Setting Priorities for HIV AIDS Interventions: A Cost-Benefit Approach

Setting Priorities for HIV/AIDS Interventions To my wife, Elizabeth, my sons, Adam and Matthew, my daughters-in-law, ...

Author: Robert J. Brent

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Setting Priorities for HIV/AIDS Interventions

To my wife, Elizabeth, my sons, Adam and Matthew, my daughters-in-law, Nancy and Carisa, and my grandchildren, Austin and Victoria

Setting Priorities for HIV/AIDS Interventions A Cost–Benefit Approach

Robert J. Brent Professor of Economics, Fordham University, USA

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Robert J. Brent 2010 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009940730

ISBN 978 1 84720 331 1

02

Printed and bound by MPG Books Group, UK

Contents List of figures List of tables and boxes List of abbreviations Preface PART I

vii viii x xii

WHY COST–BENEFIT ANALYSIS IS NEEDED TO SET HIV/AIDS PRIORITIES

1 Introduction to the book 2 Why not just simply do what is right and try to save lives? 3 Myths and misinformation 4 Counterintuitive results 5 What is wrong with setting any targets? 6 What is wrong with setting the particular MDG targets? 7 Cost–benefit analysis 101 8 Cost–benefit analysis 201 PART II

9 10 11 12 13 14 15 16 17 18 19 20

3 7 11 17 21 24 27 30

HIV/AIDS AS A HUNGER AND ECONOMIC DEVELOPMENT ISSUE

Introduction to Part II HIV and hunger Nutrition and HIV at the individual level Nutrition and HIV at the country level Income as a factor raising HIV rates Education as a factor raising HIV rates Islam as a factor lowering HIV rates Impact of HIV on agricultural households Agricultural policy and HIV interventions Sex and HIV I: the role of transmission Sex and HIV II: the role of concurrency Sex and HIV III: the role of networks

v

35 41 44 49 53 58 64 68 75 78 84 88

vi

Setting priorities for HIV/AIDS interventions

PART III

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Introduction to Part III Threshold analysis theory Threshold analysis practice: the effectiveness of HIV education Threshold analysis practice: the benefits of avoiding HIV Threshold analysis practice: the costs of a possible HIV/AIDS vaccine Willingness to pay theory Willingness to pay practice: the benefits of condoms Cost minimization theory Cost minimization practice: the costs of treating TB Cost-effectiveness theory Cost-effectiveness practice: the benefits of ARVs Human capital theory Human capital practice: the benefits of female primary education Value of a statistical life theory Value of a statistical life practice: the benefits of VCT

PART IV 36 37 38 39 40 41 42 43

COST–BENEFIT METHODS AND APPLICATIONS

113 117 122 128 132 137 141 146 150 153 158

SOCIAL CONSIDERATIONS IN CBA

Introduction to Part IV Commodification: everything is seen as a commodity to be bought and sold What is so “social” about CBA? Fundamentals of CBA Social and private perspectives in CBA CBA and equity I: allowing for ability to pay CBA and equity II: allocating by time and other non-price methods Conclusions I: how not to set priorities for HIV Conclusions II: using CBA to set priorities for HIV

References Index

95 101 105 109

167 172 176 180 185 191 195 201 207 215

Figures 7.1 The marginal benefits MB and marginal costs MC of bread 28 8.1 The marginal benefits MB and marginal costs MC of malaria reduction 31 10.1 Vicious circle of malnutrition and HIV 42 20.1 Sexual network with a single bridge 89 20.2 Sexual network with three bridges 89 26.1 The market for condoms in Tanzania 118 28.1 The costs and benefits of alternative TB treatments 129

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Tables and boxes TABLES 3.1 5.1 5.2 9.1 9.2 11.1 12.1

18.1 21.1 25.1 27.1 27.2 29.1 30.1 31.1 32.1

Percentage knowing that a healthy-looking person can have HIV in five Demographic and Health Surveys Cost–benefit outcomes for alternative levels of prevention: Cost Case 1 Cost–benefit outcomes for alternative levels of prevention: Cost Case 2 2007 HIV infections, rates and deaths by region (2001 figures in brackets) HIV prevalence rates (per 100 000 population) in the United States by race/ethnicity and gender, 2006 Prevalence of micro-nutrient deficiencies in different HIV populations Prevalence of nutritional deficiencies and estimates of deaths and DALYs lost of children aged birth through four by region, 2004 Sexual behavior and actual versus predicted HIV prevalence rates in the United States and SSA Impact of preventative interventions on behaviors, percentage changes WTP for an HIV/AIDS vaccine in Mexico according to income Private benefits and costs of a condom social marketing program in Tanzania (in TZSH) Social benefits and costs of a condom social marketing program in Tanzania (in TZSH) The cost per patient from diagnosis to completion of DOTS treatment in 2001 (in US$) The cost-effectiveness of selected HIV interventions around the world (in US$) Cost-effectiveness ratios for antiretroviral therapy (US$ cost per DALY) The benefits of a life in Tanzania as the present value of 26 years of earnings (in TZSH) viii

13 23 23 37 38 45

51 82 96 115 125 126 134 138 144 147

Tables and boxes

33.1 34.1 34.2 35.1 35.2 39.1 41.1

The cost per student of seven years of primary education in Tanzania 1994/95 to 2000/01 (in TZSH) US occupational fatality rates by industry, 1992–95 national averages Estimates of the value of a statistical life in various countries Cost–benefit outcomes for VCT testing using the VSL method for estimating benefits (m = millions of TZSH) Cost–benefit outcomes for VCT testing using the HC method for estimating benefits (m = millions of TZSH) Private (employer) calculation of benefits and costs of HIV testing of employees and hiring an HIV negative individual Estimated value of waiting list time (£ per month)

ix

152 154 155 161 162 181 193

BOXES 23.1

Threshold ratio for balancing costs and benefits of an education intervention

107

Abbreviations ABC AIDS ANCs ARVs B C CBA CDC CEA CSM CSWs CV DALYs DAW DOTS E GCE GFATM GNP HC HH HIV IDUs LDCs MB MC MC MDGs MSMs MTCT NGOs NIDA PCP PEPFAR PLWA

Abstinence, Be Faithful and Condoms Acquired immunodeficiency syndrome Antenatal clinics Antiretroviral drugs Benefits (total) Costs (total) Cost–benefit analysis Centers for Disease Control and Prevention (US) Cost-effectiveness analysis Condom social marketing Commercial sex workers Contingency valuation Disability adjusted life years Division for the Advancement of Women Directly observed treatment short course strategy Effects (total) Global Campaign for Education Global Fund to Fight AIDS, Tuberculosis and Malaria Gross national product Human capital Head of household Human immunodeficiency virus Intravenous/injecting drug users Least developed countries Marginal benefit(s) Marginal cost(s) Male circumcision Millennium Development Goals Males having sex with males Mother-to-child transmission Non-governmental organizations National Institute on Drug Abuse (US) Pneumocystis pneumonia (US) President’s Emergency Plan for AIDS Relief People living with AIDS x

Abbreviations

PNP Public–private NGO partnership (model) PPP Public–private partnerships PSI Population Services International PWP Public–private workplace participation (model) ROAH Research on Older Adults with HIV SD Standard deviation SSA Sub-Saharan Africa STDs Sexually transmitted diseases STIs Sexually transmitted infections TB Tuberculosis THIS Tanzania HIV/AIDS Indicator Survey TZSH Tanzanian shillings UNAIDS Joint United Nations Programme on HIV/AIDS UNICEF United Nations Children’s Fund UNIFEM UN Development Fund for Women UNFPA United Nations Population Fund VCT Voluntary counseling and testing VSL Value of a statistical life WFP World Food Programme WHO World Health Organization WTP Willingness to pay/willing to pay

xi

Preface HIV/AIDS has claimed at least 25 million lives so far and many more deaths are to come. Some recent progress has been achieved, but it is time to take stock of what we have learned about the epidemic and examine what needs to be done. The starting point for the book is the realization that HIV/AIDS is much too complex a phenomenon to be understood only by reference to common sense and ethical codes. For years the infection was treated as if it were basically a medical problem, with an emphasis on biology, laboratories and medication. All these factors are important, but the realities of HIV/AIDS extend much wider and involve an understanding of social and economic determinants, especially as HIV transmission is largely determined by human behavior and the choices made by individuals. Since individual choices are central to the dynamics of the disease, one needs to have available a framework for choice that can unify the field. That framework is cost–benefit analysis (CBA). This book, therefore, will present the CBA framework in as simple a fashion as possible, given that HIV/AIDS is anything but simple, and that policies to combat it have to ensure that all the important considerations are recognized and incorporated into the analysis. CBA has its technical aspects that take time and effort to master. Nonetheless, the aim in this book is to strip away the barriers that would exist if the reader were to consult the many textbooks and handbooks that are devoted to CBA. At heart, CBA is a way of thinking about public policy issues. The thought process will be exposed and examined in such a way that the contribution of CBA can be readily appreciated. CBA is inherently an applied economics field; theory and practice are so entwined that one part cannot exist without the other. This feature of CBA is very important because, as we have just pointed out, logical reasoning can take us only so far in understanding what to do about HIV/AIDS. Data must be used to reinforce the reasoning, because without empirical support for our assumptions, interventions will not be successful. There are many in the HIV/AIDS field who recognize that HIV/AIDS policies need to be “evidence based”. But what form must the evidence take? CBA identifies not only what sort of evidence (data) needs to be collected; it also explains how that data should be assembled to help determine the HIV/AIDS policy decisions. xii

Preface

xiii

The book has four parts. Together the four parts are intended to be a re-examination of most of the important controversies that have cropped up both in the HIV/AIDS and in the CBA fields. Often the resolution of the controversies will follow as a natural consequence of applying the CBA framework to the issues. The first part introduces the main themes. It explains why understanding the disease and its transmission is not so simple and why CBA is needed. Part II summarizes what we know about HIV/AIDS, basically that in Sub-Saharan Africa it is a hunger issue and in the United States it is a sexual issue, especially when it involves minorities. Part III presents the main CBA evaluation methods and shows how they have been applied. Part IV goes into detail about what is “social” about CBA as constructed by economists. Much of this final part is devoted to non-economists, but mainstream economics is not always comfortable with CBA practice and so some attention is given to bringing economists on board the CBA train. Overall then, the audience for the book is anyone who is concerned about trying to improve health care interventions in the HIV/AIDS field, whether they be activists, policy-makers, economists, non-economists or concerned citizens. This book has its origins from the time I visited the University of Dar Es Salaam for a semester as part of the Fulbright research award on the cost–benefit analysis of HIV/AIDS interventions in Tanzania in 2003. Much of my understanding of HIV in Tanzania stems from my stay at the University. I wish to thank Longinus Rutasitara, the chair of the Economics department at the time, for all his help and encouragement. I would also like to thank Fordham University (which gave me the Spring semester off from teaching in 2007 to help write the book) and the Health Economics Unit at the University of Cape Town in South Africa (where I spent part of the semester in 2007 and was able to interact with a number of researchers and learn from their extensive HIV/AID experience, especially Edina Sinanovic, Susan Cleary and Michael Thiede).

PART I

Why cost–benefit analysis is needed to set HIV/AIDS priorities

1.

Introduction to the book

The human immunodeficiency virus (HIV) that causes the acquired immunodeficiency syndrome (AIDS) has continued to thrive in the world over the last two or more decades despite all our efforts to restrain it. Our interventions are either not working, or not working fast enough. So millions have died, are dying, and will continue to die for years to come. The time has come to step back and reflect on what we know and don’t know about the HIV/AIDS pandemic so that priorities for HIV interventions can be set. The central argument of this book is that HIV/AIDS is much too difficult a problem to try to tackle it with best guesses, common sense, medical and ethical principles alone. Decisions need to be made that rely on data that relate to individual behavior and preferences as contained in a formal economic evaluation. HIV is not like other public health disasters. Most public health hazards attack and kill off the most vulnerable people in society, especially the young and the old. HIV on the other hand targets largely prime age working adults. If you are a poor person living in a crowded home where others have TB or cholera, you are likely to catch these diseases. But with HIV there is more of an individual choice involved in its transmission. Economics can be defined as the science of choice. How are choices made in economics? The answer is: on the basis of benefits and costs. This is true for individuals deciding how many hamburgers to buy, as well as for governments who have to decide how much to spend on health care. If the benefits of a good or service are greater than the costs, then one chooses more of it. If the benefits are less than the costs, then one chooses less of it. And if the benefits are exactly equal to the costs, then one has the right amount of the good or service and so one continues consuming or utilizing the good or service at the same levels as before. So this book will be all about how the benefits and costs of various interventions need to be identified, measured and compared in order that HIV/AIDS policy priorities can be set.

TYPES OF HIV EPIDEMIC Countries can be classified into two categories in terms of HIV. The first category, which comprises the United States and most Western European 3

4


countries, can be called “localized”, where HIV just affects high-risk groups, such as intravenous/injecting drug users (IDUs), males having sex with males (MSMs) and commercial sex workers (CSWs). The other category relates mainly to Sub-Saharan African countries where HIV is “generalized” in the national population. The main reason for drawing this distinction is that what constitutes an HIV/AIDS intervention differs in the two sets of countries. In countries with localized HIV populations, specific groups are to be targeted. Providing condoms and clean needles would seem to be the interventions that need to be evaluated first. However, in countries with generalized HIV populations, almost any kind of public policy change can be viewed as an HIV intervention. Agricultural, transport, trade and educational reforms must all be looked at with an “HIV lens” (Gillespie and Kadiyala, 2005). In these countries cost–benefit analysis (CBA) needs to be applied routinely to many different kinds of intervention, whether it is the time that a commodity market opens, or whether women’s education should be subsidized. This book will therefore cover CBAs related to both sets of population category. For generalized HIV populations we will discuss HIV policy as one primarily dealing with a hunger issue and not one only of sexual behavior modification.

WHY SETTING HIV PRIORITIES IS NOT SIMPLE Two fundamental reasons why the setting of HIV policies is not a straightforward exercise is due to the fact that HIV/AIDS epidemics are not unicausal and that the problems to be solved do not stay the same over time. Transmission can be due to heterosexual contact, MSMs, IDUs, blood transfusions and mother-to-child transmission (MTCT). HIV epidemics are also long-wave phenomena. The five waves are HIV infection, opportunistic infections, AIDS, death and impact. Some countries appear to be over the first wave, including the United States, Uganda, Thailand and Brazil. But no country is over the death wave and the impact wave is only just beginning (Gillespie and Kadiyala, 2005). As a consequence there are a host of different possible interventions to pursue and what one chooses to do at one point in time is not necessarily optimal at all periods of time. One size does not fit all; nor does one time fit all times. Again this points to using CBA to evaluate many different interventions and reusing CBA on many different occasions. This book aims to act as a complement (two goods with quantities moving in the same direction) to that by Jeffrey Sachs’s (2005) book entitled The End of Poverty. He argues that, if developed countries just

Introduction to the book

5

devoted 0.7 percent of their national income to foreign aid, then poverty could be eliminated. But, poverty will not be eliminated unless major successes related to HIV/AIDS are achieved. And ensuring sufficient funds is only half of the problem. How they are to be spent is just as important and CBA needs to be enlisted in the task of deciding what to invest in. Sachs’s book has a chapter outlining the details of a specific project that would reduce poverty. But it is not shown that this project actually would be better than other development projects. Part of our book will be evaluating HIV intervention projects in countries where poverty is widespread (such as Tanzania). Obviously, reducing poverty can be expected to be worthwhile. However, the object is still to make countries better off and only the use of CBA will establish this.

OUTLINE OF THE BOOK We will devote Part I of this book to spelling out in greater detail what is needed and why only CBA can be relied upon. We will first explain why the identification of HIV priorities is not straightforward and list some of the things that we think we know, and what we think makes sense, which are, in fact, things that are not true. Myths and counterintuitive results abound. Current HIV strategies assume that we already know what to do in any given country and that the task now is simply to ensure that this is “scaled up” to all the population. Hence the emphasis given to the Millennium Development Goals (MDGs), which simply set dates by which specified targets are to be achieved. Scaling up is not as obviously desirable as it is assumed, and we analyze its role in Chapter 7. Our second task in Part I is to explain why it is that setting any goals in the abstract devoid of CBA is not helpful in general, and also not helpful in the case of the particular goals set out in the MDGs. We close Part I with a summary of some of the key principles of CBA and how they relate to the setting of HIV policy. Part II switches from things we do not know to an account of some of the things that we do know about the HIV epidemic. We focus on SubSaharan Africa (SSA) where most people living with the HIV disease are located. The main theme is that in SSA, HIV/AIDS is primarily a hunger issue. Many people think that the reason HIV is so widespread in Africa is because, in a context where heterosexual activity is the main transmission mechanism, sexual activity must be higher than elsewhere. It turns out that when people are healthy, sexual transmission of HIV is inefficient. But, when people are not healthy, and suffer from malnutrition and parasitical

6


diseases, immune systems are greatly compromised and HIV transmission is greatly facilitated. Focus is then given to how multivitamins can be used as a micro-nutritional supplement. From there we turn to macronutritional issues and how agriculture policies can be viewed using the HIV lens. The emphasis here is largely on national and regional evidence. The main message will be that in countries with widespread epidemics, almost any change in institutional arrangements surrounding agriculture can be viewed as a potential intervention for HIV. Policies involve trade-offs and these need to be identified and quantified. Since the whole raison d’être for CBA is to deal with trade-off situations where advantages need to be lined up and compared alongside disadvantages to see where the net position lies, the scene is now set to cover specific CBAs of various HIV interventions. Part III is therefore devoted to the presentation of a number of CBAs of HIV/AIDS interventions. We deal with some related to countries with localized epidemics and others pertaining to countries with generalized epidemics. As we shall explain, cost-effectiveness analysis (CEA), the technique of choice in the health care evaluation field, cannot be used to set HIV intervention priorities, so we shall show how it can be reconstructed as a CBA criterion. Since there is no real alternative to using CBA for the setting of HIV priorities, we will present a number of different methodologies for measuring the benefits. Readers should then be able to choose and embrace at least one CBA methodology that they are comfortable with. Having seen how CBA operates in practice, Part IV will draw together some of the conclusions regarding the strengths and weaknesses of CBA. We examine the welfare economic base to CBA and discuss equity considerations as they relate to setting HIV priorities. CBA may be a terrible way to carry out health care evaluations. But, it will be seen to be the best way there is.

