Thursday, January 4, 2007

Oprah's School

Oprah Winfrey opens a school for girls in South Africa, at a cost of $40 million. The school will serve about 450 girls when it is operational. If she instead invested the 40 million and earned 5% interest she could have given each girl over $4,400 a year.

When other programs in South Africa, which give on the order of $300 a year have been shown to be effective it seems Oprah would rather provide luxury to few than necessities to many. Not to criticize Oprah it is just worth pointing out when money is spent on something you give up the ability to spend it on something else (or as an economist would say there is an opportunity cost).