Insights from economic-epidemiology

Ramanan LaxminarayanResources for the Future, Washington DC

Economic Epidemiology

Mathematical conceptualization of the interplay between economics, human behavior and disease ecology to improve our understanding of – the emergence, persistence and spread of

infectious agents – optimal strategies and policies to control

their spread

Economics

Measuring health outcomes Provides a single metric to compare costs and

benefits both contemporaneously and over time. Incorporating behavior

Can alter conclusions reached by purely epidemiological models by incorporating behavior.

Comparing public policies Increases relevance for application in the real

world.

Overview

Individual response and disease Incentives of institutions (to invest in

hospital infection control) Optimal allocation of resources between

two regions (or hospitals)

Individual response and disease

Vaccinations– Insufficient incentives to vaccinate prevent

attainment of herd immunity thresholds Drug resistance

– Insufficient incentives to make appropriate use leads to ineffective drugs and increasing prevalence

Testing– Private testing behavior adds to public information

on disease prevalence

Rational epidemics

Prevalence response elasticity– Hazard rate into infection of susceptibles is

a decreasing function of prevalence (opposite of epidemiological model predictions)

– Application to HIV– Application to Measles

Geoffard and Philipson, Int. Econ. Rev., 1996

Blower et al, Science, 2000

Blower et al, Science, 2000

When should governments intervene?

Disease prevalence increases adoption of public programs

Impact of public program may be zero if prevalence has already reached an individual’s threshold prevalence

Paradoxically, the role of government subsidies is lowest when prevalence is highest since individuals will protect themselves regardless

Philipson, NBER, 1999

Public price subsidies

Can price subsidies or mandatory programs achieve eradication?– Increase in demand by folks covered by

the program lowers the incentives to vaccinate for those outside the program

Do monopolistic vaccine manufacturers have an incentive to eradicate disease?– Market for their product would disappear

with eradicationGeoffard and Philipson, Int Econ Rev, 1997

Disease Complementarities

Incentive to invest in prevention against one cause of death depends positively on probability of dying from other causes

Intervening to prevent mortality not only prevents a death but also increases incentives for the family to fight other diseases

Dow et al, Am Econ Rev, 1999

Does the theory fit the facts?

Do individuals actually observe prevalence?

Why don’t we see prevalence responsiveness at work everywhere?

Importance of observational learning (herd behavior)?

Stoneburner and Low-Beer, Science, 2004

Stoneburner and Low-Beer, Science, 2004

Stoneburner and Low-Beer, Science, 2004

NNIS Data, 2004

Optimal infection control

Infection dynamics are given by

X cX1 X X

Equilibrium prevalence is given by

Xc Sc 1 Sc 1 2 4 Sc

2Sc

Smith, Levin, Laxminarayan (PNAS, 2005)

Objective

Minimize costs of infection control andinfections

c DXc

Smith, Levin, Laxminarayan (PNAS, 2005)

Local minima, if they exist, are solutions to

1 DX ĉ 0

Smith, Levin, Laxminarayan (PNAS, 2005)

X cX1 X X X Z

Y cY1 Y Y Y Z

Ż rX/n n 1Y/n Z Z

0

c DXt,c;n,ce tdt

The focal institution decides how much to invest in HIC by minimizing the net present value of discounted costs of HIC and hospitalization:

Smith, Levin, Laxminarayan (PNAS, 2005)

Strategic interactions with other hospitals

Implications for policy

Dutch experience: frequency of MRSA infections is < 0.5% after an intensive ‘‘search-and-destroy’’ campaign, compared with 50% in some areas

In Siouxland (Iowa, Nebraska, S. Dakota), an epidemic of VRE was reversed

Regionally coordinated response to epidemic Does this explain higher prevalence of ARB in

areas with high concentration of health care institutions?

Rowthorn, Laxminarayan, Gilligan Submitted

Rowthorn, Laxminarayan, Gilligan Submitted

Rowthorn, Laxminarayan, Gilligan Submitted

Rowthorn, Laxminarayan, Gilligan Submitted

Allocating resources

Expenditure on drugs is subject to the budget constraint

Finance is not transferable through time.

Problem is to choose F₁and F₂ so as to minimise the following integral

V 0

e rtI1 I2 dt

cF1 F2 M

Rowthorn, Laxminarayan, Gilligan Submitted

Optimal allocation

At low levels of infection in both populations– Preferentially treat population with higher

transmission coefficient because of greater economic value associated with greater potential to prevent secondary infections

At high levels of infection– Preferentially treat population with lower levels of

infection since the higher probability of re-infection in high infection populations reduces the economic value of treatment

Rowthorn, Laxminarayan, Gilligan Submitted

Best path

Time0 10 20 30 40 50 60 70

Pro

port

ion

infe

cte

d

0.00

0.05

0.10

0.15

0.20Worst path

Time0 10 20 30 40 50 60 70

Pro

port

ion

infe

cte

d

0.0

0.2

0.4

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0.8

Best path

Time0 10 20 30 40 50 60 70

Pro

port

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infe

cte

d

0.0

0.2

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1.0Worst path

Time0 10 20 30 40 50 60 70

Pro

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0.0

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Proportion infected

Region 10.00 0.25 0.50 0.75

Re

gio

n 2

0.00

0.25

0.50

0.75

Time0 35 70

Tre

ate

d

0.0

0.5

1.0

Time0 35 70

Tre

ate

d

0.0

0.5

1.0

Proportion infected

Region 10.00 0.25 0.50 0.75

Re

gio

n 2

0.00

0.25

0.50

0.75

Best path

Time0 10 20 30 40 50 60 70

Pro

port

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infe

cte

d

0.00

0.05

0.10

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Region 1Region 2

Worst path

Time0 10 20 30 40 50 60 70

Pro

port

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infe

cte

d

0.00

0.05

0.10

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Time0 35 70

Tre

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d

0.0

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1.0

Proportion infected

Region 10.00 0.06 0.12 0.18

Re

gio

n 2

0.00

0.05

0.10

0.15

0.20

Time0 35 70

Tre

ate

d

0.0

0.5

1.0

Time0 35 70

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0.0

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1.0

Time0 35 70

Tre

ate

d

0.0

0.5

1.0

a b c

d e f

g h i

Rowthorn, Laxminarayan, Gilligan Submitted

Closing thoughts

Epidemiological models take little or no account of economic constraints or incentives faced by individuals or institutions

Economic models mostly ignore the spatial and temporal dynamics of disease.