Why The ALS Ice Bucket Challenge Made Economic Sense

This week it seemed that much of the media hype around the ALS Ice Bucket Challenge died down as it gradually became eclipsed with other news. In case you somehow missed what this viral sensation was, it went something like this. What started as a youtube video of someone giving $100 to an ALS charity instead of having a bucket of cold water dumped on your head, spread quickly into having a bucket of cold water dumped on your head and also giving money to an ALS charity, followed by the donator/victim challenging several other people. These were filmed and placed on Facebook and youtube and people have been following it.

For the several charities that raise money for ALS research, the challenge has proved to be an enormous windfall, netting more than $100 million in donations in excess of their normal annual fund raising. But all of the cheering and success  brought in the professional cynical class of journalists. There must be a downside, and by god they would report it.

I’m not going to go into the details of the criticisms here, but here are some articles you can read if you are so inclined. Instead I want to show why the economics of which charities we give to makes more sense than critics often believe.

The standard argument goes something like this: We contribute far more money to diseases that won’t likely kill us than the ones that do. Humans are clearly illogical and if they had any sense we would direct all our money into charities that dealt with the things most likely to wipe us off the planet. This misalignment of money versus danger is similar to why we are so scared of terrorists than swimming pools, even though you are far more likely to drown in a swimming pool than be killed by terrorists.

Donating.vs.Death-Graph.0

Except that it’s all wrong! People give money to the charities that matter most to them because they understand something about diseases that kill you better than people who just look at statistics.

For instance, Heart Disease is the number one killer in almost every western country, with (I believe) the exception of Portugal. So why aren’t we more scared of heart disease? Because it typically doesn’t kill you until you are already old. While your odds of getting and dying from heart disease start to rise significantly when you reach 60, since 1952 the cardiovascular death rate in Canada has dropped by 75% and nearly 40% in the last decade due to improvements in medicines, surgical procedures and prevention efforts according to Statistics Canada. In other words we’ve already made great strides in reducing unnecessary death from heart disease, and reducing the likelihood that heart disease will strike early is as easy as simply eating a healthier more balanced diet.

Cancer on the other hand isn’t fully understood. We don’t know why some people get it, and why some do not. We don’t know why some people have cancer go into remission and why some do not. If you have survived cancer you have likely been through a hell of an ordeal, as almost every known treatment is as bad as the disease you are fighting. If you’ve watched a loved one pass away from the disease you know how difficult it was and had to watch someone slip away, often in pain and great discomfort, losing control of their bodies and losing even their sense of self.

The mistake that the statistics cover up is this. You must die of something. People do not simply get old and die. They get old, weaker with time, and finally susceptible to something far more likely to kill them. Increasingly heart disease is something that you die of when you are old. Cancer by comparison can strike you down in the prime of your life. You can get cancer in your 20s, 30s, 40s, 50s, 60s, or 70s. Its a difficult disease to overcome, survivors are acutely aware that they have a high chance of reoccurrence and people who have lost a loved one feel the pain of a prolonged illness. In that context we give money to charities that fight diseases that leave a strong emotional scar, like cancer or in this case ALS, and that does make economic sense.

We took a little time off this week following labour day. We’ll be back next week with regular postings!

2 Comments on “Why The ALS Ice Bucket Challenge Made Economic Sense

  1. Call me a conspirator but I believe drug companies don’t really want to cure chronic terminal illnesses. It makes economic sense in the economy as a whole but not in the health care sector. Good piece.

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