2.

Why not just simply do what is right and try to save lives?

When I visited Tanzania, and was beginning my research on CBA and HIV/AIDS, I met a director of a non-governmental organization (NGO) that had run a number of interventions in one region of the country. When I asked what CBAs of their programs had been undertaken I was told that no CBAs had been undertaken because they were not necessary. When I asked why there were unnecessary, the reply was that the NGO’s activities were worthwhile because they saved lives. In response to my next question as to which of the interventions were necessary to save lives, I was informed that all of them were necessary. To an economist this judgment was thought to be highly suspect. Was it really the case that if one person in the NGO did something else in the region that everything would grind to a halt? And without any empirical evidence, how could one be sure that, relative to doing something else, lives were being saved? Economics is all about considering increments in activities. Economists ask, what would happen if there were a little more of this and a little less of that? If everything that was being undertaken was necessary then a little less would eliminate everything of value. Even if this were true, surely the NGO should try to find out how many extra lives would be saved if activities in the organization were expanded? So some evaluation would be necessary even if saving lives was the only yardstick by which success were to be judged.

THE NEED TO MAKE CHOICES The key point here is that setting HIV policy is not “simply” a matter of trying to save lives, but a question of how many lives one can save given the resources available. Economics is fundamentally about trying to obtain more rather than less. If more lives can be saved by expanding or rearranging activities then this should take place notwithstanding that currently some lives are being saved. Economists express this idea more formally by pointing out that if one uses resources in one particular way, then one is foregoing the opportunity of using resources in some other way. 7

8


This leads to the notion of cost in CBA as one of “opportunity costs”. So the decision to devote resources to a particular HIV intervention needs to recognize that other ways of saving lives are being turned down. It is not just that if one provides condoms to prevent HIV, then one will be giving up resources that could be use to provide antiretroviral drugs (ARVs) for those with AIDS. There are many diseases that kill people other than HIV/AIDS. More children in Africa die due to malaria than AIDS. Furthermore, spending on health is not the only way to save lives. Food keeps people alive too. Thousands die every day due to malnutrition throughout the world. One needs to have a comprehensive evaluation framework that can recognize the many different ways that lives, and the quality of lives, can be affected. CBA is the most comprehensive framework because it uses monetary terms to express outcomes and in this way bring every possible alternative use of funds into alignment. Expenditures on housing, education, transport, the environment, criminal justice, national security, among others, can all be evaluated in monetary terms such that one spends the most on those uses of funds that give the highest monetary net benefits.

ARGUMENTS FOR TRYING TO AVOID MAKING CHOICES It is at this stage when there is talk of monetary valuation that the noneconomist starts to get annoyed. How can one possibly put a monetary value on a life saved? And who says that one cannot have all the basic needs such as food, housing and health at the same time? We deal with these two questions in turn. First, notwithstanding that in some approaches to CBA monetary values are directly applied to lives saved, best practice in CBA is not to go around and ask people how much they would be willing to pay to save their lives. Obviously, the answer for most people to this question would be an infinite amount, or almost equivalently, all the money in the world. Instead, best practice in CBA asks the question, for a specified risk of losing your life, how much would be required as compensation? These kinds of question individuals routinely face in their daily lives. The choice of occupation often depends on such a compensation mechanism. Why are people in Southern Africa willing to work underground in mines and possibly die? It is because they expect to get a higher wage than if they did not work in the mines. Some people live near environmental hazards because house prices are cheaper. In many different ways, such as choosing which mode of transport to use to make one’s journeys to work, people trade off risk for financial

Why not try to save lives?

9

gain. So it is not an actual life that one is trying to value but what is called a “statistical life” (after Thomas Schelling, 1968). In the course, say, of heading a large multinational company, those involved may be more susceptible to a heart attack because there is great pressure to perform. If out of 10 000 CEOs, ten did die during a year due to stress, then there would be an annual 1 in 1000 chance of dying, on average, that someone thinking about being a CEO would expect to face. Should the salary be $10 000 p.a. more than someone not under so much pressure, then a 100 percent chance of dying would be 1000 times greater than a 1 in 1000 chance of dying, and so 1000 × $10 000, that is, $10 million, would be the value of a statistical life. Note that the identities of which CEOs will die are not known. If things turn out well, perhaps no CEO would actually die. But given that a person did accept the extra $1000 for doing the CEO job with the specified expected risk of dying, then, implicitly, that person would be valuing his/her life at $10 million. As we shall see in Part IV, if that is how much people value their lives, then by what authority is an economist to disagree with that valuation? The second question, as to why one cannot have condoms and ARVs, or health and education, has a simple answer. It is a fact of life that resources are limited and so one cannot do everything that one would like to do. One has to make choices and, as stated earlier, economics is the science of choice. The need to make choices does not go away just because people think it is wrong to have to make choices. The old Soviet Union considered that economics was bourgeois and therefore expendable. But they eventually realized that gold medals in Olympics and sending people into outer space had an opportunity cost in terms of foregone agricultural output and this “price” was too high to pay. One author who is clearly exasperated by the need to have to make choices when determining HIV policies is Stephen Lewis. In his book on HIV entitled Race Against Time, Lewis (2005, pp. 157–8) records an interchange he had with a very senior member of the World Bank. The official told him: “The people with AIDS are going to die. The money would probably be better used for prevention. It’s all a matter of tradeoffs”. Lewis then tells us his response: “I couldn’t believe what I was hearing. ‘Trade-offs,’ I sputtered. ‘You speak to me of trade-offs? You have drugs to keep people alive, and you’re going to let them die because of a trade-off? Why don’t you find more money and do both treatment and prevention, and screw the trade-off?’” We can all share the frustration of Stephen Lewis, but resource constraints are a fact of life and not just a figment of the imagination of economists. In fact, resource constraints are a part of Stephen Lewis’s reality. Just six pages later in his book, after expressing his support for

10


the World Food Programme’s (WFP) advocacy of school feeding programs he writes: “It’s hard to find anyone who’s associated with school feeding who doesn’t feel that it should be universal. At the moment, alas, such thoughts are the stuff of fantasy. The WFP simply doesn’t have the money”. So Lewis does actually accept, even though he does not like the fact, that if additional money is not made available then choices will have to be made. To conclude: even though it may seem that economists are “trying to play God” by using CBAs to help to determine who lives and who dies, this is not the case, seeing that resources are scarce in this world and this reality means that we cannot save everyone we would like to. It is because individuals need to be compensated for the risk of losing their lives, and the lives of others, that we can be confident that matters of life and death are not ignored by CBA and that these considerations will be captured by the monetary outcomes.

3.

Myths and misinformation

CBA attempts to quantify the benefits and costs of any intervention. It does not just assume that these benefits and costs are known. In the case of HIV/AIDS this is very important as there is a lot of information circulated that is either misunderstood or flat out false. In part, this is due to the stigma associated with the disease, which makes denial very prevalent. If people say that they are not HIV positive, or do not know (or do not want to know) whether they are HIV positive, how can one know what is best in terms of treatment or prevention? In part, the lack of knowledge is an inherent ingredient of HIV/AIDS as it is especially complex, both biologically and socially. One sign of the biological complexity is that AIDS is not a clearly specified condition in itself. If your immune system is compromised due to HIV you become susceptible to a number of opportunistic infections – for generalized epidemics it is likely to be TB, while in localized outbreaks it may be some rare forms of cancer of the blood (such as Kaposi’s sarcoma) or rare kinds of pneumonia (such as pneumocystis pneumonia, PCP). So when someone “dies of AIDS” it may not always be recorded as AIDS and could be classed by the proximate cause of death, for example, as due to TB. An example of the social complexity of the disease is that, prior to ARVs, the disease AIDS would normally follow HIV only after a period of five to ten years. During that period, one may have been able to function normally even though HIV was present. During that period, the capacity to infect others sexually would not be constant. An HIV positive person was highly infectious for the first few months and then again for the last few months when AIDS was present. In the meanwhile the probability of infecting others was very low. In the current AIDS era having unprotected sex is always risky. But, the risks are not the same over time, so what is rational behavior would change over time. Society is often very uncomfortable with the idea that rules governing behavior need to be nuanced. Knowledge of the means of transmission of HIV is important in enabling people to protect themselves and others from the disease. Surveying how knowledgeable people are about the transmission mechanism is often used as an indicator of the effectiveness of HIV educational programs.

11

12


For example, in the Tanzania HIV/AIDS Indicator Survey 2003–04 (THIS, 2005) knowledge of three HIV transmission facts were tested. Did the respondent know that: (1) people can reduce their chances of getting the AIDS virus by having sex with only one uninfected, faithful partner and by using condoms – the so-called “ABC” (Abstinence, Be Faithful and Condoms) of HIV; (2) a healthy-looking person can have the HIV virus; or (3) HIV cannot be transmitted by mosquito bites or by sharing food with a person who has AIDS? It is instructive (and sobering) to know that the bar for knowledge of HIV transmission is set so low that as late as 2004 in a country such as Tanzania where 2.3 million were living with HIV and 150 000 had died of AIDS in just the previous year, that the THIS (2005, p. 57) stated: “It is encouraging [my italics] that 44% of young women and 49% of young men know all of these facts about HIV/ AIDS”. Let us look a little deeper into why there is this knowledge deficiency by examining the determinants of one of the questions related to HIV transmission.

WHO KNOWS THAT A HEALTHY-LOOKING PERSON CAN HAVE HIV? De Walque (2006) analyzed recent Demographic and Health Surveys in five African countries. He focused on the one question regarding whether someone who looks healthy can have HIV. This question was viewed as a good indicator of the general state of knowledge in a country concerning the HIV/AIDS epidemic and a piece of knowledge with important implications for prevention. Given that the disease does take time to transform into AIDS, the answer to the question should be: “Yes, someone who looks healthy now could still have HIV”. Table 3.1 reports the percentage of people who answered the question correctly in the five countries, giving the response by gender. Although there is a lot of variation across countries, uniformly it was the case that females were less informed. The one variable that explained the variation across all five countries and for both sexes was the number of years of education that a person had. Since females on average have fewer years of education, this is one explanation for the gender–knowledge disparity. Other than years of education, there was no determinant that was statistically significant for all ten groups (both sexes in each of the five countries). In a few cases the results had different signs for the same determinant. For example, coming from an urban and not a rural area had a positive effect on HIV knowledge for males and females in Burkina Faso, but it was negative for males in Kenya (while


Table 3.1

Percentage knowing that a healthy-looking person can have HIV in five Demographic and Health Surveys

Country Burkina Faso 2003 Cameroon 2004 Ghana 2003 Kenya 2003 Tanzania 2004 Source:

13

Percentage of Males Who Know

Percentage of Females Who Know

71.28 79.84 77.03 90.33 84.44

57.35 68.68 63.32 86.16 78.76

Based on De Walque (2006) Table 14 (for the World Bank).

still positive for urban females in Kenya). On the whole then we see that what is known in one country or group may not be known in another country or group.

MYTHS In addition to the existence of information that is true that people don’t know about, there is also information that people think is true, but is actually false, that is, myths. Irwin et al. (2003) have written a book listing a number of myths concerning HIV/AIDS. Here we cover just four of the myths that they examine. We mention them because, as explained below, if believed, they all seemingly present obstacles to an awareness of the need to carry out CBAs. However, note that two of the ten alleged myths mentioned by Irwin et al. are not myths. That is, they claim as myths (p. 134) that: “Financial resources for global health are extremely limited, so public health officials in poor countries should prioritize programs” and (p. 73) “Very few poor countries have adequate facilities and services” and “trying to deliver ARVs without sufficient infrastructure” has the danger that “drug resistant strains could develop” because of these limitations. As we explained in the last chapter, there is a shortage of funds, so not everything we would like to do can be funded. Also, poverty does reduce the effectiveness of ARV treatment in developing countries relative to richer countries. There are side-effects with ARVs and there are shortages in trained health care staff to monitor these side-effects in poor countries. This does not, of course, mean that ARVs cannot be worthwhile. Again it just points to the need to carry out a CBA to see whether they are worthwhile without adequate monitoring.

14

(i)


AIDS is Primarily an African Problem

The claim is that other countries are unlikely to be affected to the same extent as African countries so their experience with HIV/AIDS is not of much relevance to other countries. The lie to this claim is readily apparent when one is aware of the fact that the country that (as of 2007) has the third largest absolute number of HIV cases is not in Africa, but is in Asia, that is, India with 2.4 million people infected (just 0.2 million below Nigeria, which has the second highest number; South Africa has by far the highest total with 5.7 million cases). Also note that it is the poor and marginalized populations in all countries, including the United States, who are most affected by HIV. The CDC HIV/AIDS Surveillance Report for 2008 shows that HIV/ AIDS rates for African American females were 18 times the rates for white females and four times that for Hispanic females – see Chapter 9. (ii)

Prevention is Better than Cure

Many think that available resources should be given to prevention and that costly treatment via ARVs should wait until prevention programs have been fully funded. As Irwin et al. (2003, p. 64) point out, there are limits to what prevention efforts can achieve, especially as the spread of HIV has not been halted. “Understanding how social and economic factors determine individuals’ vulnerability to infection does not necessarily mean that public health officials will be able to alter these patterns”. Moreover, prevention and treatment are not mutually exclusive. As we shall see in greater depth in Part II, prevention and treatment (and mitigation) all support each other. (Some analysis of how to compare treatment and prevention takes place in Chapter 8.) (iii)

There is Nothing to be Gained from Helping Other Countries

Since it is perceived that the constituents of wealthy countries are not affected, politicians in these countries think that AIDS is a low-priority issue. This perception by politicians is false seeing that we all now live in a very globally interconnected world. All countries are affected by foreign trade, tourism, labor migration and cross-border refugee flows. Nowhere is the need to devote resources to prevention efforts abroad as well as at home more necessary than in the United Kingdom, where persons infected in Sub-Saharan Africa were the group most affected. More than threequarters (77 percent) of newly diagnosed HIV infections in 2004 were contracted in high-prevalence countries (UNAIDS, 2006a, p. 47).


(iv)

15

There is Nothing We Can Do

The AIDS crisis is considered by some to be just too big. According to the UNAIDS (2008), there were 2.7 million persons newly infected with HIV and 2 million AIDS deaths worldwide during 2007. The history of HIV is not just a list of failures. There are also successes. UNAIDS (2008) reports that, in 14 of 17 African countries with adequate survey data, the percentage of young pregnant women with HIV has declined since 2000–01. Also, thanks to ARVs, HIV is now no longer automatically a death sentence. There were around 1.5 million people who were on ARVs by the end of 2006 according to Lewis (2005). Nattrass (2006) reports that in South Africa the numbers on ARVs rose a hundredfold between October 2003 to the end of 2005 (from less than 2000 to almost 200 000). Nor is it the case that every HIV/AIDS target is not reached. Nattrass cites the Western Cape as having reached 130 percent of the ARV target set for it by the Department of Health’s Operational Plan. The Global Fund to Fight AIDS, TB and Malaria (GFATM) and the United States’s President’s Emergency Plan for AIDS Relief (PEPFAR) have brought billions of additional dollars to assist in the fight against HIV/AIDS. The challenge is to ensure that these extra funds are directed by CBA to the best uses and not wasted.

THE RELEVANCE OF MYTHS AND MISINFORMATION FOR CBA The problem with believing the four myths just identified is that one would think wrongly that one can easily formulate HIV priorities without reference to CBA. If AIDS is purely an African problem then other countries do not need to have an HIV plan. If prevention is better than cure, then why bother evaluating ARVs? If people in the United States have nothing to gain by fighting AIDS in the developing countries, then benefits in the United States can never outweigh costs. And if there is nothing that the rich countries can do to help the struggle against AIDS in poor countries then again why carry out a CBA if it cannot possibly uncover any intervention that is worthwhile? The position we take on the other hand is that we need to carry out CBAs of all kinds of HIV intervention and let the results reveal what is worthwhile or not. Why prejudge the outcome when, as we have seen, general information abut HIV/AIDS is so unreliable? Even if general information were reliable, it would still be necessary to carry out CBAs in order to allow for divergences in known trends. Let us consider one implication of the De Walque findings reported in Table 3.1.

16


Say you are considering persuading females in a high school in an African country to use free condoms that your agency is providing. If the female at the school thinks that condoms are not necessary, because their sex partner does not have HIV because he looks so healthy, then the condom promotion program would not work as the condoms would not be used. On the other hand, if the females know that a healthy-looking person can have HIV, then the condoms might be used. One should therefore expect that in a country like Burkina Faso where 43 percent of the females don’t know the HIV facts, that the outcome of a CBA of condom promotion in schools would be much worse than in a country like Kenya where only 14 percent of the females don’t know the facts. To conclude: allow the data to tell you what is worthwhile rather than assume that a condom program that worked in one country in one time period (with a given level of HIV general knowledge) can bring the same results as a condom program in another country at some other time period (with a different level of HIV general knowledge). What really confirms the fact that we cannot assume that we already know what needs to be done to combat HIV is the fact that in some countries not only is knowledge of the epidemic incomplete and wrong, the knowledge base can also actually deteriorate over time simultaneously with the worldwide epidemic growing even larger. The UNAIDS (2006b, pp. 56–7) update tells us that in a 2005 survey in the United Kingdom, 79 percent of respondents nationally knew that HIV can be transmitted through unprotected sex when earlier (in 2000) the percentage had been as high as 91 percent. Condom promotion that was done as recently as five years ago may not now be worthwhile or may have to be repeated.

4.

Counterintuitive results

We have just seen in the previous chapter that there is a lot of misinformation about HIV/AIDS. Even when we obtain the correct information, we may not make the best use of the information if we go straight to conclusions without going through a systematic evaluation exercise using the data. Let us look at some strategies that intuitively would seem to make a lot of sense as ways of preventing the spread of HIV, but do not end up as furthering the cause. In each case we explain the logic and why the facts may not fit the logic.

