Economics 172Issues in African Economic Development

Lecture 8

February 9, 2006

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Outline:

(1) Deworming in Kenya – public health policy issues

(2) New topic: The Economics of HIV/AIDS in Africa

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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

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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

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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

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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)

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Given the returns, why is take-up not 100%?

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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”

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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)

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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

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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%

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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

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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+

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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%

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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

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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+!

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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?

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Whiteboard #1

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Whiteboard #2

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Whiteboard #3

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Whiteboard #4

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Whiteboard #5

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Map of Africa