The Long-run Economic Costs of AIDS : Theory and an Application to South Africa
Most existing estimates of the macroeconomic costs of AIDS, as measured by the reduction in the growth rate of gross domestic product, are modest. For Africa-the continent where the epidemic has hit the hardest-they range between 0.3 and 1.5 percen...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2003/10/2693515/long-run-economic-costs-aids-theory-application-south-africa http://hdl.handle.net/10986/18050 |
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okr-10986-180502021-04-23T14:03:41Z The Long-run Economic Costs of AIDS : Theory and an Application to South Africa Bell, Clive Devarajan, Shantayanan Gersbach, Hans ACQUIRED IMMUNE DEFICIENCY SYNDROME DISEASE BURDEN HUMAN CAPITAL DEVELOPMENT ECONOMIC CONTRACTION DISEASE CONTROL & PREVENTION POOLING HOUSEHOLD PRODUCTIVITY COST ANALYSIS COST STUDIES EDUCATIONAL POLICY HEALTH POLICY TARGETING HEALTH EXPENDITURES GOVERNMENT SPENDING POLICY FAMILY COMPOSITION GOVERNMENT TRANSFER OF FUNDS SUBSIDIES ACCOUNT ADULT MORTALITY ADULTHOOD AGED AIDS EPIDEMIC BENCHMARK BENCHMARKS CHILD LABOR CHILDHOOD ECONOMIC GROWTH EXTENDED FAMILY FAMILIES FAMILY STATUS FATHERS FORMAL EDUCATION FUTURE RESEARCH GDP GDP PER CAPITA GENERATIONS GROWTH RATE HEALTH POLICY HEALTH SERVICES HUMAN CAPITAL INCOME INCREASE IN MORTALITY INFERIOR GOODS INTERVENTION MACROECONOMICS MORTALITY MOTHERS OLD AGE OPPORTUNITY COSTS ORPHANS PARENTS PRODUCTIVITY PUBLIC GOOD SCHOOL ATTENDANCE SEX UTILITY FUNCTIONS VICTIMS YOUNG ADULTS AIDS HIV/AIDS Most existing estimates of the macroeconomic costs of AIDS, as measured by the reduction in the growth rate of gross domestic product, are modest. For Africa-the continent where the epidemic has hit the hardest-they range between 0.3 and 1.5 percent annually. The reason is that these estimates are based on an underlying assumption that the main effect of increased mortality is to relieve pressure on existing land and physical capital so that output per head is little affected. The authors argue that this emphasis is misplaced and that, with a more plausible view of how the economy functions over the long run, the economic costs of AIDS are almost certain to be much higher. Not only does AIDS destroy existing human capital, but by killing mostly young adults, it also weakens the mechanism through which knowledge and abilities are transmitted from one generation to the next. The children of AIDS victims will be left without one or both parents to love, raise, and educate them. The model yields the following results. In the absence of AIDS, the counterfactual benchmark, there is modest growth, with universal and complete education attained within three generations. But if nothing is done to combat the epidemic, a complete economic collapse will occur within three generations. With optimal spending on combating the disease, and if there is pooling, growth is maintained, albeit at a somewhat slower rate than in the benchmark case in the absence of AIDS. If pooling breaks down and is replaced by nuclear families, growth will be slower still. Indeed, if school attendance subsidies are not possible, growth will be distinctly sluggish. In all three cases, the additional fiscal burden of intervention will be large, which reinforces the gravity of the findings. 2014-04-25T16:14:34Z 2014-04-25T16:14:34Z 2003-06 http://documents.worldbank.org/curated/en/2003/10/2693515/long-run-economic-costs-aids-theory-application-south-africa http://hdl.handle.net/10986/18050 English en_US Policy Research Working Paper;No. 3152 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa South Africa |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACQUIRED IMMUNE DEFICIENCY SYNDROME DISEASE BURDEN HUMAN CAPITAL DEVELOPMENT ECONOMIC CONTRACTION DISEASE CONTROL & PREVENTION POOLING HOUSEHOLD PRODUCTIVITY COST ANALYSIS COST STUDIES EDUCATIONAL POLICY HEALTH POLICY TARGETING HEALTH EXPENDITURES GOVERNMENT SPENDING POLICY FAMILY COMPOSITION GOVERNMENT TRANSFER OF FUNDS SUBSIDIES ACCOUNT ADULT MORTALITY ADULTHOOD AGED AIDS EPIDEMIC BENCHMARK BENCHMARKS CHILD LABOR CHILDHOOD ECONOMIC GROWTH EXTENDED FAMILY FAMILIES FAMILY STATUS FATHERS FORMAL EDUCATION FUTURE RESEARCH GDP GDP PER CAPITA GENERATIONS GROWTH RATE HEALTH POLICY HEALTH SERVICES HUMAN CAPITAL INCOME INCREASE IN MORTALITY INFERIOR GOODS INTERVENTION MACROECONOMICS MORTALITY MOTHERS OLD AGE OPPORTUNITY COSTS ORPHANS PARENTS PRODUCTIVITY PUBLIC GOOD SCHOOL ATTENDANCE SEX UTILITY FUNCTIONS VICTIMS YOUNG ADULTS AIDS HIV/AIDS |