ABSTINENCE Consider a country in which there are two groups: a high-risk group that has ten or more partners and a low-risk group with one sex partner. Given that those in the high-risk group have more partners than those in the low-risk group, they are more likely to be HIV positive than those in the low-risk group who are more likely to be HIV negative. Persons in the high-risk group have sex with others in the high-risk group, but they also have sex with persons in the low-risk group. Those in the lowrisk group partner only people in the high-risk group. As a result of all the pairings that have one partner HIV positive and one partner HIV negative, there is a national HIV prevalence rate of, say, X percent. Now introduce an informational program that encourages abstinence. If the program has an impact only on persons in the low-risk group, then this group will no longer interact with the high-risk group. The new HIV prevalence rate could now actually rise to greater than X percent. How could this possibly happen? The only people having sex with those in the high-risk group are others in the high-risk group. Their chances of getting the infection have risen and this would lift the prevalence rate. It is true that the new abstainers can no longer get HIV and this would bring the prevalence rate down. But, the net result would be a higher rate if the numbers now getting infected exceeded the numbers now no longer getting infected. Kremer (1994) was the first to model the possibility that withdrawing

17

18


the low-risk group from the pool of partners could raise the prevalence rate. He followed up his theory with an application related to data in the United Kingdom, which showed that, for this country, raising the prevalence was not just a possibility; it actually took place. For HIV to continue over time in a population, on average over a person’s lifetime, every person infected must also infect at least one other person. If less than one other person is infected, the disease will die out. Kremer supplies some figures to illustrate how abstinence can be counterproductive by raising the chances that more than one other person will be infected per infected person. Assume that for the disease to continue, each person must have seven partners a year to end up infecting one other person. Say that all sexual partners meet at a bar. This bar is frequented by two groups each consisting of the same number of members, a high-activity group that finds a partner eight times a year, and a low-activity group that finds a partner two times a year. On any given night, the bar will be populated more by the high-activity group, in the ratio of 80 percent to 20 percent. A person going to the bar to meet someone for sex, who chooses the partner at random, would have an 80 percent chance of meeting someone with eight partners and a 20 percent chance of meeting someone with two partners. The weighted average number of partners would be 6.8 partners a year (that is, 8 × 0.8, plus 2 × 0.2). HIV would die out at this partner rate. Now let the low-activity group cease to go to the bar at all. The only people at the bar would be the high-activity group. There would be a 100 percent chance that they would be meeting someone with eight partners. So on average there would be eight partners a year. Even though the low-activity group does not in any way add to the population average number of partners of eight, this number (as it is greater than seven) is sufficient to ensure that the disease would now rise over time instead of falling. What the numbers in this example make clear is that the average number of partners in the population is largely determined by the high-activity group and that if this group never meets partners with lower partner rates, the overall rate will go up. So in terms of containing the disease, abstinence by the lowactivity group is not helpful.

MARRIAGE For many people, abstinence cannot be regarded to be the single long-term solution to the HIV/AIDS problem. Apart from the desire to experience sexual pleasure, a fundamental reason to have sex is to have children. From this perspective neither abstinence nor the use of condoms is useful.

Counterintuitive results

19

One reason why some people get married is to have children. Hence abstinence is often linked with marriage as a part of a package. In this context, someone would practice abstinence for the period prior to marriage, then get married and have children. If one’s partner followed the same path, then HIV/AIDS could be largely avoided. Why would postponing sex until one is married not be helpful? The trouble is that a person has full information of, and one can try to control, only one’s own sexual behavior. One’s marriage partner’s sexual history may not be known. Typically, males are older than females when they get married. In Sub-Saharan Africa the gender–age difference at marriage can be as much as ten, 20, or even 30 years. It is when the husband is so much more sexually experienced than the wife that marriage can become a problem for younger females. This possibility had become so much a reality that UNAIDS (2004) even considered that for many women their main HIV risk factor is being married to a husband with previous or current other sex partners. It point outs that among sexually active girls aged 15–19 years in the cities of Kisumu (Kenya) and Ndola (Zambia), HIV levels were 10 percent higher for married than for sexually active unmarried girls, and that in rural Uganda, among HIV-infected women aged 15–19 years, 88 percent of the girls were married. It concludes (p. 10) that, “persuading girls to abstain from sex until marriage is of little help”.

TESTING UNAIDS (2006a) reports that in the United States around 25 percent of those with HIV do not know they have the disease. In which case, the chances of them infecting others were very high. One might think, therefore, that if more people were tested, and the governments were to subsidize the tests to encourage this to take place, then HIV transmission would be slowed. However, in the US context at least, this subsidy argument can be questioned. There are two main reasons. First, more risky sex and not less might take place as a result of testing. As explained in Philipson and Posner (1995), one of the selfish motives for getting tested would be in order to obtain unprotected (and hence risky) sex when without the test one was previously only getting protected sex. If a person were known to have many other partners, then a prospective new partner may insist that sex will take place with that person only provided that a condom is used. Taking a test would be beneficial here because, if it were found to be negative, then this result could get the new partner to change his/her mind about requiring that a condom be used. In line with this type of reasoning,

20


we would expect to find (as we do actually see in many countries) that those being tested were high-risk groups (a higher percentage were found to test positive than in the population as a whole). Second, the tests may increase the number of sex partners. According to Boozer and Philipson (2000), one tests if one expects to gain from the knowledge revealed by the test. How much knowledge one gains depends on what information a person has prior to the test. Say a person thinks they are HIV positive going in to the test, because risky sex is practiced with a number of partners. In this case, an HIV test would just confirm what they already know. Sexual behavior would already have changed if it was going to. So why have the test? Similarly, if someone practiced abstinence, one would expect to be HIV negative. A negative HIV test would lead to the exact same behavior as before the test. Again, if nothing is gained by testing, the test is not worth doing. The Boozer and Philipson policy conclusion is therefore that the government should not subsidize the test for everyone. Only those who might learn something new from the test and would change their behavior in a way that lowered transmission should be encouraged to test. In their empirical work for the United States they found that, indeed, those who did not learn anything did not change the number of partners. For those who thought they were negative, but tested positive, their behavior did not change. However, those who thought they were positive increased their number of partners by 20 percent when they learned that they did not have HIV. Overall, testing could be expected to raise the transmission rate. The point about highlighting these three counterintuitive results is not to argue that abstinence, marriage and testing cannot be a part of the solution to HIV/AIDS transmission. Rather, the point is that only by considering them in the context of an actual behavior intervention exercise, which will be evaluated on the basis of results of any behavioral change, will progress be made. In particular, counseling services will probably have to be provided in each case to ensure that behavior change in the “right” direction takes place, whether the person is getting HIV tested, or getting married, or belongs to a high-sexual-activity group. Behavior change cannot be assumed to take place just because we think this is what should take place.

5.

What is wrong with setting any targets?

We will examine the desirability of setting targets in the context of the MDGs, though the considerations discussed apply to any set of targets, such as the recent “3 by 5 Initiative” whereby the WHO (World Health Organization) set out the target to put 3 million people into HIV/ AIDS treatment by 2005. The MDGs were derived from the Millennium Declaration, unanimously adopted by world leaders at the 2000 Millennium Summit. They have become an organizing framework for UN development work for both donors and developing nations. We will focus just on Goal 6, which is aimed at combating HIV/AIDS, malaria and other diseases. There are two targets assigned to Goal 6 (UN Millennium Project, 2005, p. xvi): Target 7: Have halted by 2015 and begun to reverse the spread of HIV/AIDS Target 8: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases

There are two main problems with setting any targets. The first involves their feasibility and second their desirability.

FEASIBILITY What happens if the set of targets one specifies cannot be achieved given the resources, technology and time at hand? Say one can achieve Target 7 or Target 8, but not both. Which one does one try to achieve completely? Is achieving one target completely better than tackling both targets and achieving some, but not full success for either? Targets only give guidance for policy-makers when they can be met fully.

DESIRABILITY Even if targets are feasible, are they desirable? If achieving full success is not feasible, is some success better than none? Only CBA can answer these 21

22


two questions. So targets only make sense when they are backed up by numbers that come out from undertaking a CBA. To illustrate how CBA can inform the process of setting targets, let us assume that we know the total costs and benefits of various levels of preventing HIV. To keep the arithmetic simple and easy to interpret, assume that there are 100 persons per year who newly get HIV and these numbers can be reduced by the government’s provision of free condoms. Benefits per person are $10 throughout, so total benefits depend simply only on the numbers benefiting. As there are 100 persons infected, the total benefits of completely preventing the disease would be $1000. (All dollar amounts can be expressed in millions if numerical simplicity is a barrier to understanding the logic of the illustration.) The costs have first a fixed and then a variable component. Forty of the potentially infected persons live in a town and 60 live in a rural area. In town there are no transport costs. The only cost is $200 for setting up a clinic that distributes the condoms. So this $200 is fixed and has to be incurred irrespective of whether all 40 living in the town next to the clinic, or fewer than 40 people, are cared for. The variable costs just apply to the 60 persons living in the rural area who have to travel to the clinic. We consider two cases for the transport cost per person. In Cost Case 1 the travel costs are $5 per person (so the variable cost for all 60 rural persons would be $300, making a total cost of $500 including the clinic cost); and in Cost Case 2 the travel costs are $15 per person (so the variable cost for all 60 rural persons would be $900, making a total cost of $1100). The costs and benefits for all levels of prevention for the two cases are shown in Tables 5.1 and 5.2. With Cost Case 1 in Table 5.1, “halting” the spread of the HIV, that is, preventing 100 cases, is not only desirable, it is also the most desirable intervention level. The net benefits of $500 are greatest with 100 cases prevented. However, targeting runs into problems with the higher transport costs shown in Table 5.2. Building the clinic for 40 townspeople is the most desirable intervention level. Preventing 80 breaks even, but it is not the most desirable level. Halting the spread of HIV is not now desirable at all. The point then is that with knowledge of costs and benefits, policymakers can not just set targets, they can set the most desirable targets. Without knowledge of the costs and benefits some target-setting may not make any economic sense. Does it ever make sense to set a target for prevention less than 40? In the absence of the information in Tables 5.1 and 5.2, caring for 40 may appear to be too “ambitious” compared with ten, and ten may seem to be a good “conservative” level to start with. But, if one knows the costs and benefits to be either those in Table 5.1 or those in Table 5.2, any level less than 40 is not the best target to set.

What is wrong with setting any targets?

Table 5.1

Number Prevented 10 20 30 40 50 60 70 80 90 100 Source:

Number Prevented

Source:

Cost–benefit outcomes for alternative levels of prevention: Cost Case 1 Total Benefits ($B)

Total Costs ($C)

Net Benefits ($B – $C)

100 200 300 400 500 600 700 800 900 1000

200 200 200 200 250 300 350 400 450 500

–100 0 +100 +200 +250 +300 +350 +400 +450 +500

These numbers were created by the author.

Table 5.2

10 20 30 40 50 60 70 80 90 100

23

Cost–benefit outcomes for alternative levels of prevention: Cost Case 2 Total Benefits ($B)

Total Costs ($C)

Net Benefits ($B – $C)

100 200 300 400 500 600 700 800 900 1000

200 200 200 200 350 500 650 800 950 1100

–100 0 +100 +200 +150 +100 +50 0 –50 –100

These numbers were created by the author.

6.

What is wrong with setting the particular MDG targets?

We have just examined the weaknesses of targets in general terms. Let us now look at problems in detail with Target 7 of the MDGs. Recall that this wanted to “Have halted by 2015 and begun to reverse the spread of HIV/ AIDS” (see Chapter 5). Even the task force set up by the UN to recommend strategies for implementing the MDGs asked the question, “What does ‘halting the spread of HIV/AIDS’ mean and how will we know when it has been achieved?” (UN Millennium Project, 2005, pp. 24–6). It points out that if one takes a literal interpretation, that is, bringing the number of new infections to zero, the target is unsatisfactory for two reasons. It is not feasible to achieve this by 2015 and it focuses solely on prevention and sets no target for treating those already with HIV. The criticism that Target 7 ignores treatment is obviously valid and warrants no further discussion. So let us examine the feasibility issue further.

FEASIBILITY AS AN ECONOMIC ISSUE The only sure way to ensure that there are no new cases of HIV is to have a vaccine that is 100 percent effective and that this vaccine is given to everyone. As of 2009, such a vaccine does not exist. If it did exist, there is no way that the world’s population will all have been vaccinated by 2015, given that the BCG vaccination for TB already exists and there is not 100 percent compliance (perhaps because it is not 100 percent effective). But, let us assume that it is feasible. It would probably require all the world’s resources to achieve it. Would this be worthwhile? Did anyone at the UN carry out a CBA to demonstrate this? Interestingly, the UN task force thinks that achieving Target 7 would be a failure even if it were achieved! It states, “Stabilizing incidence at anywhere near current levels in the hardest-hit countries cannot be considered success” (ibid., p. 24). Instead it proposed replacing Target 7 with, “Reduce prevalence among young people to 5 percent in the most affected countries and by 50 percent elsewhere by 2015” (ibid., p. 25, Box 1.3). Since there is a fundamental misconception here that lies at the heart 24

What is wrong with setting MDG targets?

25

of the problem of setting HIV prevalence or incidence targets let us clear this up now. Say a country has a 25 percent prevalence rate among its young people. How could anyone possibly baulk at setting a target for this number to be reduced to 5 percent in 2015? The central problem with the 5 percent target in the context of a current 25 percent reality is that we do not know what would happen to the prevalence rate in the absence of any policy interventions for HIV/AIDS. If the epidemic has not peaked in this country then it could be that the rate would go up from 25 percent to 40 percent by 2015 without any interventions. In fact, the rate may well rise to 30 percent even with policy interventions. But, note that in this latter case HIV/AIDS policy would have been spectacularly successful for a 40 percent rate to be cut to 30 percent in just a few years. Yet the task force claims that, in line with the original target specification, keeping the rate at 25 percent when there would have otherwise have been a 40 percent rate “cannot be considered success” (ibid., p. 24). Worse still, with its new specification that the rate has to be cut to 5 percent, reduction from 40 percent to 10 percent by 2015 would also be judged a failure. In countries where the epidemic has not peaked, and this is most of Sub-Saharan Africa, Asia and Latin America, setting targets at rates below current levels is almost setting up the HIV/AIDS policy system for failure. Sensible targeting then can only be made in the context of what would happen in the absence of policy intervention. So, if one has to have targets, all countries should have one simple target, that is, to lower rates below what they might otherwise have been. In this formulation target-setting and CBA would be mutually reinforcing. For it needs to be understood that when a CBA is undertaken and no specific alternative is considered (as in Tables 5.1 and 5.2 in the previous chapter) the benefits and costs are calculated relative to what they would have been in the absence of intervention. So positive net benefits for an intervention means that the intervention is worthwhile relative to doing nothing. As long as all interventions are subject to a CBA test, then a target of reducing HIV/AIDS relative to doing nothing (called the “with and without” approach in CBA) would be successful only if the interventions were worthwhile. Conversely the target would not be met only if interventions did not take place, and interventions would not take place if a CBA test says they are not worthwhile.

FEASIBILITY AS A POLITICAL ISSUE While the difference between feasible and non-feasible targets is all important from an economic point of view, from a political point of view, targets

26


have a momentum of their own even if they are not feasible. Stephen Lewis (2005, who we mentioned in Chapter 2) called the WHO’s “3 by 5 Initiative” to put 3 million in treatment by 2005 “brilliant” even though it was clear to him by the middle of 2005 that only 1.5 million would be treated by the end of 2005 (Lewis, 2005, p. 154). He pointed out that it did not matter that the target will not be reached as the international community: “was stagnating in its response to the pandemic until the WHO initiative vaulted upon the scene. ‘Three by five’ has had a remarkable impact: countries everywhere falling over themselves to introduce treatment, the numbers are increasing on a daily basis, and hope has re-emerged where only fear and despair held sway” (ibid., p. 155). As long as the setting of targets does not get in the way of undertaking CBAs, and it is seen as a political movement to galvanize international support for HIV/AIDS interventions, there is no harm in the exercise. However, the economic perspective is what is more important, as Stephen Lewis ultimately acknowledges. He pointed out that even though 1.5 million being treated was not 3 million, it was still 1.5 million more people than would have been treated otherwise. It was the “with and without comparison” saving 1.5 million additional lives that really justified Stephen Lewis calling the 3 by 5 Initiative “brilliant”.

7.

Cost–benefit analysis 101

There are lots of frills with CBA (such as discounting future benefits and costs to convert them to current values). But fortunately the essentials are few and can easily be summarized. In this chapter we cover some of the basic principles as included in a first-level course (101) and in the next chapter deal with some of the extensions as included in a second-level course (201). We leave to Parts III and IV the addition of some of the refinements of CBA. When considering a change in the level of an activity, one should compare the marginal (additional) benefits with the marginal (additional) costs. If marginal benefits (MB) are greater than marginal costs (MC), one should do more of the activity, for one is gaining more than one is losing, leading to positive net benefits. If marginal benefits are lower than marginal costs one should do less of the activity as one is losing more than one is gaining. Net benefits are negative in this case. And if it happens that marginal benefits just equal marginal costs, one should do neither more nor less. One should stay where one was as no other level of activity would bring higher net benefits. Obviously the principles are very general and can apply to any activity. The principles apply to the private sector as well as to governments, though how one would measure the marginal benefits and costs would differ according to who is undertaking the CBA of the activity. Let us see what we can learn from applying these principles to a basic health intervention. Poverty is widespread in all the countries where HIV/AIDS severely reduces life expectancies. So let us consider a basic nutrition supplement program, giving out loaves of bread, which increases the daily calories a person consumes. Say the bread program distributes the bread in reverse order of the body weight of the person being assisted. So the marginal (additional) benefits are highest for those first receiving help. From there the marginal benefits start to decline as less needy, but still needy, people get extra food. The decline in marginal benefits continues until those receiving the bread have a body weight that is judged to be normal, that is, the recommended daily intake of calories is reached. At this point the bread supplement program provides zero marginal benefits. The cost of a loaf of bread is the compensation that has to be paid to the bakers to supply the bread. Assume that this is a fixed amount per loaf.

