Negative Reality of the HIV Positives: Evaluating Welfare Loss in a Low Prevalence Country

Das, Sanghamitra and Mukhopadhyay, Abhiroop and Ray, Tridip (2008): Negative Reality of the HIV Positives: Evaluating Welfare Loss in a Low Prevalence Country.

Abstract

Using primary household data from India we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children’s schooling in determining household utility. We then estimate that the monetary equivalent of the welfare loss to an HIV family is Rs. 66,039 per month, whereas the losses to an HIV male and female are Rs. 67,601 and Rs. 65,120 per month respectively. These figures are huge given that the average per capita consumption expenditure of the families in our sample is just Rs. 1,019 per month. This huge magnitude is not surprising as it includes private valuation of one’s own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, sale of assets and social insurance) accounts for 2.6% of annual health expenditure and 0.12% of GDP in 2004. The significance of mental health in welfare evaluation can be gauged from the fact that, for an average HIV family, a whopping 74% of the welfare loss comes from aspects of mental health.

• Item Type: MPRA Paper
• Language: English
• Keywords: HIV/AIDS; Mental Health; Physical Health; Welfare Loss; Family Preference
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; D - Microeconomics > D1 - Household Behavior and Family Economics > D10 - General; I - Health, Education, and Welfare > I1 - Health > I10 - General

References

[1] Arndt, C. and Lewis, J.D. (2000), “The Macro Implications of HIV/AIDS in South Africa: A Preliminary Assessment,” South African Journal of Economics, 856-87.

[2] Andres, A.R. (2004), “Determinants of Self-reported Mental Health Using the British Household Panel Survey,” Journal of Mental Health Policy and Economics, vol. 7(3), 99-106.

[3] Bell, C. (2005), “Estimating the Costs of Sickness and Premature Adult Mortality,” mimeo, South Asia Institute, University of Heidelberg.

[4] Bell, C., Devarajan, S. and Gersbach, H. (2004), “Thinking about the Long-Run Economic Costs of AIDS,” in The Macroeconomics of HIV/AIDS, ed. by Markus Haacker, Washington DC: International Monetary Fund.

[5] Bell, C., Devarajan, S. and Gersbach, H. (2006), “The Long-run Economic Costs of AIDS: Theory and an Application to South Africa,” World Bank Economic Review, vol. 20, 55-89.

[6] Blanchflower, D.G. and Oswald, A.J. (2004), “Well-being over Time in Britain and the USA,” Journal of Public Economics, vol. 88, 1359-86.

[7] Blanchflower, D.G. and Oswald, A.J. (2007), “Is Well-being U-shaped over the Life Cycle?” NBER Working Paper No. 12935.

[8] Bloom, D.E. and Mahal, A.S. (1997), “Does the AIDS Epidemic Threaten Economic Growth?” Journal of Econometrics, 105-24.

[9] Bonnel, R. (2000), “HIV/AIDS and Economic Growth: A Global Perspective,” South African Journal of Economics, 820-55.

[10] Booysen, F. le R. and Bachmann M. (2002), “HIV/AIDS, Poverty and Growth: Evidence from a Household Impact Study Conducted in the Free State Province, South Africa,” Paper presented at the Annual Conference of the Centre for the study of African Economies, Oxford, March 18-19.

[11] Case, A. and Deaton, A. (2005), “Health and Wealth among the Poor: India and South Africa Compared.” American Economic Review Papers and Proceedings, 229-233.

[12] Case, A. and Deaton, A. (2006), “Health and Well-Being in Udaipur and South Africa,” in Developments in the Economics of Aging, ed. by D. Wise, University of Chicago Press (forthcoming).

[13] Corrigan, P., Glomm, G. and Mendez, F. (2005), “AIDS Crisis and Growth,” Journal of Development Economics, 107-24.

[14] Corrigan, P., Glomm, G. and Mendez, F. (2004), “AIDS, Human Capital and Growth,” mimeo.

[15] Crafts, N. and Haacker, M. (2004), “Welfare Implications of HIV/AIDS,” in The Macroeconomics of HIV/AIDS, ed. by Markus Haacker, Washington DC: International Monetary Fund.

