The simple idea

A mayor has a million dollar surplus which he wants to allocate to a good cause. Dozens of groups clamor for the cash. One wants to buy computers for an inner-city high school. Another hopes to beautify a local park. A third would promote energy efficiency. Each group makes a persuasive case outlining the benefits they could achieve. What should the politician do?

The straightforward answer is to divide the cash into equal amounts. Intuitively, the idea seems fair: nobody will walk away empty-handed. But the obvious answer is probably wrong.

With more information, it is possible to quantify the spin-offs from each alternative. Some options will always be better than others. Shouldn't any extra money go first to the cause with the greatest social value? The idea is simple: with scarce resources it is necessary to prioritize.

On a larger scale, this is what underpins the Copenhagen Consensus. Imagine you had $75bn to donate to worthwhile causes. You could do a tremendous amount of good. What would you do?

The world has many pressing problems. Governments and the United Nations have massive – but limited – budgets to reduce suffering. Even they tend to distribute any extra money thinly across different causes, often following the media's roving attention. A little extra is spent battling HIV/AIDS, malaria and malnutrition. Some more is devoted to stamping out corruption and conflict. Other cash is set aside for holding back climate change and warding off avian flu.