27

28


MB

Monetary values

0

100

1000

MB – MC > 0

MC

2500

3500

5000

Loaves of bread

MB – MC < 0

Source: Author’s own work.

Figure 7.1

The marginal benefits MB and marginal costs MC of bread

To this must be added the transport costs of delivering the bread to those in the program. If the needy live in more and more remote places, then the cost per loaf delivered will be rising as the program expands. Figure 7.1 shows the falling marginal benefits and the rising marginal costs. The differences between MB and MC are represented by the dotted arrows. Focus on the situation where 100 loaves are provided where the marginal benefits are high and the marginal costs are low, corresponding to the case where the neediest are receiving the food, and they are nearby, making it relatively cheap to service them. The difference between marginal benefits and marginal costs is both positive and very large. A CBA would record the large, positive difference and, because of this calculation, judge this scale of operations a huge success. As the food program expands to the level corresponding to 1000 loaves, less needy people are being helped and it is more costly to provide them with food. However, a CBA would again judge this scale worthwhile as the marginal benefits still exceed the marginal costs. The food program would then continue expanding until 2500 loaves are provided. At this scale of operations MB is just equal to MC. A CBA finding neither a positive nor a negative difference would decide that this is where the program should stop expanding and that the best scale has


29

been obtained. Although nothing is gained on the last loaf provided, all the previous 2499 loaves have generated net gains and so this is the most gain that can be achieved. If the program expands to 3500 loaves, MB is less than MC. A CBA would not sanction this program level and signal that the program should be cut back. If the program were expanded even further to 5000 loaves, where everyone who is underweight gets assistance and the marginal benefits are zero, MC far exceed MB, and a CBA would certainly not approve of this scale of assistance. There are two main lessons to be learned from considering this evaluation exercise. First, we understand that expanding the food program is not always worthwhile. It depends on the size of marginal benefits and costs. We cannot just state that providing extra bread must be worthwhile because food keeps people alive for it is a necessity. At the levels of 100 and 1000 loaves, MB exceeds MC so these levels are worth providing. But, at the levels of 3500 and 5000 loaves, MB is less than MC and these levels are not worth pursuing. Second, just because we undertake a program evaluation and find positive net benefits (say we are at 1000 loaves), it does not necessarily mean that we move from there to provide bread to everyone who needs it. “Scaling up” is only desirable until we reach the optimum of 2500 leaves. After that level, we should be “scaling down” not scaling up. In any case it definitely does not mean that we provide bread on the maximum scale. At some point (5000 loaves) there are no additional benefits to be achieved and this cannot possibly be worthwhile if marginal costs are positive. Diminishing marginal benefits must be expected and factored in whenever scaling up is to be contemplated.

8.


Looking at whether a little more, or a little less, of an activity is worthwhile is mainly what CBA is about. So a comparison of marginal benefits and marginal costs is the main social decision-making test. However, sometimes the evaluation must switch from looking at the margin to analyzing the effects in terms of totals. Totals are just the sum of the marginal effects. When an activity proceeds only in large jumps (for example, it is not useful to build only half a bridge) an all or nothing evaluation must be carried out. The criterion now for determining whether the activity is worthwhile is whether total benefits exceed total costs. If so, then the project for all the levels is considered worthwhile. The complications that arise for CBA by switching from a marginal to a total emphasis can be appreciated by considering two policy interventions for the one health improvement. Note that now we will be considering situations where MC is falling and not rising as in Figure 7.1 in the previous chapter. Countries in Sub-Saharan Africa where the HIV/AIDS epidemic is at its height are also countries where malaria is rampant. Reducing malaria would therefore help to keep alive those infected with HIV/AIDS. Consider the case where in a community there are ten people (cases) with malaria as depicted in Figure 8.1. There are two main interventions for malaria: prevention and cure (treatment). One way of preventing malaria is to spray areas that are breeding grounds for mosquitoes. There is a large initial outlay for setting up the program to spray mosquitoes with insecticides. Thereafter, as more of the swamps are sprayed, the marginal cost would fall as the number of beneficiaries expands and the number of cases of malaria declines. We therefore characterize the marginal costs of prevention as falling from right to left in Figure 8.1 from $5 to 20 cents, as the number of cases decline from ten to zero. Treatment on the other hand is individualized. A person comes into a clinic and receives medication (say quinine). If we ignore transportation cost, we can regard treatment cost as being constant, say at $2 per person. So in Figure 8.1, treating two people (giving two people quinine) is simply twice the total cost of treating one person (giving one person quinine). The MB curve in Figure 8.1 is, like that in Figure 7.1, depicted as falling as the scale of a malaria intervention is increased. The MC curve

30


$5

a

$3

b c

$2

d

31

MC of treatment e

$1

f MB g MC of prevention

$0.2 10 0 Source:

6

5

Cases of malaria

4

Malaria reduction

10

Author’s own work.

Figure 8.1

The marginal benefits MB and marginal costs MC of malaria reduction

is assumed to be the same irrespective of by how much malaria is being reduced. We again think of the worst cases (or areas) being targeted first and less serious cases being targeted later. In terms of the treatment alternative, the evaluation can follow marginal lines as people can be treated one at a time. Equating marginal benefits and the marginal costs of treatment would lead us to point c in Figure 8.1. A malaria treatment reduction of four, so that six cases remain, is worthwhile as marginal benefits exceed the marginal costs of treatment up to this level. However, for the prevention alternative, marginal analysis gives the wrong answer. Equating MB and MC would place the intervention program at point e with a six-person reduction and four cases remaining. Note that for each of the six-person reduction, the MC of prevention exceeds the MB. So not only would the six-person reduction be rejected, one would not have started the intervention program in the first place, as MB (point b) is below MC (point a) when there are ten cases of malaria. Interestingly, although one would not have started intervening with prevention, scaling up prevention actually could be worthwhile. For if greater than six persons are prevented, then marginal benefits exceed costs for all levels until malaria is eradicated and no cases remain. One

32


should therefore never stop at preventing six people, but consider whether preventing all ten persons with malaria is desirable. Is total eradication worthwhile? That depends on whether the size of the negative net benefits from cases where prevention is not worthwhile at the margin (area abe between 10 and 4) can be overcome by the size of the positive net benefits where prevention is worthwhile at the margin (area egf between 4 and 0). This is precisely what a total benefits and costs evaluation assesses. That is, for all the ten persons prevented from 10 to 0, do the total benefits (as given by the area under the MB curve) exceed the total costs (as given by the area under the MC of prevention curve)? The traditional proverb is that “prevention is better than cure”, or in the situation we are considering, “prevention is better than treatment”. However, only a CBA can tell us whether that is true or not for a particular intervention. The MC of treatment curve intersects the MC of prevention curve at point d. To the left of this point, at level 4, treatment is less costly, while to the right of d, prevention is cheaper. Thus, labeling an intervention as “prevention” or “treatment” does not help to decide which is better. What is important is the size of the benefits relative to the costs of each alternative. In fact, if the total costs exceed the total benefits for both interventions, then prevention may be better than cure, but prevention actually would not be worthwhile. We are now in a position to complete the picture about the desirability of scaling up first discussed in the context of Figure 7.1. When MC is rising, and MB is falling, as in Figure 7.1, then scaling up should be considered whenever an evaluation of an initial level of an intervention produces an MB that exceeds MC. Scaling up is a non-starter if the MC of the initial intervention exceeds the MB. But, with MC falling, as with prevention in Figure 8.1, the evaluation of the initial intervention does not predetermine whether scaling up should subsequently take place. Even though MB may be declining, if at some level of intervention the MB is above MC, then increasing the scale may lead to total benefits that exceed total costs.

PART II

HIV/AIDS as a hunger and economic development issue

9.

Introduction to Part II

For a CBA to be undertaken there has to be an intervention effect to evaluate. For the purposes of this book, an intervention is anything that reverses what has contributed to HIV/AIDS and its effects on people’s lives. Thus, given that unprotected sex causes people to get HIV, then providing condoms to reduce the incidence of unprotected sex would be an intervention. When the sharing of needles contaminated by HIV transmits the disease, supplying clean needles would be another intervention. The first step then in examining CBAs of HIV interventions is to identify what has contributed to the progression of the disease. As we explained in Chapter 1, there are many causes of HIV. To avoid an encyclopedic list of everything that has played a role, we will organize our discussion in Part II of this book around the fundamental question of why there is so much more HIV/AIDS in countries in SSA that have experienced a generalized epidemic than in a country such as the United States where HIV is largely just in localized populations. Once we have established this, we will then look at a second HIV distributional question, that is, why is HIV prevalence in the African American community so much higher than the rest of the United States? By trying to answer these two distribution questions we can see exactly what is similar and what is different about the epidemics in Africa and the United States. In this chapter we first summarize the important facts regarding HIV/ AIDS throughout the world and in the United States, which will provide the backcloth for all of the discussion in Part II. Then we provide a guide to the rest of Part II. Before we begin this chapter we need to make some general remarks about HIV/AIDS numbers as there are many different data sources and many different ways of reporting the numbers. The main points are these: ●

The Joint United Nations Programme on HIV/AIDS (UNAIDS) is the major source of country HIV data and it gives periodic updates. The important updates occur in December in every year. The main drawback with the UNAIDS data is that they are not collected on a uniform basis for every country. In addition, each individual country has its own measurement initiatives and the numbers that 35

36


●

●

●

●

come out from these sources may not correspond with those that UNAIDS reports. UNAIDS uses two sources of data, depending on whether a country’s epidemic is generalized or localized (“concentrated”). For generalized epidemics UNAIDS uses estimates primarily from surveillance among pregnant women attending antenatal clinics (ANCs). Obviously, these numbers exclude women who are not pregnant and/or not sexually active and omit all men. For localized epidemics UNAIDS relies on studies among key populations that are at highest risk of HIV exposure, such as IDUs, MSMs and CSWs (see Chapter 1). Instead of relying on ANC data, a number of SSA countries have initiated population-based HIV prevalence surveys. Most of these population-based surveys have generated HIV estimates that are lower than those for ANCs. For example, in a sample of 14 SSA countries, 13 of them had lower HIV prevalence rates measured by their population-based surveys than previously estimated using ANC data (UNAIDS, 2006a, Figure 2.1). UNAIDS has recently changed its reporting system. Apart from incorporating new data from population-based surveys, UNAIDS has also changed the coverage of its surveillance system. Surveillance has expanded into rural areas where prevalence is known to be lower. So even though HIV prevalence rates may look like they have decreased between 2005 and 2006, most of this difference is due to a changed methodology (revised data). This means that one must always be careful about making comparisons of HIV prevalence rates in a country over time. Lastly, as a rule of thumb, if you see an estimate of HIV prevalence for a country that is low, and you thought you had seen a number published that was much higher, this would be because the specification of the group involved is different. High rates relate to adults aged 15 to 49 years, while low rates relate to the population as a whole. For example, the adult rate in mid-2006 for South Africa was 18.3 percent when the prevalence rate in the total population was 11.2 percent.

PREVALENCE RATES OF HIV (i)

HIV/AIDS Prevalence Rates Worldwide

In Table 9.1 we present the numbers as of December 2007 as reported in UNAIDS (2008). The majority of people living with HIV/AIDS, nearly


Table 9.1

37

2007 HIV infections, rates and deaths by region (2001 figures in brackets)

Region

Adults and Children Living with HIV/AIDS

Adults 15–49 Prevalence Rate (percent)

Deaths in Adults and Children

Sub-Saharan Africa

22 000 000 (20 400 000) 380 000 (300 000) 4 200 000 (4 200 000) 740 000 (490 000) 74 000 (25 000) 1 700 000 (1 400 000) 230 000 (210 000) 1 500 000 (650 000) 730 000 (610 000) 1 200 000 (1 100 000) 33 000 000 (29 500 000)

5.0 (5.7) 0.3 (0.3) 0.3 (0.4) 0.1 (0.1) 0.4 (0.2) 0.5 (0.5) 1.1 (1.1) 0.8 (0.4) 0.3 (0.2) 0.6 (0.6) 0.8 (0.8)

1 500 000 (1 300 000) 27 000 (22 000) 340 000 (250 000) 40 000 (15 000) 1 000 (.. . .) 63 000 (47 000) 14 000 (15 000) 58 000 (6 700) 8 000 (9 600) 23 000 (18 000) 2 000 000 (1 700 000)

N Africa and Middle East South and SE Asia East Asia Oceania Latin America Caribbean E Europe and Central Asia W and Central Europe North America Total (global)

Source:

Constructed by the author from UNAIDS (2008) Annex A.

two-thirds of the total, are in SSA. This is true even though SSA has only 10 percent of the world’s population. With 2.7 million new infections and 2 million dying each year, the total of 33 million is going to rise over time, at least for the next few years. The total in 2007 was up from 29.5 million in 2001. Within SSA there is enormous variation around the 5.0 percent average, with rates as high as 26.1 percent in Swaziland and as low as 0.1 percent in Mauritania. Southern Africa is the epicenter of the global epidemic with about one-third of the world’s cases living in this area. East Africa is next in line after Southern Africa, and then comes West Africa where Côte d’Ivoire has the highest rate at 3.9 percent. The lowest HIV rates in Africa are in North Africa. Nearly 60 percent of people infected in

38


Table 9.2

HIV prevalence rates (per 100 000 population) in the United States by race/ethnicity and gender, 2006

Race/Ethnicity

Males

Females

White Black Hispanic Asian/Pacific Islander American Indian/Alaska Native

395 2388 863 220 340

63 1122 263 46 127

Source: Created by the author from data released in CDC (2008).

SSA are women, which seems to indicate that heterosexual activity is the main transmission mechanism. In North America and Western Europe, around a quarter of the people with HIV are females. (ii)

HIV/AIDS Prevalence Rates in the United States

Table 9.2 gives the HIV prevalence rates for various groups in the United States expressed per 100 000, as opposed to per 100, which is the usual way that UNAIDS and most other agencies report the numbers. Since rates are so much lower in the United States and elsewhere it is often more convenient to express them per 100 000 to avoid a large number of decimal places. The rates are as of the end of 2006 (beginning of 2007). HIV is more prevalent amongst blacks than for other races and groups in the United States. Although blacks are only 12 percent of the population, they make up 46 percent of the 1 106 400 total number of persons that were living with HIV; whites were 35 percent and Hispanics were 18 percent (leaving 1 percent Asian/Pacific Islander and less than 1 percent American Indian). Females in the United States constitute only 25 percent of the HIV total, much lower than the 50 percent worldwide and the 60 percent in SSA, though the share is rising over time. The concentration of HIV is so large for black females that their rates outnumber white females by a ratio of nearly 18 to 1 (and 4.3 to 1 relative to Hispanic females). In total in 2006, there were 1 106 400 individuals living with HIV, up by 112 400 from the 2003 total of 994 000. Some of the increase was expected due to the fact that people now live longer with HIV, and are not dying at the same rate as before, due to treatment with ARVs. Also, if people are living and not dying they can, of course, still transmit the disease. The elderly in the United States (people over 50) make up 24 percent of the total number living with HIV/AIDS (up from 17 percent in 2001) and constitute 15 percent of new HIV/AIDS diagnoses.


39

The disease is virtually absent now in children (under the age of 13 years). So MTCT is not a major transmission mechanism, unlike for SSA where it is how 5 percent of the infections are generated. The breakdown of the total number of HIV cases in the United States by means of transmission was as follows: ● ● ● ● ● ● ●

48 percent were male via MSMs; 18 percent were female high-risk heterosexual; 12 percent were male IDUs; 9 percent were male high-risk heterosexual; 7 percent were female IDUs; 5 percent were male via joint MSMs and IDUs; 1 percent were other.

For males, the main ways that HIV was transmitted was via MSMs and IDUs. Relatively few males were infected by having unprotected sex with females. Females in the United States are like their counterparts in SSA by having heterosexual sex as the main transmission mechanism. So in Part II, when we discuss sexual activity and its role in explaining similarities and differences in regional and racial HIV prevalence rates, we will focus exclusively on heterosexual transmission and largely ignore MSMs and IDUs. Pisani (2008) examines these latter two transmission modes in detail, which are especially important for explaining HIV prevalence in many Asian countries.

OUTLINE OF PART II We see in Table 9.1 that the HIV prevalence rate in SSA is 17 times that of North Africa and of Western Europe, ten times that of Latin America and eight times that of North America. We explain why the rates are so high in SSA by arguing that HIV in these countries is primarily a hunger issue and not simply a sexual issue. To make this case we have to explain why it is that nutrition is more important and sexual behavior less important in African epidemics. Table 9.2 reveals that blacks in the United States are almost nine times more likely to be infected by HIV than whites (and twice as likely as Hispanics). Although black males are twice as likely to be infected as black females, it must be remembered that in the United States the racial difference is starker for black females, as black females are 18 times more likely to be infected than white females, while it is “only” six times higher for black males than for white males. We shall see that the role of sexual

40


relations is more important for accounting for the second, racial, HIV distributional question than the first distribution question related to region. Apart from accounting for regional and racial differences in HIV prevalence rates, the other main task for this second part of the book is to make the reader aware of the wide variety of interventions that are possible to try to stem the rates of HIV infection in countries where there are generalized epidemics. Some of these interventions will be evaluated in cost–benefit terms in Part III. Many of the non-standard HIV interventions involve seeing how to reduce the problems associated with a given HIV prevalence rate (that is, targeting mitigation) and this is why we shall be focusing our efforts on detailing the implications of the fact that HIV in SSA is mainly a hunger and economic development issue. We proceed as follows. Chapters 10–12 make the case for the importance of hunger in SSA. Chapters 13–15 provide the social, cultural and economic background. Chapters 16–17 identify the possible interventions that play a role in agricultural economies. We close with Chapters 18–20, which are devoted to the contribution of sexual behavior to HIV transmission in individual and social settings, comparing and contrasting SSA with the United States.

10.