[16] Cuddington, J.T. (1993a), “Modeling the Macroeconomic Effects of AIDS with an Application to Tanzania,” World Bank Economic Review, 173-89.

[17] Cuddington, J.T. (1993b), “Further Results on the Macroeconomic Effects of AIDS: The Dualistic Labor-Surplus Economy,” World Bank Economic Review, 403-17.

[18] Cuddington, J.T. and Hancock, J.D. (1994), “Assessing the Impact of AIDS on the Growth Path of the Malawian Economy,” Journal of Developing Economics, 363-68.

[19] Das, S., Mukhopadhyay, A. and Ray, T. (2007), “Integrating Mental Health in Welfare Evaluation: An Empirical Application,” Discussion Paper 07-06, Indian Statistical Institute, Delhi.

[20] Deininger, K., Garcia M. and Subbarao K. (2003), “AIDS-Induced Orphanhood as a Systemic Shock: Magnitude, Impact and Program Interventions in Africa,” World Development, 1201-1220.

[21] Emanuel, E.J., Fairclough, D.L., Slutsman, J. and Emanuel, L.L. (2000), “Understanding Economic and other Burdens of Terminal Illness: The Experience of Patients and their Caregivers,” Annals of Internal Medicine, vol. 132, 451-59.

[22] Evans, D. and Miguel, E. (2005), “Orphans and Schooling in Africa: A Longitudinal Analysis,” Working Paper No. C05-143, Centre for International and Development Economics Research, University of California, Berkeley.

[23] Ferreira, C.P. and Pessoa, S. (2003), “The Long-Run Impact of AIDS,” mimeo, Graduate School of Economics, Fundacao Getulio Vargas, Rio de Janeiro.

[24] Gertler, P., Martinez, S., Levine, D. and Bertozzi, S. (2003), “Losing the Presence and Presents of Parents: How Parental Death Affects Children,” mimeo.

[25] Graham, C. (2007), “The Economics of Happiness,” in The New Palgrave Dictionary of Economics, eds., S. Durlauf and L. Blume, Second Edition (forthcoming).

[26] Grunfeld, E., Coyle, D., Whelan, T., Clinch, J., Reyno, L., Earle, C.C., Willan, A., Viola, R., Coristine, M., Janz, T. and Glossop, R. (2004), “Family Caregiver Burden: Results of a Longitudinal Study of Breast Cancer Patients and their Principal Caregivers,” Canadian Medical Association Journal, 170 (12), 1795-801.

[27] Haacker (2004), “HIV/AIDS: The Impact on the Social Fabric and the Economy,” in The Macroeconomics of HIV/AIDS, ed. by Markus Haacker, Washington DC: International Monetary Fund.

[28] Helliwell, J.F. (2006), “Well-being, Social Capital and Public Policy: What’s New?” Economic Journal, vol. 116, C34-C45.

[29] International Institute for Population Sciences (IIPS), 2007, “2005-2006 National Family Health Survey (NFHS-3) – National Fact Sheet India (Provisional Data)” (Deonar, Mumbai: IIPS).

[30] Kambou, G., Devarajan, S. and Over, M. (1992), “The Economic Impact of AIDS in an African Country: Simulations with a General Equilibrium Model for Cameroon,” Journal of African Economies, 109-30.

[31] McDonald, S. and Roberts, J. (2006), “AIDS and Economic Growth: A Human Capital Approach,” Journal of Development Economics, 228-250.

[32] Sherman, D.W. (1998), “Reciprocal Suffering: The Need to Improve Caregiver’s Quality of Life Through Palliative Care”, Journal of Palliative Medicine, 357-366.

[33] Sen, A. (1986), “Social Choice Theory”, in Handbook of Mathematical Economics, ed. by K. J. Arrow and M. D. Intriligator, North-Holland, vol. 3, 1073-1181.

[34] Yamano, T. and Jayne, T.S. (2005), “Working-Age Adult Mortality and Primary School Attendance in Rural Kenya,” Economic Development and Cultural Change, 619-653.

[35] Young, A. (2005), “The Gift of the Dying: The Tragedy of Aids and the Welfare of Future African Generations,” Quarterly Journal of Economics, 423-66.