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Economics 172Issues in African Economic Development
Lecture 8
February 9, 2006
Economics 172 2
Outline:
(1) Deworming in Kenya – public health policy issues
(2) New topic: The Economics of HIV/AIDS in Africa
Economics 172 3
Cost-benefit calculations
• Cost of this program: US$1.46 per pupil per year• Cost of a larger-scale program in neighboring Tanzania:
only US$0.49 per pupil per year
Economics 172 4
Cost-benefit calculations
• Cost of this program: US$1.46 per pupil per year• Cost of a larger-scale program in neighboring Tanzania:
only US$0.49 per pupil per year
• Deworming as a human capital investment:
Health gains More schooling Higher adult wages
Economics 172 5
Cost-benefit calculations
• Deworming as a human capital investment:
Health gains More schooling Higher adult wages
• Deworming led to 7% gain in school participation• Previous study: each year of school 7% higher wages• Take these gains in wages (7% x 7%) over 40 years in
the workforce, discounted 5% per year
Economics 172 6
Cost-benefit calculations
• Deworming as a human capital investment:
Health gains More schooling Higher adult wages
• Deworming led to 7% gain in school participation• Previous study: each year of school 7% higher wages• Take these gains in wages (7% x 7%) over 40 years in
the workforce, discounted 5% per year
Deworming benefits are at least three times (3x) as large as treatment costs (using the Tanzania costs)
Economics 172 7
Given the returns, why is take-up not 100%?
Economics 172 8
Given the returns, why is take-up not 100%?
• Possible explanations:
(1) Free-riding / externalities
-- Strong evidence people learned through their social network that the drugs were “not effective”
Economics 172 9
Given the returns, why is take-up not 100%?
• Possible explanations:
(1) Free-riding / externalities
-- Strong evidence people learned through their social network that the drugs were “not effective”
(2) Socio-cultural explanations / resistance to new technologies (evidence from anthropology)
Economics 172 10
The Impact of Higher Drug Costs
• In 1998, 1999, 2000 deworming was given for free• In 2001, parents in 25 randomly chosen Group 1 and
Group 2 schools paid US$0.10-0.30 per child
Economics 172 11
The Impact of Higher Drug Costs
• In 1998, 1999, 2000 deworming was given for free• In 2001, parents in 25 randomly chosen Group 1 and
Group 2 schools paid US$0.10-0.30 per child
• 2001 deworming take-up:
Free-treatment schools: 75%
Cost-sharing schools: 18%
Economics 172 12
Economics 172 13
The Economics of HIV/AIDS in Africa
• Of the 42 million people worldwide thought to be infected with HIV, approximately 25 million (!) are in Sub-Saharan Africa
Economics 172 14
Economics 172 15
The Economics of HIV/AIDS in Africa
• Of the 42 million people worldwide thought to be infected with HIV, approximately 25 million (!) are in Sub-Saharan Africa
• In some countries in southern Africa (e.g. Botswana, Swaziland), it is claimed that over 35% are HIV+
Economics 172 16
Economics 172 17
Counting HIV+ people in Kenya
• Based on antenatal clinic survey data, the official UNAIDS estimate of HIV+ adults in Kenya by late 2001 was 15.0%
Economics 172 18
Counting HIV+ people in Kenya
• Based on antenatal clinic survey data, the official UNAIDS estimate of HIV+ adults in Kenya by late 2001 was 15.0%
• The 2003 Kenya Demographic and Health Survey (DHS) tried to survey a representative subsample of population. 73.4% agreed to be tested
Economics 172 19
Counting HIV+ people in Kenya
• Based on antenatal clinic survey data, the official UNAIDS estimate of HIV+ adults in Kenya by late 2001 was 15.0%
• The 2003 Kenya Demographic and Health Survey (DHS) tried to survey a representative subsample of population. 73.4% agreed to be tested– This data indicates that “only” 6.7% of Kenyan 15-49
year olds tested are HIV+!
Economics 172 20
Economics 172 21
Counting HIV+ people in Kenya
• Based on antenatal clinic survey data, the official UNAIDS estimate of HIV+ adults in Kenya by late 2001 was 15.0%
• The 2003 Kenya Demographic and Health Survey (DHS) tried to survey a representative subsample of population. 73.4% agreed to be tested– This data indicates that “only” 6.7% of Kenyan 15-49
year olds tested are HIV+!
• Which of the two numbers is better?
Economics 172 22
Economics 172 23
Whiteboard #1
Economics 172 24
Whiteboard #2
Economics 172 25
Whiteboard #3
Economics 172 26
Whiteboard #4
Economics 172 27
Whiteboard #5
Economics 172 28
Map of Africa