HIV and hunger

Table 9.1 in Chapter 9 informed us that HIV/AIDS is concentrated in SSA. We will see evidence in the next two chapters that hunger, in the form of malnutrition, also has a major presence in SSA. In this chapter we are going to argue that this positive association between HIV and malnutrition in SSA is not an accidental relationship and that understanding this association is crucial for explaining why HIV is highest in SSA. Malnutrition occurs when the nutrients available to a person are insufficient to meet the body’s needs. This nutrient deficiency between what the body needs and receives can be because a person does not receive sufficient nutrients or because, even though the level may be sufficient, the nutrients are not properly absorbed. What the body needs is not constant over time and is itself a function of the extent to which disease is present. One of the many reasons why HIV and malnutrition go hand in hand is that people living with HIV have higher than normal nutrition requirements. Gillespie and Haddad (2002, p. 10) report that people with HIV need up to 50 percent more protein and up to 15 percent more calories than those who are uninfected.

THE DIRECT ROLE OF MALNUTRITION IN HIV TRANSMISSION There are two main types of malnutrition: (1) macro-malnutrition exists when there is insufficient protein, energy (carbohydrates) and fat and (2) micro-malnutrition involves a shortage of vitamins (such as A, D and E) and minerals (for example, calcium, sodium and potassium). These two types of malnutrition interact and create what Semba and Tang (1999) call a “vicious circle” whereby malnutrition and HIV work together to deplete the immune system. One mechanism that Semba and Tang use to explain the vicious circle involves highlighting the existence of free radicals in the body that damage healthy cells. Antioxidants are chemical compounds or substances (such as vitamins E, C and beta carotene) that prevent the free radicals from operating. When the production of free radicals in the human body exceeds the body’s ability to neutralize them via the

41

42

Setting priorities for HIV/AIDS interventions Insufficient dietary intake Malabsorption and diarrhea Impaired storage and altered metabolism Increased HIVreplication Progression of disease Increased morbidity

Micro-nutrient deficiencies

Increased oxidative stress Immunosuppression Source: Semba and Tang (1999).

Figure 10.1

Vicious circle of malnutrition and HIV

antioxidants this is defined as “oxidative stress”. So micro-nutrient deficiencies increase oxidative stress and this is one half of the vicious circle shown in Figure 10.1. With cells that are damaged, their ability to fight the HIV virus is reduced. There is increased HIV replication and illness (morbidity) leading to insufficient dietary intake and malabsorption of what is consumed (macro-malnutrition) and this is the second half of the circle. What is particularly significant about this vicious circle is that malnutrition is both a cause and a consequence of HIV transmission.

THE INDIRECT ROLE OF MALNUTRITION IN HIV TRANSMISSION We have just seen that malnutrition leads not only to greater HIV replication once the virus has been introduced, but it is also associated with increased sickness more generally. This is important because being infected with other diseases, especially parasitical ones, can lead to higher HIV transmission. Mosquitoes do not spread the HIV disease but they break the skin, and because HIV is transmitted from one person’s bloodstream to another’s, anything that breaks the skin makes it easier for HIVinfected blood to enter into another person. Stillwaggon (2006) was one of the first to emphasize the importance of parasitic diseases and malnutrition in explaining why the transmission rate

HIV and hunger

43

in SSA was higher than elsewhere. Her main point was that it was wrong to just focus on the HIV virus and ignore the characteristics of the host who was being attacked by the virus. HIV is like any of the other public health threats such as TB, smallpox and cholera from the point of view that it is the poor and malnourished who suffer most. Similarly, the parasitic diseases are more prevalent among the malnourished. Hookworms, roundworms and amebas are widespread among the poor in SSA. In fact, 80 percent of the 200 million people infected with schistosomiasis are in SSA. Water in dams and lakes are home to the snails that host the schistosome worms. Using these resources for drinking, washing and fishing turns out to be “high-risk” activities from an HIV perspective. Breaking skin is one thing; breaking skin around the genitals is clearly more important. But this is exactly what these worms do as they cause genital lesions and inflammatory effects in genital areas. The fact that breaking the skin around the genital areas is important for HIV transmission is not a new finding just related to parasitical diseases. Sexually transmitted diseases (STDs) such as chancroid, syphilis, gonorrhea and chlamydia also open up the skin. STDs, in common with schistosomiasis, have an inflammatory effect on genital tissue, which attracts T cells to the site and makes them vulnerable to being infected by HIV (Stillwaggon, 2006, p. 63). The point that we wish to emphasize about STDs is that they are also more likely to be present in populations where malnutrition is widespread.

THE SIGNIFICANCE OF MALNUTRITION AS A CAUSE OF HIV TRANSMISSION With hunger as a main determinant of HIV transmission in SSA, a whole new set of interventions for HIV are opened up. It is not just sexual behavior that one seeks to influence but also factors that influence, and are influenced by, malnutrition. Vitamin supplementation and food programs take center stage. SSA economies are mainly agriculturally based. Anything that enhances or restricts the flow of food can be a target for an HIV intervention. This theme that HIV policy in SSA must not be limited to trying to change sexual behavior and must be looked at broadly in terms of going outside the health sector is one that will be explored throughout Part II and is covered in great detail in Chapters 13–15. But first we look specifically at the evidence for micro- and macro-nutrition deficiencies in SSA and see how they have been remedied.

11.

Nutrition and HIV at the individual level

Many countries have recognized the importance of micro-nutrients in supporting the immune system in its fight against all kinds of diseases. For example, South Africa has a national program that provides vitamin A supplementation in schools. Vitamin A is particularly important for SSA as there is more likely to be a deficiency due to the type of foods eaten and the fact that the tropical sun increases the demand for vitamin A (Stillwaggon, 2006, pp. 34–5). In the HIV context we would expect vitamin A to be important as it is required for the production of T cells. In this chapter we look at some evidence of micro-nutrient deficiencies in HIV populations and report the results of an attempt to assess the effectiveness of supplementing vitamins in SSA.

THE EXTENT OF MICRO-NUTRIENT DEFICIENCIES IN THOSE WITH HIV Semba and Tang (1999) report the extent of micro-nutrient deficiencies in various HIV populations and the percentages are shown in Table 11.1. In the United States, homosexual men and heterosexual adults have the lowest levels of micro-nutrient deficiencies, and IDUs from large inner cities have the highest. There are not many studies for developing countries, but the ones that do exist show that pregnant women are most at risk. Note that vitamin A in particular is deficient in HIV populations in developing countries and in some groups in the United States.

THE EFFECTIVENESS OF MULTIVITAMIN SUPPLEMENTATION Fawzi et al. (1998, 2004) undertook a serious of studies of multivitamin supplementation of pregnant women in Tanzania. They used a controlled clinical trial whereby persons (pregnant women) were randomly assigned to two groups: an experimental group (who were given specified vitamins) 44

Nutrition and HIV at the individual level

Table 11.1

45

Prevalence of micro-nutrient deficiencies in different HIV populations

Location

Risk Group

Criteria

New York City

Heterosexual adults

Miami

Homosexual men

Miami Baltimore/ Washington Baltimore

Adult men Homosexual men

Vitamin A Vitamin E Vitamin B6 Zinc Vitamin A Vitamin E Vitamin B6 Zinc Selenium Vitamin A Vitamin E Vitamin A

0 4 2 4 11 19 30 26 11 3 11 15

Vitamin A Vitamin A

65 24

Malawi Kenya Source:

Injecting drug users Pregnant women Pregnant women

Deficient (percent)

Semba and Tang (1999).

and a control group (who were given a placebo) to see if there were any differences in outcomes between the two groups. Any differences, by the random design, would be due only to the effectiveness of the treatment (the multivitamins). One thousand and seventy-five HIV-1-infected pregnant women at between 12 and 27 weeks’ gestation received the multivitamins A, B1, B2, B6, niacin, B12, C, E in combination and with vitamin A on its own. The main results from the first study were: ● ●

● ●

Thirty fetal deaths occurred among women assigned multivitamins compared with 49 among those not on multivitamins. Multivitamin supplementation decreased the risk of: low birth weight ( C Since dividing total costs C by the number of DALYs is just the cost per DALY, then dividing both sides of the equality by the number of DALYs produces the CBA criterion: Price of a DALY > Cost per DALY But, where does the price of a DALY come from in the CEA exercise? The answer is that the price of a DALY is a threshold value just like the ones that appeared in Chapters 22 to 25. It is the cost per DALY of the last project that was just marginally approved in the fixed budget. So with $500 as the budget, the cost-effectiveness ratio of Project 5 is the threshold cost per DALY. This is given as $218 in Table 30.1. Thus, if the price of a DALY is $218, then for a different intervention to replace one in the approved set, it must produce a DALY at a cost of less than $218.

THE STRENGTHS AND WEAKNESSES OF CEA The main advantage of CEA is that it is relatively easy for an evaluator to undertake. The medical team produces the health outcomes, the comptrollers list the costs and one just divides the costs by the outcomes. It is true that there is more work to do if the outcome is in DALYs and not just persons treated or tested and so on. But certainly no direct estimation of benefits seems to be involved. Also, from the point of view of one department in a large agency, CEA appears to be relevant to the world of administrators who are presented with a fixed annual budget. The argument goes like this: if the funds are limited to those budgeted, what is the point of evaluating projects that cannot be financed out of this budget? The biggest problem with CEA is that the idea of a fixed budget constraint is not valid in theory or practice. From a social point of view, it is not the budget of an individual department that fixes the threshold CEA ratio. It needs to be the total funds of all agencies dealing with HIV/AIDS interventions. This is no easy figure to calculate because, as we have seen in Part II, when one is dealing with generalized HIV epidemics, an HIV/ AIDS intervention could involve transport, nutrition and education as well as health expenditures. Moreover, does it ever make sense to think of

140


funds being fixed independently of considering the benefits of what is to be financed? $5 for a tooth-pick is not much of a deal, but, $5 for a diamond would be a great bargain. One cannot decide whether to cap spending at $5 unless one knows what could be obtained for $5, or even more than $5. In any case, the world of the early 2000s is very different from the world of the early 1980s. With the advent of the Global Fund and the US President’s PEPFAR program, there are more funds available to be spent on HIV/AIDS interventions than ever before. Even if (or especially if) these funds were to dry up in the future, the point is the same. The budget cannot be regarded to be fixed as theory requires. In practice, evaluators nearly always undertake their CEAs without mentioning an explicit budget constraint. How can one know whether an intervention is cost-effective or not if one is not told the amount of funds available? The answer is that the evaluators often use thresholds that others have thought decisive. In the World Bank’s World Development Report for 1993 it was suggested that any intervention producing a DALY at a cost of $50 or less was cost-effective in the context of the poorest developing countries. However, as we shall see in the next chapter this benchmark cannot be generally used to determine what is socially desirable even if one accepts it as being a good guide to what is cost-effective. Another possible line of criticism of CEA, especially by Arnesen and Nord (2006), has been its reliance on DALYs as the sole outcome measure. There are, indeed, measurement problems involved with estimating DALYs. But, the main alleged conceptual criticism is Arnesen and Nord’s claim that the DALY assumes that the lives of disabled persons are worth less than the lives of healthy people. To understand their claim, say that a person is at the final stages of HIV, that is, AIDS is taking over. If a DALY for those with AIDS is valued at 0.2, then saving their lives would contribute 0.2 DALYs; while saving the life of a healthy person would generate 1.0 DALYs. The healthy person’s life would always be saved first. But, this argument ignores the flip side. If a person is mildly ill and has a DALY recorded as 0.95, then spending on curing his/her illness would contribute only 0.05 DALYS, much less than the 0.8 DALYS that would be produced by spending on a cure for AIDS. Thus, the correct way of formulating the Arnesen and Nord concern is to say that a DALY biases interventions in favor of cures over preventions when DALYs are low due to disabilities.

31.

Cost-effectiveness practice: the benefits of ARVs

There is a common saying: “Put your money where your mouth is”. More prosaically, the expression is: “Where your treasure is, there is your heart”. What these sayings imply is that if you say you care for something, then you should be willing to back up the words by giving up your money to support it. This is the basic idea behind the revealed preference methodology that we are going to use in this chapter to carry out an evaluation of antiretroviral drugs (ARVs). To use the CEA method, one needs to have an estimate of the price of a DALY. We present a study that estimated the value of a DALY derived from the revealed preferences of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).

THE REVEALED PREFERENCE APPROACH APPLIED TO INDIVIDUAL AND SOCIAL DECISIONS The revealed preference approach is not something that should be entirely new to the reader as we have already used it in Chapters 26 and 27 to justify the WTP method when dealing with individual preferences as embodied in market behavior. Recall that we said that if someone was willing to pay $4 for a hamburger, then that amount (at least) is what the hamburger must have been worth to the person paying that amount for it. It was this reasoning that we invoked when we argued that the demand curve for condoms is also the marginal benefit curve for condoms as it records the WTP that was revealed by people when they make their purchases. We are now going to extend the argument to cover two goods and not just one and then deal with social, rather than market, revealed preferences. Say we already knew that a person bought one hamburger for $4 and market research now tells us that this same person also bought a book for $8. Then we can deduce using the revealed preference methodology that the person valued the book as equivalent to two hamburgers. We can deduce this because the person spent twice as much on the book as he or she spent on one hamburger. That is, the person valued the book twice as 141

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much as a hamburger, given the two prices established by markets and the income that the individual had available. As was explained in Chapters 26 and 27, market revealed preferences, especially when they are augmented by valuations of third parties who are also affected, is best practice for estimating benefits in CBA. However, when it comes to DALYs, not only do markets for these outcomes not exist, one can also argue that, even if explicit markets were used, they would not be reliable as individuals have no experience of purchasing DALYs. Thus, it may be true that purchasing cough syrup for $10 could increase people’s quality of life, such that they avoid the loss of 0.01 DALYs. But how could anyone know this? Certainly the number of DALYs saved is not specified on the label of the cough medicine. Nor would a person know how many DALYs could be saved if instead of buying the cough mixture, some alternative medicine (say aspirin) was purchased. In these circumstances, it may be useful to consider an alternative approach that tries to extract an expression of revealed preferences by social decision-makers. The starting point for a revealed preference study is a statement of objectives (preferences) by the person or group making the social expenditure decisions. For a government, the objective could be part of legislation or, for an international body, the objectives would be specified in the constitution or rules of association that set up the organization. Then there needs to be some information on spending and the extent to which the objectives were changed by the spending. Finally, there needs to take place a statistical analysis (regression equation) that examines the relation between the changes in the measured objectives and the changes in measured spending. So if, for example, a unit change in a first objective increases spending by $1, and a unit change in a second objective causes spending to go down by $2, then spending is unchanged if two units of the first objective are exchanged (or traded) for one unit of the second objective. The rate of exchange between one unit of one objective for one unit of the other is the trade-off of the second objective in terms of the first objective. When one of the two objectives is expressed in monetary terms, and the other is not, then the trade-off between the two objectives will effectively be a “price”, that is, converting the non-monetary objective into monetary terms. We will now explain how these ingredients for the revealed preference approach were made operational in the context of GFATM expenditure decisions as analyzed in Brent (2009b).

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THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIA (GFATM) The Global Fund was set up in January 2002 to finance projects for the three diseases to be carried out by nationally organized entities represented by governmental ministries, groups of ministries, international organizations, civil society and NGOs. By the end of 2005, the amount approved in grants was US$9.6 billion. Over the period 2002–05, there were 350 grants given to 128 countries. The grants going to 48 African countries will be analyzed, amounting to around 60 percent of the total commitments. In the mission statement for the Global Fund it was stated that funds would be given to: “Countries and regions in greatest need, based on the highest burden of disease and the least ability to bring financial resources to address these problems”. The burden of disease could be measured by the number of DALYs lost to each of the three diseases and the ability of a country to finance these diseases could be reflected by a country’s per capita GNP. So there were two objectives that were assumed to be important for the GFATM, that is, DALYS and per capita GNP. The higher the number of DALYs lost, the greater the need; and the lower the per capita GNP of a country, the greater the need. It is the trade-off between these two objectives that leads to an estimate of the price of a DALY in terms of dollars of national income. The Brent study had separate statistical equations for four DALYs lost-to-disease specifications, that is, DALYs lost from any disease at all; DALYs lost from the three diseases AIDS, TB and Malaria; DALYs lost from the two diseases AIDS and TB and DALYs lost just due to AIDS. We will focus just on the case where DALYs lost to AIDS was involved. The statistical relationship between the amounts of grants committed and the two objectives revealed that: (1) one more DALY lost per capita to AIDS caused GFATM spending to rise by US$72.67, and (2) $11 871 of additional per capita GNP caused GFATM spending to fall by US$72.67. We can put these two pieces of information together as follows. One more DALY lost per capita would cause GFATM to spend $72.67 more (as they would be more in need). This could be offset by per capita income for a country going up by $11 871 seeing that this would cause GFATM to spend $72.67 less (as they would be less in need). The two changes being considered as equivalent in spending terms would mean that one more DALY would be traded for an additional $11 871. In other words, a DALY was priced at $11 871 by the Global Fund.

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Table 31.1


Cost-effectiveness ratios for antiretroviral therapy (US$ cost per DALY)

Type of ARV Intervention Single interventions First line drugs only First line drugs with intensive monitoring First and second line drugs only First and second line drugs with intensive monitoring Combined interventions First line drugs only First line drugs with intensive monitoring First and second line drugs only First and second line drugs with intensive monitoring

CE Ratio (US$) 350–2029 596 2010 1977 547–563 1144 2011 5175

Source: Based on Brent (2009b) Table 3.

CEA OF ANTIRETROVIRAL DRUGS Table 31.1 reports estimates of the cost-effectiveness ratios for ARVs that appear in the health evaluation literature. The single interventions are for ARVs assuming that no other interventions are taking place. The combined interventions are when ARVs are added to a package that includes prevention interventions first. Without a specified budget constraint we cannot tell whether any of the ARV options in Table 31.1 are worthwhile. If we use the World Bank’s (1993) cut-off value mentioned in the last chapter, that producing a DALY at a cost of $50 or less was cost-effective in the poorest of countries, then none of the ARV options would be approved. However, as we also saw in the last chapter, that if we use the CBA version of the CEA criterion, we would pass an intervention if: Price of a DALY > Cost per DALY If we use the price of a DALY that was implied by past Global Fund decisions we would have to approve any intervention that produced a DALY at a cost of less than $11 871. We would now have to decide that instead of none of the ARV options in Table 31.1 being acceptable, any one of them could be approved using a CBA.