| spellingShingle |
ACQUIRED IMMUNE DEFICIENCY SYNDROME DISEASE BURDEN HUMAN CAPITAL DEVELOPMENT ECONOMIC CONTRACTION DISEASE CONTROL & PREVENTION POOLING HOUSEHOLD PRODUCTIVITY COST ANALYSIS COST STUDIES EDUCATIONAL POLICY HEALTH POLICY TARGETING HEALTH EXPENDITURES GOVERNMENT SPENDING POLICY FAMILY COMPOSITION GOVERNMENT TRANSFER OF FUNDS SUBSIDIES ACCOUNT ADULT MORTALITY ADULTHOOD AGED AIDS EPIDEMIC BENCHMARK BENCHMARKS CHILD LABOR CHILDHOOD ECONOMIC GROWTH EXTENDED FAMILY FAMILIES FAMILY STATUS FATHERS FORMAL EDUCATION FUTURE RESEARCH GDP GDP PER CAPITA GENERATIONS GROWTH RATE HEALTH POLICY HEALTH SERVICES HUMAN CAPITAL INCOME INCREASE IN MORTALITY INFERIOR GOODS INTERVENTION MACROECONOMICS MORTALITY MOTHERS OLD AGE OPPORTUNITY COSTS ORPHANS PARENTS PRODUCTIVITY PUBLIC GOOD SCHOOL ATTENDANCE SEX UTILITY FUNCTIONS VICTIMS YOUNG ADULTS AIDS HIV/AIDS Bell, Clive Devarajan, Shantayanan Gersbach, Hans The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| geographic_facet |
Africa South Africa |
| relation |
Policy Research Working Paper;No. 3152 |
| description |
Most existing estimates of the
macroeconomic costs of AIDS, as measured by the reduction in
the growth rate of gross domestic product, are modest. For
Africa-the continent where the epidemic has hit the
hardest-they range between 0.3 and 1.5 percent annually. The
reason is that these estimates are based on an underlying
assumption that the main effect of increased mortality is to
relieve pressure on existing land and physical capital so
that output per head is little affected. The authors argue
that this emphasis is misplaced and that, with a more
plausible view of how the economy functions over the long
run, the economic costs of AIDS are almost certain to be
much higher. Not only does AIDS destroy existing human
capital, but by killing mostly young adults, it also weakens
the mechanism through which knowledge and abilities are
transmitted from one generation to the next. The children of
AIDS victims will be left without one or both parents to
love, raise, and educate them. The model yields the
following results. In the absence of AIDS, the
counterfactual benchmark, there is modest growth, with
universal and complete education attained within three
generations. But if nothing is done to combat the epidemic,
a complete economic collapse will occur within three
generations. With optimal spending on combating the disease,
and if there is pooling, growth is maintained, albeit at a
somewhat slower rate than in the benchmark case in the
absence of AIDS. If pooling breaks down and is replaced by
nuclear families, growth will be slower still. Indeed, if
school attendance subsidies are not possible, growth will be
distinctly sluggish. In all three cases, the additional
fiscal burden of intervention will be large, which
reinforces the gravity of the findings. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Bell, Clive Devarajan, Shantayanan Gersbach, Hans |
| author_facet |
Bell, Clive Devarajan, Shantayanan Gersbach, Hans |
| author_sort |
Bell, Clive |
| title |
The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| title_short |
The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| title_full |
The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| title_fullStr |
The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| title_full_unstemmed |
The Long-run Economic Costs of AIDS : Theory and an Application to South Africa |
| title_sort |
long-run economic costs of aids : theory and an application to south africa |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2003/10/2693515/long-run-economic-costs-aids-theory-application-south-africa http://hdl.handle.net/10986/18050 |
| _version_ |
1764438767161049088 |