Using economics to fight AIDS

I gave one of the keynotes (based on joint work with Markus Goldstein) at the recent ICASA 2008 in Dakar, Senegal on the title of this post. The fight against AIDS involves allocating scarce resources to multiple uses; and contracting, avoiding, preventing, testing for, and treating the disease all involve behavioral choices. So economics should be an important weapon in the battle. Noting that earlier work on the economic impact of AIDS, which treated it as a shock to labor supply, showed only mild effects, we pointed to recent work that examined the effects on the transmission of human capital across generations (parents’ providing for their children’s education, for example), which showed much larger effects on economic growth—including the possibility of an economic collapse in three or four generations. On prevention behavior, we looked at some experiments by Paul Gertler, Manisha Shah and Stefano Bertozzi that showed that clients paid sex workers about 23 percent more for unprotected sex. Just providing more condoms may not be enough. On another aspect of prevention, the work by Esther Duflo, Pascaline Dupas, Michael Kremer and Samuel Sinei shows that in Western Kenya, information campaigns were more cost-effective than training teachers in HIV/AIDS curriculum or lowering the cost of education by providing free school uniforms. On testing, Rebecca Thornton finds that when people in Malawi were offered even a small financial incentive to learn their testing results, the percentage of those finding out their HIV status doubled. Finally, on treatment, Markus, Harsha Thirumurthy and Joshua Zivin estimate that Kenyan patients on antiretroviral therapy not only become healthier, but they increase their labor force participation rate by 16.7 percentage points, which brings us back full circle to the economic impact of AIDS. If HIV-positive parents can stay alive and work longer, they may be able to provide for their children’s education—and avert the disastrous consequences of a breakdown in the transmission of human capital across generations and a possible economic collapse.