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SUMMARY AND CONCLUSIONS Spending reveals preferences. When one is spending on two different items, the relative spending reveals the relative preference of the two items, that is, the trade-off of one item for the other. If one item is a physical good while the other is in monetary terms, then the trade-off expresses the value or price of the physical item in monetary units. In this way a DALY was priced using the spending behavior of the Global Fund. We then placed this DALY price into a CBA framework that involved comparing the price with the cost that was incurred in generating a DALY produced by an intervention. We applied this framework to a consideration of whether ARVs were worth financing. We found that the price of a DALY was much higher than any of the cost per DALY estimates that currently exist in the literature, which involved many different ways of carrying out the ARV intervention. The main conclusion we reached was that without an explicit statement of the funds that are to be made available, a CEA based on commonly applied cost-effectiveness guidelines did not give reliable decision outcomes. We saw that although ARVs are routinely found to be the least cost-effective of all HIV interventions (see Table 30.1 in Chapter 30 as well as Table 31.1) they were in fact highly socially desirable in CBA terms. Logically then, the converse can also be true. An intervention that is the most cost-effective for some other category of HIV intervention may not be actually worthwhile using a CBA test (if, for example, it provides the DALYs at a cost greater than $11 871). One last point. Why should we treat seriously an estimate of the price of a DALY based on the revealed preferences of the Global Fund? This estimate has social significance for two main reasons. (1) The mission statement of the Global Fund said that its allocation of grants would be based on social considerations and these considerations explicitly included the burden of disease, which is typically measured by reference to DALYs lost. (2) The Global Fund is simply a financing agency. It did not have any control over how the money was to be spent, which was to be decided by a Technical Review Panel, consisting of scientists. There is no reason to think that the Global Fund members were making decisions that would serve their self-interest or the interests of any particular political group. The valuation could therefore be interpreted to be social and not private or political.

32.

Human capital theory

In Part I we came across the claim that saving lives is what HIV/AIDS interventions is, or should be, all about. There we pointed out that not all HIV interventions saved lives; and even if they all did, there may be other uses of resources (such as for nutrition or treating other diseases) where even more lives could be saved, or the same number of lives could be saved at lower cost. So one needs to evaluate all interventions, no matter how obviously beneficial they may seem to be in terms of saving lives. For the rest of Part III we will accept that saving lives is the main objective of HIV/ AIDS projects and see how CBA can be used to evaluate the projects from this perspective. In this chapter and the next we deal with the most common way of dealing with the estimation of lives saved and lost in CBA, and in the following two chapters we will examine best practice for valuing lives.

THE HUMAN CAPITAL APPROACH The basic idea behind this method for estimating benefits is that the value of a person’s life that you save can be measured by the present value of the lifetime earnings of the individual. The wages of an individual are determined by the value of the product that the worker produces. The greater the quantity of goods generated, and the amount that people are willing to pay for the goods and services produced, the more valuable the worker. When the person dies, society loses the value of the output that would have been produced. There are four main steps that have to be undertaken to calculate the present value of lifetime earnings: 1. 2. 3. 4.

The current age and the expected remaining working life of the person whose life is being saved have to be identified. The earnings for each and every working year for the individual then have to be estimated. Each year’s earnings must be discounted to its present value equivalent by using a specified social discount rate. The present value of each year’s earnings must be summed to obtain the lifetime earnings. 146


Table 32.1

Year

147

The benefits of a life in Tanzania as the present value of 26 years of earnings (in TZSH) Growth Adjusted Earnings

Discount Factor

25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Totals

335 613 346 018 356 744 367 803 379 205 390 960 403 080 415 576 428 458 441 741 455 435 469 553 484 109 499 117 514 589 530 542 546 988 563 945 581 427 599 451 618 034 637 194 656 947 677 312 698 309 719 956 13 118 105

0.605 0.587 0.570 0.554 0.538 0.522 0.507 0.492 0.478 0.464 0.450 0.437 0.424 0.412 0.400 0.388 0.377 0.366 0.355 0.345 0.335 0.325 0.316 0.307 0.298 0.289

Source:

Created by the author based on Brent (2009d).

Present Value 203 052 203 249 203 446 203 644 203 841 204 039 204 237 204 436 204 634 204 833 205 032 205 231 205 430 205 629 205 829 206 029 206 229 206 429 206 630 206 830 207 031 207 232 207 433 207 635 207 836 208 038 5 343 913

We will illustrate these four steps in the context of valuing the benefits of saving the lives of females by providing them with primary education in Tanzania, which is the evaluation we will be examining in detail in the next chapter. Table 32.1 shows all the base figures and the resulting calculations. Illustration from Tanzania 1.

Tanzania provides primary education free of charge for seven years for all females (and males) aged seven to 13. Many over-aged females

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also attend primary school. For example, in 2001, most pupils (85 percent) were over the age of 13 in the top grade (grade 7). We will assume that schooling typically spans the years eight to 14 to ensure that these over-age females are being represented. HIV infection will be assumed to take place in the 15th year if the female had not attended primary school. For ten years, for years 15 to 24, HIV infection will exist, but not affect whether the female works or not. Without ARVs, the uneducated female is assumed to die at the age of 25 and it is from this year that foregone earnings will start to accrue. Life expectancy in Tanzania is around 50 years. So it is the earnings in years 25 to 50 that are lost for the uneducated female and would be saved if she had attended primary school. 2. Average yearly earnings for females were estimated to be 239 880 Tanzanian shillings (or around US$400). This figure can be expected to increase in line with the recent growth rate in the economy as a whole (which was 3.1 percent for the years 1992 to 2000). So the earnings figures rise over time in column 2. The 26 years of earnings from years 25 to 50 amount to just over 13 million TZSH (or US$21 863). 3. Because a dollar in the future is worth less than a dollar today (as, for example, a dollar today can be put in the bank and earn interest) any future dollars are worth less than a dollar today. How much less depends on the interest rate. We will be considering a 3 percent interest rate because this is the rate that is the recommended rate for use with health care evaluations. A dollar today at an interest rate of 3 percent would be worth $1.03 next year. So $1.03 when discounted at a rate of 3 percent (which means that it is divided by 1.03) is worth $1 today. Alternatively we can say that the future value is multiplied by 1 over 1.03, that is, 0.97, to find the worth today, in which case 0.97 is called the “discount factor” for next year’s values. The conversion of future values to today value terms (when the evaluation of the intervention is taking place) is called finding the “present value”. Because the earnings in year 25 are 17 years into the future from the year that primary school education began, there would be 17 years of discounting at 1.03 to find the present value and so the discount factor for $1 that is 17 years into the future would be 0.605. The discount factors are recorded in column 3 of Table 32.1. Each year’s discount factor is 0.97 of the previous year’s discount factor. This discounting continues to year 50 where the discount factor is 0.289. 4. Multiplying each year’s earnings by each year’s discount factor produces the present values of earnings. Total discounted earnings are equal to 5.3 million TZSH (or US$8907). To conclude: the value of a


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life saved for a female provided with primary education in Tanzania is $8907 using the human capital approach.

THE STRENGTHS AND WEAKNESSES OF THE HUMAN CAPITAL APPROACH The main (and perhaps only) advantage of the human capital approach is that data on earnings is usually readily available and so it is very easy to use and interpret. So much so that legal systems throughout the world use the approach to fix compensation for injuries and deaths. If a person is attacked and is off work for six months, then six months’ earnings are awarded in compensation (in addition to the sums for pain and suffering). Similarly, if the government’s negligence has led to the death of a spouse whose present value of lifetime earning would have been $3 million, then this is the amount of damages that the remaining spouse can expect if he or she successfully sues the government for the negligence. Most non-economists and economists are against using the human capital approach to measure the benefits of life-saving interventions. The main complaint by non-economists is that the approach violates social justice or equity. A millionaire’s life would be valued in the millions while the life of a homeless person without earnings would be worth nothing. Similarly, women (who earn less than men) and the elderly (who have fewer years left to work or are retired) would be undervalued if all one looked at is their lifetime earnings. People in developing countries have much less physical capital to accompany their labors. So their productivity and hence their earnings are bound to be low. Many of these issues can be seen in the measurement of the value of saving a female’s life in Tanzania via an investment in primary education that we just examined. A female’s life was valued at only $8907. Many US citizens earn more than this in a day, never mind a lifetime. While there has been an attempt to measure human capital in terms of time rather than earnings, see Brent (1991), and this would eliminate a number of the equity issues, this new way of valuing a life has not been widely adopted by evaluators. The biggest problem with the human capital approach from an economist’s perspective is that it has nothing to do with the fundamental willingness to pay foundations of CBA. The preference of the person whose life is being saved and evaluated is not being considered in any way. At best the human capital approach is a measure of an external benefit, that is, the effect on others if a person’s life is lost or saved.

33. Human capital practice: the benefits of female primary education There are two main types of education intervention. The first type basically involves providing information about HIV/AIDS and its transmission, which people can use to their advantage. This was the nature of the application covered in Chapter 23 in connection with threshold analysis. The information program could be disseminated out in the community or in a school setting. In a school environment the education program could be run by a teacher or by a peer of the student body. The second type of education intervention takes the form of a general basic education and need not specifically have any course or instruction that relates to HIV/ AIDS. This chapter is concerned with explaining how one goes about evaluating this second type of education intervention. It is this type of program that the World Bank (2002, p. xvii) thinks is one of the “strongest weapons against the HIV/AIDS epidemic”. The reasons why the World Bank thought this way were summarized in Chapter 14. Here we give the details of the evaluation of the provision of female primary education in Tanzania by Brent (2009d), which we introduced in the last chapter.

FEMALE EDUCATION AND ITS EFFECTIVENESS IN REDUCING HIV/AIDS IN TANZANIA As we have stressed a number of times, there is no point in spending time evaluating an intervention that is ineffective, as it would never pass a cost– benefit test. There would be costs and no benefits to show for the costs. As we saw in Chapter 14, there is at this time no general presumption that HIV rates will go down when female education goes up. Effectiveness first has to be established. As was also mentioned in Chapter 14, in the case of Tanzania, effectiveness was found using statistical techniques related to 20 regions over seven years. We will just report the results as they appear in the best estimates. The direct effect of educating a cohort of 20 507 females was, consistent with most of the literature, to raise the number of HIV cases, in this case by 463. But, there was also, simultaneously, an indirect effect that meant that, as the cohort of females became educated, 150

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the incomes to them and others would rise, and this income effect lowered the number of HIV cases by 1879. The net effect of female primary education was the difference between the direct and indirect effects, that is, a reduction of 1408 HIV cases.

THE CBA OF FEMALE PRIMARY EDUCATION IN TANZANIA From the effectiveness part of the study we have just seen that, if 20 507 females were provided with primary schooling in Tanzania, then around 1408 HIV cases would be saved. So the CBA in its simplest terms was one of seeing whether the benefits of saving 1408 lives were worth the expense of educating 20 507 females. In the previous chapter, we sketched out the timing of the expenses and the timing of the benefits using the human capital approach that entailed measuring benefits by the present value of lifetime earnings. To summarize the time profile of benefits and costs: ● ● ●

A female goes to school for years 8 to 14. If infected, she is symptom free for ten years and earns income until 25 when she dies. If uninfected (because she is educated), she earns income for 26 years (from years 25 to 50) and then she dies.

The present discounted value of the 26 years of earnings was already calculated in Table 32.1 in Chapter 32 to be 5.3 million TZSH (or US$8907). With each of the 1408 lives saved being valued at 5.3 million TZSH, the total benefits were 7522 million TZSH (or US$47 million). What we now have to explain is how the costs of schooling were calculated. Table 33.1 gives the details. The primary schooling years took place in years 8 to 14. The Tanzanian government paid for most of it. The government cost rose over time. Expenses incurred by the females (or their families) were mainly school books and uniforms and these were assumed to be relatively constant. The total cost per year is shown in column 4 of Table 33.1. When we multiply these figures by the discount factors, which like the benefits were based on a discount rate of 3 percent, we obtain the present value amounts appearing in the final column of the table. The sum of these present value costs were 127 743 TZSH. Since 20 507 females was the cohort size that was the basis for the generation of the benefits, the total costs for the cohort was 20 507 times 127 743 TZSH, that is, 2620 million TZSH (or US$16.38 million). With total benefits of 7522 million TZSH, and total costs of 2620 million

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Table 33.1

Year 8 9 10 11 12 13 14 Totals


The cost per student of seven years of primary education in Tanzania 1994/95 to 2000/01 (in TZSH) Government Cost

Private Cost

Total Cost

Discount Factor

Present Value

12 830 13 215 15 902 17 039 18 983 21 710 31 290 130 969

1 512 1 512 1 512 1 512 1 512 1 512 1 512 10 584

14 342 14 727 17 414 18 551 20 495 23 222 32 802 141 553

1 0.971 0.943 0.915 0.888 0.863 0.837

14 342 14 298 16 414 16 977 18 210 20 032 27 471 127 743

Source: Created by the author based on Brent (2009d).

TZSH, the net benefits of providing primary education to the cohort of females were 4902 million TZSH (or US$30.6 million). The Tanzanian primary education project was clearly worthwhile with benefits almost three times as large as the costs.

SUMMARY AND CONCLUSIONS From the CBA methods point of view, what is noteworthy about the application of the human capital approach to Tanzanian primary education was the result that the project was found to be very worthwhile even using the very conservative, and hence very controversial, estimate of a female life to be valued only at $8907. This result is not hard to explain because although earnings (and hence the value of life using the human capital approach) are very low in a developing country, the costs of schooling are also expressed in local value terms and therefore very low. The cost of seven years of primary education in Tanzania was only about $213. So it is the difference between the scaled down benefits and the scaled down costs that determines evaluation net benefits for developing countries, not the size of benefits or costs on their own. This means that the desirability of a health care intervention is not necessarily predetermined by the benefit methodology one adopts for making the evaluation. The human capital approach will not automatically rule out every project that affects the poorly paid in society. Notwithstanding this caveat, the human capital approach is not best practice for valuing a life in CBA and it to this end that we next turn our attention.

34.

Value of a statistical life theory

The human capital approach is the most often used method to value a life in health care evaluations. But as we have just explained in the last chapter, it is not best CBA practice. Individual preferences are not being considered. If anything, it is the foregone output to the rest of society that is being recorded, not the value to the individual him or herself. In the value of a statistical life (VSL) approach, it is the preferences of individuals regarding the amount of money that is required to compensate them for putting up with reduced safety that is the relevant valuation. This fits in well with the WTP base of CBA as the individual is choosing to pay for something (usually a job) that has a lower risk of a fatality.

THE VALUE OF A STATISTICAL LIFE APPROACH As first argued by Schelling (1968), the wrong question to ask in a CBA is: how much are you willing to accept to compensate you for losing your life? The most common response would be that there would be no finite amount that would adequately compensate. After all, if you are dead, what can one do with the money (other than give it to a friend or family member)? Rather, the question to ask is: how much are you willing to accept for a specified risk of losing your life? If the risk is 0.001 and you would accept $1000, then you are implicitly valuing your life at $1 million. That is, you would need to receive 1000 times more than $1000 to accept a risk that is 1000 times larger than 0.001. Obviously, a risk 1000 times larger than 0.001 accumulates to a risk of 1 that a person would die. The risk of 1 is a statistical death not an actual death. By accepting $1000 for the 0.001 risk of dying you would, of course, hope that you would not actually die. The $1 million dollar valuation is the statistical implication of the fact that if 1000 people accepted a risk of 0.001 of dying, then on average there would be one death that would result from the collective risk-taking. It is in this sense that the valuation can be called the “value of a statistical life”. Government decision-making nearly always involves considering small risks that affect a large number of persons (for example, operations for hip replacements) rather than a certain death for a known

153

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Table 34.1

US occupational fatality rates by industry, 1992–95 national averages

Industry

Fatality Rate per 100 000 Workers

Agriculture, Forestry & Fisheries Mining Construction Manufacturing Transportation & Utilities Wholesale Trade Retail Trade Finance, Insurance & Real Estate Services Source:

17.0 24.5 12.8 3.6 10.4 3.5 2.8 1.1 1.5

Based on Viscusi and Aldy (2003) Table 1.

person (which would happen if there were, say, one donor heart available and two potential heart recipients and the government had to choose the one person to give the heart to). There are few studies that focus on the VSL in the context of HIV/ AIDS risks and even fewer related to SSA. Most research has involved risks regarding the choice of occupation in the United States and we will examine a typical study in this area. Occupational choice is assumed to involve comparing industries with different risks of fatalities against the extra wages that one can obtain in the riskier industries. Let us look at data issued by the National Traumatic Occupational Fatality Project on US fatality rates by industry for 1992–95 as shown in Table 34.1: The two points to note in Table 34.1 is that there are sizeable differences in fatalities by industry (the rate in Mining is over 22 times that in Finance, Insurance & Real Estate) and the fatality rates are small in absolute size even in Mining (of the order of 0.000245). Given the fatality rate differences by industry, by how much did the wages paid to workers to be employed in risky industries vary? According to a study by Moore and Viscusi (1988), the typical worker required an extra annual compensation of $43.4 to accept a job in an industry with an additional 1 in 100 000 chance of dying during the year. If 1/100 000 equals $43.4, then multiplying both sides by 100 000 means that a chance of dying of unity (that is, it would be certain) requires compensation of $43.4 times 100 000, equivalent to $4.34 million. This would be an estimate of the VSL in the United States involved with the choice of industrial occupation.


Table 34.2

Estimates of the value of a statistical life in various countries

Countries

South Korea (1985) Taiwan (1985) New Zealand Canada Australia United Kingdom France Austria Sweden United States Denmark Switzerland Japan Source:

155

1997 Gross Domestic Product (US dollars per capita)

Mean Value of a Statistical Life (VSL) (millions of US dollars)

2 630 5 901 15 100 19 225 20 316 20 831 22 795 24 481 24 670 28 206 30 834 34 397 36 399

0.620 0.956 1.625 3.518 2.126 2.281 3.435 3.253 3.106 3.472 3.764 7.525 8.280

Based on Miller (2000) Table 2 and an abridged version of Table 5.

