, education impacts, social impacts, and consequences for labor-force functioning. We aim to identify, quantify, and measure the costs of inaction. Some impacts are quantifiable in monetary terms and others in metrics that relate to the area of the impact (e.g. mortality or morbidity increase, school enrollment, decline in the health workforce, etc.). There will be some, especially social, impacts that are identifiable only in qualitative terms – e.g. the implications of increase in drug use, violence, crime, other anti-social behaviors, and prostitution.

The first phase of the Cost of Inaction project focused on developing and applying a methodology to consider the consequences and costs that arise from a failure to respond to the needs of children affected (or infected) by HIV/AIDS. To this end, the project team developed a conceptual framework and wrote detailed country case studies.

The conceptual framework is critical to the project. It is necessary to be clear on what exactly is meant by the “cost of inaction” and how alternative meanings shape the implementation of such a study. The conceptual framework highlights the need to identify and justify the actions against which inaction is to be evaluated.

Case studies are necessary to illustrate the choice of counterfactual actions which may be more or less desirable. Different counterfactual actions will give rise to different costs of inaction, and to different direct benefits of action. Given the initial focus on children affected by HIV/AIDS, case-study countries were selected from the region with the highest HIV prevalence, viz. eastern and southern Africa. The selected countries differ not only in HIV prevalence but also in availability of and access to resources for investment. This is important because the actions that are identified as desirable in one context may not be desirable in another. Four countries – South Africa, Rwanda, Tanzania, and Angola – were visited and data collection was undertaken in Rwanda and Angola. In-country meetings with government officials, international non-governmental organizations (NGOs), and local non-profit organizations  helped identify candidate actions against which the cost of inaction can be assessed. Special attention was given to developing distinct research plans for the two countries because they have differing political, geographical, cultural and religious structures which present different challenges for implementation and delivery. For the case-study countries, the team identified unimplemented actions which the evidence suggests may be desirable. It was against these actions that the costs of inaction was assessed – and compared to the costs as well as to the direct benefits of action.

Policy Impact

In the spring of 2012, the COI research team completed a book, The Cost of Inaction, which was published by the FXB Center with a foreword by Amartya Sen. In October 2012, the FXB Center organized a series of panels to celebrate the release of The Cost of Inaction. Amartya Sen, recipient of the 1998 Nobel Prize in Economics and Thomas W. Lamont University Professor at Harvard, chaired a panel of distinguished economists who assessed the theoretical and policy implications of the work. Eric Maskin, recipient of the 2007 Nobel Prize in Economics and Adams University Professor at Harvard,
chaired another panel of senior policy officers and practitioners from UNICEF and partner institutions who explored the possible applications of the COI framework to economic and social development, and human rights. As noted by Sen in his preface to the book, one of the most important uses of COI is in the world of policymakers, who must set priorities on the basis of an analytic and empirical framework which the COI provides.

In December 2012, the World Bank hosted a book launch for The Cost of Inaction at its headquarters in Washington, D.C. The event took the form of a panel discussion, with Sudhir Anand, lead author, introducing the book and Jim Yong Kim, World Bank President and former FXB Center Director, delivering opening remarks. Shantayanan Devarajan, Chief Economist of the World Bank’s Africa region and a panelist, later reflected on the COI approach in a World Bank blog post titled “The Costs of Inaction.” He writes: “All cost-benefit analysis requires the analyst to specify a counterfactual—how the world would have evolved in the absence of the project or program … The costs of inaction, therefore, can play a powerful role, not just in guiding public action, but also in mobilizing public support for reforms that will benefit the poor.” Read more here.