The Moore and Viscusi figure of $4.34 million was just one of the 39 VSL estimates that Miller (2000) found for the United States and thought suitable by him for further examination. The average of the 39 studies for the United States was around $3.47 million. There were 12 other countries that had undertaken VSL studies. All of the non-US countries had much fewer studies in which to extract a typical value. For many of the 12 countries there was just one study per country. In total there were 69 studies with VSL estimates in the 13 countries. The average VSL estimate for each of the 13 countries is presented in Table 34.2. The table also shows the per capita income for each country. Because only 13 countries have VSL estimates, how can the approach be used in countries not represented in Table 34.2? Note that the countries in Table 34.2 are sorted into ascending order by income per capita. It is clear that, on the whole, the higher a country’s income per capita, the higher is the VSL estimate. The general relationship between income and VSL was estimated by Miller based on 68 of the estimates and this took the form: VSL = 136.7 × GDP per capita. Thus, as long as one knows a country’s GDP per capita, one can generate an estimate of the VSL for any country by multiplying by 136.7.

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THE STRENGTHS AND WEAKNESSES OF THE VALUE OF A STATISTICAL LIFE APPROACH Individuals make risky decisions all the time. But, they do so for a reason. They expect to gain something in return for taking the risk. This applies no matter the particular risk one is considering, whether it be the choice of job, the choice of mode of travel to take to work (bus, train or car), or the choice of whom to have sex with and whether to use a condom or not. How large the gain has to be to compensate for the risk is a matter of individual preferences. So if one is carrying out a CBA based on individual preferences, risk preferences need to be incorporated just like any other values related to project inputs and outputs. Thus, generating a value of a life that is derived from these risk-return preferences is best practice for CBA. CBA would break down if one were to ask how much the life of an identifiable individual (like you or a family member) is worth. But, if the unit one is trying to value is an unknown person of the general public who is on average likely to die in the course of carrying out advantageous activities that inevitably incur some risk of fatality, that is, one is evaluating a “statistical life”, then meaningful values can be obtained that are less controversial. Having said that, there are a number of problems in applying the VSL approach to evaluate a particular intervention – see Viscusi and Aldy (2003) for a full list. Some of the difficulties are: ●

●

●

●

We know that if a person has to consider a situation where they are certain to lose their life, that is, the probability of dying is 1, then a finite dollar evaluation will not be forthcoming. So only “low” risk situations are feasible using the VSL approach. In Table 34.1, risk rates were expressed in units of 1 in 100 000. Different risk units have been shown to give different VSL estimates. To obtain a VSL of $4.64 million for an individual that values a 1 in a 100 000 chance of dying at $4.64, one simply multiplies the $4.64 amount by 100 000. This assumes linearity. People often value risk non-linearly (so a rise of risk by 1 in 100 000 from a starting base of 0.5 would lead to a lower compensating wage adjustment than when the starting probability is 0.6). What happens if the individual is not well informed and he or she thinks that the risk level in mining is not 24.5, but instead thinks it is much lower? Do we use their actual probabilities or their subjective probabilities to estimate the VSL? Can individuals understand fully the meaning of very low probabilities? If they think that a probability of 0.00001 is really no different


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from 0 (that is, 0.00000), then the VSL estimate would be an unacceptable amount, that is, zero dollars. Other problems mainly stem from the fact that (1) all of the estimates existing in the literature that Miller considered relate to developed countries and none to developing countries and (2) many of the estimates comes from wage-risk choices and none of them relate to risks related to HIV/ AIDS. So if one tries to take VSL values found in developed countries and apply them to HIV/AIDS interventions in developing countries, one will be ignoring the fact that perceptions of risk depend on context and culture. Mining may have a risk of 24.5 per 100 000 workers in the United States, but the figure could be radically higher in Africa. Moreover, what relevance would a low mining risk fatality have for a high-risk activity like sharing needles among IDUs? As Grüne-Yanoff (ND, p. 7) points out, individuals “evaluate fatality risk according to the kind of death this risk may bring about: whether it occurs through illness or accident, whether it is slow or quick, consciously experienced or not”. This point is very relevant to understanding why attempts to apply preferences for work-related deaths, which usually involve sudden accidents, would not be appropriate for preferences for AIDS deaths that are sometimes not strictly accidents and are long drawn-out events. We have come across the law of diminishing marginal utility a number of times. Applied to income, it means that as one’s income increases, the less is the additional satisfaction from having more of it. The relevance of this principle to estimating the VSL is that it is obtained from preferences to trade off higher risk for higher income. If the rich value additional income lower, they will require greater amounts of income to compensate them for the higher risk. So one should expect that the estimated VSL would have to increase with the income level of the person whose life one is valuing. This is clearly seen in Miller’s equation: VSL = 136.7 × GDP per capita. Thus, because people in developing countries have low per capita incomes, their lives will be valued low using the VSL approach. The conclusion therefore is that, while it is good that the VSL approach fits in well with the WTP base behind CBA, the approach will inevitably share the equity drawback of WTP – that it is going to be greatly affected by the income level of the preferences for whom it is used to estimate the benefits.

35.

Value of a statistical life practice: the benefits of VCT

In this chapter we will explain how the VSL approach has been used to value VCT services in Tanzania as covered in Brent (2009a). In that country, at the time of the evaluation, VCT services were available to a very small percentage of the population. One issue then, after carrying out a CBA of an existing program, is how to evaluate VCT programs if they were to be scaled up to the population as a whole. As we have seen in Part I, scaling up HIV/AIDS interventions is a main objective of UNAIDS and the World Bank. So we will be examining results for both existing and scaled up VCT programs in Tanzania. Because evaluating VCT completes our study of alternative methods for evaluating CBA interventions for HIV/AIDS, and as a kind of conclusion to Part III of this book, we will compare and contrast the VSL results for VCT with those using a competing benefit methodology, that is, the human capital (HC) approach. As usual, we begin the outline of a CBA application with a discussion of the effectiveness of the intervention.

ESTIMATING VCT EFFECTIVENESS We will start with a framework that provides estimates of the number of lives saved if we assume that VCT is effective. Then we refer to evidence supporting this assumption for Tanzania. VCT services involve testing, and then counseling on the basis of the test results, to change behavior. The effectiveness of the services depends crucially on the existence of discordant couples – couples where one partner is HIV positive and the other is HIV negative. If both partners are HIV negative then behavior does not need to change. Similarly, if both are HIV positive then it is not so essential that behavior changes (though this is not always the case as people can get reinfected with different strains). When one partner is HIV positive and the other is HIV negative, then risky behavior has to change to prevent the positive person infecting the negative one. The existence of a discordant couple is a joint event: one must be HIV 158

Value of a statistical life practice

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positive and the other HIV negative. The probability of there being one individual in a discordant couple is therefore the probability of this joint event, which in the simplest case is the product of two probabilities, that is, the probability of one being infected P and the probability of the other person not being infected 1– P. That is, the joint probability is: P (1 – P). If, as in the Tanzanian VCT program between 1997 and 2001, the percentage tested HIV was 70.8 percent, this would fix P = 0.708 and 1 – P as 0.292, so the joint probability was 0.2067. In a program that tested a group of 3586 individuals, there would be 0.2067 × 3586 people – equal to 741.4 – who could be infected without behavior change if, say, condoms were not used during sexual relations. Therefore, with behavior change following the counseling part of VCT, there would be 741.4 lives saved by the intervention. This number assumes that the VCT program involves an individual being tested and counseled on his or her own. If there were dual testing, then both the individual and the partner would be changing their behavior in the event that one of them was HIV positive and the other was HIV negative. So there would be twice as many lives saved under a dual testing VCT program (to accompany the twice as much testing costs). In this case 1482.8 lives would be saved. The existing VCT program in Tanzania at the time served very few individuals. The ones who were served were more likely to be HIV positive, as the main reason why they got tested in the first place was that they were involved in risky sexual behavior and they wanted to confirm their HIV status. This was why the HIV positive rate was so high with P = 0.708. A scaled up program would be serving the average Tanzanian and not just the high-risk groups. Since the HIV prevalence rate in Tanzania at the time was 7 percent, the appropriate probability for a typical Tanzanian in a VCT program extended to the general population would be P = 0.07 and not P = 0.708. Hence the joint probability of a couple being discordant with this lower probability would be 0.065. This means that 0.065 times the 3586 people being tested would result in 233.4 lives saved in a scaled up, separate VCT program, much less than the 741.4 lives saved under the existing program. A scaled up dual program would again save twice as many lives, that is, 466.9. To summarize: the existing VCT program saved 741 lives if it was a separate testing program and 1483 if testing was dual. A scaled up separate testing program would generate 233 lives saved and this would rise to 467 under a dual testing program. These numbers were estimates that were derived from the P (1 – P) formula. These numbers were not unrealistically high because both the Voluntary HIV-1 Counseling and Testing Efficacy Study Group (2002) and Brent (2009a) found empirically that, for Tanzania, VCT was highly effective.

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THE CBA OF VCT SERVICES IN TANZANIA The evaluation of VCT services in Tanzania involves taking the estimates of the number of lives saved from the previous section and multiplying them by the value of a life saved to form the benefits. Then one has to estimate the costs to produce the net benefits. We explain these steps in turn. All the cost–benefit ingredients and results are shown in Tables 35.1 and 35.2. Table 35.1 relates to the case where the VSL method was used to measure the benefits and Table 35.2 is the counterpart with the HC approach used to measure the benefits. (i)

The Benefits

The VSL method explained in the last chapter came up with an estimation equation for the value of a life that was dependent on the national income of the country (GDP per capita). The equation was: VSL = 136.7 × GDP per capita. The 1998 figure for GDP was 170 844 TZSH, leading to a VSL of 23.354 million TZSH. Multiplying this amount for the VSL by the number of lives saved for the various VCT programs produces the total benefit figures given in Table 35.1. Following work by Haacker (2006), an estimate of the value of a life using the human capital (HC) approach can also be obtained from an equation dependent on a country’s national income. This relation for Tanzania is (which assumes that the life one is saving has 24 years remaining): HC = 24 × GDP per capita. With the same 1998 GDP figure, the HC estimate of the value of a life is 4.1 million TZSH. Multiplying this figure by the number of lives saved for the various VCT programs gives the total benefit figures in Table 35.2. (ii)

The Costs

There are two costs associated with VCT services. The first one relates to the costs of testing and counseling. Obviously if one expects to obtain behavior change after testing, one must expect to pay for counseling to accompany the testing. The cost per client in the program (whether they accepted to be tested or not) was estimated to be 17 358 TZSH. With 5535 clients in the program, the testing and counseling costs were 96.1 million TZSH. These costs did not vary by VCT program except that they would be double the amount for dual testing. The second cost was the foregone benefit of unprotected sex. If one is now to use a condom with one’s partner, the loss of satisfaction from having sex without a condom must be factored in. An estimate of the

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Source:

96 m 192 m 96 m 192 m

16 796 m 9 809 m 1 661 m 3 089 m

Foregone Benefits

Based on Brent (2009a) Tables 2 and 3.

Existing, separate Existing, dual Scaled up, separate Scaled up, dual

VCT Costs 16 893 m 10 001 m 1 757 m 3 281 m

Total Costs 741 1 483 233 467

Number of Lives Saved 23.4 m 23.4 m 23.4 m 23.4 m

Benefits per Person

17 314 m 34 628 m 5 452 m 10 904 m

Total Benefits

1.03 3.46 3.10 3.32

Benefit– Cost Ratio

Cost–benefit outcomes for VCT testing using the VSL method for estimating benefits (m = millions of TZSH)

VCT Program

Table 35.1

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Source:

96 m 192 m 96 m 192 m

Based on Brent (2009a) Tables 2 and 3.

Existing, separate Existing, dual Scaled up, separate Scaled up, dual

VCT Costs 16 796 m 9 809 m 1 661 m 3 089 m

Foregone Benefits 16 893 m 10 001 m 1 757 m 3 281 m

Total Costs 741 1 483 233 467

Number of Lives Saved

4.1 m 4.1 m 4.1 m 4.1 m

Benefits per Person

3 040 m 6 080 m 957 m 1 914 m

Total Benefits

0.18 0.61 0.54 0.58

Benefit–Cost Ratio

Cost–benefit outcomes for VCT testing using the HC method for estimating benefits (m = millions of TZSH)

VCT Program

Table 35.2

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value of unprotected could be deduced from the differential price charged by commercial sex workers for protected and unprotected sex, which was estimated to be 3627 TZSH. For a 24-year remaining lifetime (and an average of 28 sexual acts per year) this cost becomes 3.3 million TZSH. This sum is then multiplied by the number of people who are expected to be changing their behavior, which varies by the particular VCT program, and this leads to the foregone benefits figures in Tables 35.1 and 35.2. The total costs in these tables are then the sum of the two costs (the VCT costs and the foregone benefits). (iii)

The Benefit–Cost Results

On the basis of the figures in Table 35.1, which uses the VSL method to measure benefits, we can see that existing separate VCT services in Tanzania were only marginally worthwhile. Benefits were just 3 percent larger than the costs (that is, the cost–benefit ratio was 1.03). However, for dual programs, benefits were over three times larger than the costs. Note that foregone benefits are by far the larger element in the costs of VCT. This category of cost was estimated in this study for the first time. Its importance is not just in its absolute size, but how it varies with the VCT program considered. It is because foregone benefits were so much lower in the existing dual program that this version was so much more worthwhile than separate testing. The reason why foregone benefits were so much lower can be easily understood. When a person gets tested separately and is found to be HIV positive, that person will feel obliged to use condoms with his or her partner since the HIV status of the partner is unknown without that person being tested. With dual testing, partners need to give up unprotected sex only if they are part of a discordant couple, that is, the partner has a different test result. Scaled up programs were always highly worthwhile with benefits over three times the costs. The difference between separate and dual programs disappears, in contrast to the evaluation of existing programs. Again, the main explanation lies with the foregone benefits category. When, probabilities related to the average person are used (instead of just the high-risk individual) there are fewer discordant couples and thus less need to give up unprotected sex. When we replace the VSL estimate of benefits with the HC valuation method, which is the only difference between Tables 35.1 and 35.2, we see that no VCT program is worthwhile. Benefit–cost ratios are always less than 1, that is, benefits are less than costs and so net benefits are negative. These results are simply a product of the fact that the formula used to estimate the value of a life as a function of a country’s per capita GDP had a multiplier that was five times larger when applied to the VSL method than

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it did when used with the HC approach. Hence if benefits are five times larger using the VSL method, then the benefit–cost ratios also will be five times larger.

SUMMARY AND CONCLUSIONS We now summarize results and issues with all of Part III in mind. The main points are: ●

●

●

●

●

●

Only CBA can determine priorities. There are no real alternatives. Some proposed alternatives, such as cost minimization and costeffectiveness analysis, are, at best, partial and incomplete CBA methods. Since there is only CBA, it is up to the reader to rely on the method for valuing the benefits that best reflects his/her values, preferences and understanding of how the world operates. There are a number of different methods. CBA is not restricted to using just one benefit method. Having said that, some methods are better than others. This is important because different methods may give opposing outcomes. We saw that in the evaluation of VCT services in Tanzania. The services were worthwhile using the VSL method and not worthwhile using the HC method. What makes one method of estimating benefits better than another is whether it relies on individual preferences or not. WTP and the VSL approaches are best practice because they are based on these preferences. Thus, for the VCT evaluation for Tanzania one can conclude that these services are, in fact, worthwhile because the VSL results showed this to be the case. When considering evaluations, it is important to ensure that alternative versions of the program are being considered. It is not the case that, for example, every VCT program is going to be highly worthwhile. Altering how a program is to take place (for example, using dual rather separate testing) will affect the results. Similarly, when considering evaluations, one should also ensure that different scales of operations are being considered. Again, it is not the case that if one scale is worthwhile then another scale will be equally worthwhile. With VCT services in Tanzania we saw that existing programs were marginally worthwhile, but scaled up programs were highly worthwhile.

PART IV

Social considerations in CBA

36.

Introduction to Part IV

By now it should be fully clear why the setting of MDGs was not very helpful. It is true that seeking to halve the spread of HIV/AIDS by 2015 does at least try to ensure that that there is some accountability for all the monies that have been devoted to this disease. In this way the effectiveness of interventions would be an issue. There cannot be no improvement. But, why a 50 percent improvement should be feasible when no mention is made of how the improvement is to be achieved makes no sense. Moreover, we need to know why a 50 percent improvement is better than any other rate of improvement. CBA on the other hand, would enable us to answer all the relevant questions, not only about whether particular interventions are effective or not, but also about whether any or all of them are worthwhile. We add up all the worthwhile interventions so that we can find what the resulting level of improvement can be and then determine what the total necessary expenditures should be. Part III covered some of the necessary ingredients of CBA. Many of the technical details were omitted, especially a discussion of the statistical methods that need to be employed to analyze the data so that they can estimate the inputs, outputs, effects, benefits and costs. The aim was not to prepare the reader to carry out a CBA for him/herself. Rather the object was to show the many ways that a CBA evaluates an HIV/AIDS intervention, so that the reader can appreciate what CBA has to offer for the setting of priorities to deal with this disease. In this introduction to the last part of the book we will summarize the main points from Part III and present an outline to Part IV, which is devoted to explaining what is so “social” about an economist’s cost–benefit calculations.

WHAT HAS BEEN LEARNED FROM PART III There are three main themes that were covered in Part III that need to be highlighted so that one has the necessary base to understand the arguments that will be made in Part IV:

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(i)


There is More than One Way to Carry Out a CBA

Since measuring outcomes in monetary terms to form the benefits is the distinctive part of CBA, as it separates the discipline from cost minimization and cost-effectiveness analysis, Part III concentrated on presenting many different methods for measuring the benefits of HIV/AIDS interventions. Many think that CBA relies solely on valuing lives and other effects of health care interventions by a person’s earnings (that is, the human capital approach). In the health care evaluation field this was the main valuation method and this approach has its uses. But, outside the health care field the human capital approach is not best CBA practice and this needs to be understood. The willingness to pay approach is best practice in CBA generally, whether valuing inputs to form the costs or valuing the outputs to determine the benefits. The main purpose of Part IV is to explain why it is that using WTP is considered to be best practice. Even though WTP is best practice, nonetheless the reader was presented in Part III with a selection of alternative methods for valuing benefits and these various methods had applications, so that the reader could fully appreciate the implications of using each method. CBA is the only way to determine whether a project is worthwhile. But, the reader should be aware that there exists a whole range of possible ways that have been used to carry out CBAs of HIV/AIDS interventions (and many others in the CBA field that have not yet been applied to interventions for this particular disease). Exposed to a range of options and their implications, the reader should be able to adopt a CBA method whose assumptions he or she feels comfortable with. (ii)

The Details of Interventions are Important

Apart from giving the reader an appreciation of the implications of what it means to adopt a particular benefit methodology, the purpose of pairing the various approaches with actual applications was to make the point that details matter to CBA outcomes. Some of the important details are how an intervention is implemented (for example, on what scale it is to be carried out), while other details relate to local circumstances that impact projects (such as the wage rates that exist in a particular area). This point that the details are important in determining outcomes must be realized whenever it is suggested that, because an intervention was worthwhile on a particular scale in a specific country, that therefore the project must be worthwhile when implemented on a different scale in some other country. The outcomes depend on the particular numbers; if the numbers are different, the outcomes could be different. It is as simple as that. As obvious


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as this point is, it has not been understood by the international agencies making HIV/AIDS decisions who are determined to scale up effective programs whether they are worthwhile or not. To see how details mattered let us look back at the evaluation of the condom social marketing program in Tanzania in Chapter 27. The program involved charging a price for a pack of condoms that was one-third of the costs. At this price, social benefits were about 60 percent higher than the costs (the cost–benefit ratio was 1.59). If the price charged had not been so low, and raised equal to the costs, then output would have been lower and hence benefits would have been smaller. But, with output lower, costs would also have been much reduced. So the social benefits would have been over three times the size of the costs (the cost–benefit ratio would have been 3.35) with the higher-priced program, making the smaller-scale project much more socially worthwhile than the actual program that was in place. The existing condom social market program was itself just one variant of a whole host of possible condom promotion schemes. One alternative, that existed in Tanzania and was run by the Ministry of Health, supplied condoms free of charge. Zero pricing is every non-economist’s delight. Why not everyone’s delight? This is because the details of a program are important. The free condoms were supplied at government clinics that operated during the daylight hours. People going to the daytime program would be highly visible to all and thus open to stigma. People could ask: “Why was so-and-so going to get free condoms when he or she is supposed to be happily married?” Instead of being subject to such stigma, people could go to the condom social marketing program. This did not provide condoms free, but did supply the condoms in bars and clubs where customers could go late at night under the cover of dark. Half of the total condoms used in Tanzania were obtained in this anonymous fashion that mitigated the effect of stigma – see Brent (2009e). Clearly the price charged for condoms, and where and when they can be bought, are important details that would affect the outcomes of any condom promotion program. (iii)

CEA is Not Useful when Budgets are Variable

Most health care evaluations, and this includes those involving HIV, are carried out as cost-effectiveness analyses. As we explained in Part III, CEA cannot always be relied on to determine whether projects are worthwhile. CEA requires a fixed budget constraint. All interventions are then to be ranked from lowest to highest according to their cost-effectiveness ratios. The decision-maker is to first approve the intervention with the lowest cost per unit of effect and go up the list until all the funds in the budget have just been exhausted. If the budget is not fixed, then all the decisions that were

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predicated on the fixed budget may have to be altered if funds are variable. With more funds, additional projects with higher cost-effectiveness ratios that were originally rejected can now be approved. With fewer funds, some of the previously approved projects would now be ruled out. The issue then is, how realistic is it to assume that there is a fixed budget constraint? Superficially, a fixed budget is what many agency departments actually do seem to experience. A department may get an annual allocation of funds and be told do the best job (that is, carry out the most costeffective projects) with these funds. But, this is often an illusion because not all the allocation of funds will be spent, and if more funds are required, the agency as a whole may be able to do some fundraising to secure added financial resources. In general, the reality is that additional funds will be found if a project is thought worthwhile and not otherwise. So it matters what the extra money is going to be spent on. A project that saves lives will often be able to attract additional funds; while a project that seeks to build a statue to honor a political leader will not be as easy to finance. It frustrates many people that large sums of additional monies have been raised for HIV/ AIDS in the last few years, especially by PEPFAR and the Global Fund, and comparable sums have not been available for other diseases (such as malaria and malnutrition) where millions of lives are also at stake. The reality though is that more funds are available for HIV/AIDS only because it is HIV/AIDS that is being targeted by the funds. Donors do not seem to be willing to make the same commitment to other public health issues. If donors think that HIV/AIDS is exceptional, then HIV/AIDS is exceptional, whether project evaluators like it or not. To conclude: CBA compares the benefits and costs of any available level of health care expenditures. It can deal with situations where funds are variable, unlike CEA where it must be assumed that funds are fixed. We suggested that budgets are usually flexible, depending on how the funds are to be spent. Note that for the last few years, funds for HIV/AIDS have been increasing so they have not in fact been fixed. But, reductions in funds can also be accommodated by CBA and not just increases. At the time of writing (summer 2009) the world is in the midst of a financial crisis. One should therefore expect that charitable giving will decrease and there will be fewer funds available for HIV/AIDS interventions.

OUTLINE OF PART IV Part IV will present some of the arguments in favor of going the cost– benefit route to make HIV/AIDS expenditure decisions. Isn’t using


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economic reasoning like treating people as if they are in a meat market – commodities to be bought and sold? The next chapter will try to answer this question. It will be argued that there is no simple classification scheme that identifies “higher” from “lower” goods and services. After all, meat can keep you alive, and there can be markets for goods that save lives and not just those that can satisfy the taste buds. The next two chapters deal with the issue of what economics has to offer for an understanding of social decisions. What makes CBA “social”? The role of WTP will be highlighted and the difference between making a decision from a private rather than a social perspective will be detailed. Next comes two chapters on equity. These two chapters deal with the heart of the non-economist’s complaint of CBA that relying on WTP is inherently unfair. We will show how WTP can and has been adjusted for an individual’s ability to pay in CBA using distribution weights. Relying on this weighed WTP will be seen to be a lot fairer than trying to avoid efficiency considerations altogether by using time and other non-price methods for rationing health care resources. The final two chapters present the main conclusions of the book. First we explain how not to make health care expenditure decisions for HIV/ AIDS and then we say how one should go about setting priorities in this area. How not to make expenditure decisions is to do what actually takes place now, basically, simply rely on common sense. Part I was devoted to explaining how things are so complicated in the HIV/AIDS field that guesswork cannot be relied on. We will now build on this understanding by showing why HIV/AIDS interventions do not go about with labels on them saying: “Look at my anti-HIV label! I’m a project that was specially designed to combat the disease, so I am bound to be always worth supporting”. One should label the outcomes of the interventions “worthwhile”/“not worthwhile” and not rely just on the description of the interventions to make this judgment. How to make HIV/AIDS decisions is to rely on CBA. This uses data that reflects actual human behavior and assembles these data in a form that shows whether something is worthwhile or not.

37.

Commodification: everything is seen as a commodity to be bought and sold

Non-economists (and many health economists) take the view that they are content to use cost minimization and cost-effectiveness analysis to try to evaluate HIV/AIDS interventions, but they balk at the use of CBA for the same purposes. Using monetary values for inputs to determine costs is fine, but using values for outputs to determine benefits is not fine (in fact, it is unacceptable). In Part III, when we looked at these alternative evaluation methods, we already pointed out that putting monetary values on inputs and outputs involves the same set of ethical and social considerations. So if one accepts one set of valuations (on the costs side) one should, logically, accept the other set of valuations (on the benefits side). But, now let us examine in detail exactly what the values are that underlie the estimation of benefits in CBA. Best practice in CBA is to use willingness to pay to obtain the monetary values for outputs and inputs. When we went through the theory behind WTP we drew the analogy with hamburgers. If people actually pay $4 for a hamburger then they must value the hamburgers at least $4 or else they would not have been willing to pay that amount for them. It is at this point that you can imagine the critics of CBA saying: “That is exactly the problem with CBA. It is treating health care and HIV/AIDS interventions as if they were commodities like hamburgers! How can you use the idea of WTP to value something like a human life, or helping people who are needy?” Our answer will be that one cannot easily distinguish, and hence separate out, “higher”-level and “lower”-level goods and services. If one tries to make such a separation, this often ensures that “higher”-level goods and services get ignored from consideration in an evaluation.

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Commodification

173

WHETHER TO TREAT HIV/AIDS INTERVENTIONS AS IF THEY WERE “COMMODITIES” The case against treating everything as if it were a commodity has been stated best by Os Guinness (2001, p. 67): Not everything can or should be given a market price. The sign of a good society is the level and number of things that are acknowledged to be beyond market values – and thus appreciated for their own sake and not for extrinsic, especially financial rewards. The line between “For Sale” and “Not for Sale” is a key indication of a nation’s values.

One can agree with the general sentiments expressed by Guinness’s words. Unfortunately they are not as helpful as they seem from the point of view of carrying out a health care evaluation. There are three main difficulties that need to be recognized. First, the idea that there are two types of goods: one type that is really special and above the need to value them in monetary terms, and another type that is in some way ordinary and therefore alright to allocate a price, is not descriptively true of how human beings run their lives. Individuals are willing to pay, and actually do pay, for almost everything. Art and culture are not immune from monetary evaluation. Most museums, opera houses, art galleries, zoos and botanical gardens experience no philosophical difficulties in charging an admission fee for entry. In the process individuals have to decide whether seeing nature, a work of art, a virtuoso performance, or an endangered species, are all worth paying for relative to (yes!) buying a hamburger. And we have seen in Part III, that individuals are even willing to trade off a chance of losing their own lives as long as the monetary gain is large enough. In fact, trying to claim that certain parts of an intervention are above monetary valuations is a position that turns out to be counterproductive. If one treats providing health care, peace and quiet, preserving culture and the environment as activities or states of the world that should not be priced, this actually ensures that they do not play a part in the formal evaluation. One quantifies and values all the tangible items and excludes, and hence ignores, the intangible items as they are “difficult” to value. If one regards something as “priceless”, evaluators take this much too seriously and literally give it “a zero price”! It is better for an evaluator to give his/ her best shot at valuing something, no matter how imperfectly, rather than to exclude it entirely from consideration. One needs to act as if everything has a price in order to ensure that everything gets included. Second, giving a value to something is indeed a sign of appreciating it for its “own sake”. Take the case of housework. In many cases throughout

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the world, housework is undertaken by women and no explicit remuneration is given. This leads to the contribution of women to society and the economy being undervalued. For example, home-making services are not usually recorded as a part of national income (GDP). One reason why macroeconomists have underestimated the impact of HIV/AIDS on countries in Africa is that the epidemic has killed many women and their work is outside the monetary sphere. On the other hand, it is standard in the design of a health care CBA (if not always in the practice in Africa) to measure how much time is given up, say, in visiting a doctor for testing and treatment, and to put a monetary amount on that time given up. We have seen this consideration play a role in the evaluation in Chapter 29 (see Table 29.1) where valuing time was a part of the patient costs of visiting TB clinics. These patient costs were different for different forms of public–private partnership giving treatment because their locations were different, causing travel times to vary. The point is that CBA sets out to value all inputs and these valuations are not excluded because they relate to women. In principle, a CBA would value each and every one of the contributions of a woman working at home, whether she is a cleaner, a cook, a child minder, a planner of household finances, or a counselor. Putting a price on all women’s home-making services is recognizing their contribution and ensures that the evaluator is not taking them for granted. Third, CBA is not culturally neutral; it does recognize a “nation’s values”. A cost–benefit evaluation does depend on the legal system that defines what should and should not count. Net benefits of, say, $1 million dollars can be generated by a magazine containing child pornography, or from a certain form of cancer research. From a private perspective, $1 million dollars is $1 million dollars, no matter how it is obtained. But, a social CBA would not treat the two sums equivalently. Increases in cancer research would be positively valued as this would lead to reductions in cancer cases. Increases in child pornography would not have a positive net benefit because the effect of pornography on the children would be a cost, and the benefits (WTP) of the magazine readers would be given zero social value because it is illegal. Nonetheless, because something is illegal does not mean that it does not take place. CBA needs to be involved in setting priorities for all types of intervention, whether they be increasing “goods” or reducing “bads”. For example, drug treatment programs need to be evaluated even though the taking of some drugs is illegal. A CBA would justify switching a person from the addiction to heroin to the addiction to methadone if the harm to others is lower. The relative legality of the two forms of addiction would not be decisive. The relative effectiveness and net benefits of treatments would be the crucial factor for a CBA.

Commodification

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SUMMARY AND CONCLUSIONS These are the main points of the chapter: ●

●

●

HIV/AIDS is a behavioral disease. Certain behaviors will give a person the disease, help to transmit the disease to others and reduce the adverse effect once the disease has been detected. All these behaviors determine monetary prices and are affected by them. Interventions that try to alter behaviors work through prices. The prices of condoms, commercial sex work, clean needles, ARVs, getting tested and being counseled are elements that need to be considered in an evaluation of an intervention. CBA ensures that these considerations are included as part of the evaluation, whether in the form of the benefits or as a part of the costs. When we price something we give it value. We are trying to estimate its inherent worth. Valuing something does not “devalue” it somehow. Placing a zero price on a good or service is the surest way to devalue it. Many risky behaviors that contribute to the transmission of HIV/ AIDS are illegal to some extent, for example, injecting drugs, commercial sex work and even (in some developing countries like Tanzania) males having sex with males. When interventions (like condoms and clean needle exchanges) are promoted to change behaviors, in the process of reducing transmission, they reduce the riskiness of the behaviors and inevitably lead to an increase in the illegal activities. Although, CBA operates within an existing legal system, the extent to which illegal activities continue is not the outcome that is to be used to judge the value of an intervention. If transmissions decline and net benefits are positive, then “harm reduction” interventions are socially worthwhile even if (unintentionally) the number of lawbreakers increase. After all, if saving lives is valuable, then all lives are worth saving – those who are involved in legal activities (like the wives who subsequently have sex with their husbands who first visited CSWs and will not now be infected because condoms were used) and even those doing things to themselves that society does not approve (injecting themselves with newly provided clean needles).

38.

What is so “social” about CBA? Fundamentals of CBA

What makes CBA “social” is that it tries to specify when any intervention makes society better off. There are two main objectives that are to be used to make the determination as to whether something is a social improvement. The first is economic efficiency and the current chapter is devoted to this objective. The second is equity, and the next two chapters will examine this objective. In the process of outlining the principles behind economic efficiency, we will explain what the crucial value judgments are that need to be made to justify the methodology of CBA, that is, we will be identifying the fundamentals of CBA.

ECONOMIC EFFICIENCY AND WILLINGNESS TO PAY Mainstream economics assumes that society is individualistic. For an intervention to make society better off, one first has to make individuals better off. How does one know whether individuals are better off? One looks at their net benefits. If the willingness to pay for all the outputs that individuals receive exceeds their willingness to accept compensation for all the inputs they supply, then net benefits are positive and they are better off. To find out whether society is better off one just sums the net benefits (both positive and negative) for all the individuals to obtain aggregate net benefits. If this is positive then the intervention is worthwhile. After all interventions that have positive net benefits are undertaken, then net benefits are highest and “economic efficiency” has been realized. In other words, the idea of economic efficiency is bound up with the objective of maximizing the satisfaction (net benefits) of all individuals. The shorthand way of referring to economic efficiency is in terms of maximizing the size of the “economic pie”. The value judgment here is that “more is better than less”. In the absence of concerns about equity, economic efficiency seems straightforward as it would seem strange to advocate that one should waste resources and not put them to their best use. Why not make someone better off if one can do so and not make anyone else worse off? 176

Fundamentals of CBA

177

ECONOMIC EFFICIENCY AND CONSUMER SOVEREIGNTY People get satisfaction from receiving the output from an intervention if they are willing to pay for it. With resources (income) limited, purchasing health care goods and services precludes the purchase of other goods and services that also give satisfaction. There would be no point in people purchasing the health care if it did not make them better off. Because it is the individuals themselves who are to decide how to spend their income, and in the process make themselves better off, the most important value judgment in CBA is the assumption of “consumer sovereignty”, that is, the individual is assumed to be the best judge of his/her own welfare. In economics, outside the health care field, the assumption of consumer sovereignty is generally accepted. The main violations of this principle would be related to age. We do not ask fiveyear-old kids how much they are WTP to stay up after midnight. The parents decide for the kids that they have to be in bed fast asleep well before midnight. Nor do we always accept the preferences of the elderly when their minds seem to go and they are not able to look after themselves. Family members or paid professions are occasionally the deciders of what is best for the elderly. In between the very young and the very old, individuals are left to decide what is best for them, whether it is to join the army, who to vote for, whether or whom to marry and what career path to follow. Loosely speaking, consumer sovereignty is the democratic way. In the health care field the assumption of consumer sovereignty is strongly questioned. Does the individual really know what is best for them? And even if this is the case, does the individual want to make health decisions for him/self? We address the second question first. It is true that sometimes we would like to leave certain decisions to the doctors, for example, when to stop life support for a brain-dead relative. But, generally, who knows better than the patient how much pain he or she is in, and whether the risk of dying from an operation is worth undertaking? Most of the time the elderly are physically but not mentally impaired. The reality is that less than 5 percent of health care expenditures involve emergency situations where patients are unconscious or otherwise incapacitated to such an extent that someone else (like a surgeon in the ER room) has to decide what treatment to apply. As for the issue that individuals are not well informed about their health conditions and their alternatives, one can point out that there is nothing wrong with an individual consulting a physician and asking that person to act as an advisor as to the best course of treatment. After all, individuals

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usually do not know much about the law, yet they do not leave all their legal decisions to lawyers. One could argue that for HIV/AIDS, the lack of information to make informed decisions can no longer be an excuse for saying that individuals do not know what is best for themselves. If there is one success story of all the millions that has been spent on this disease it is education and information programs. The whole point about establishing the vast number of surveillance systems through the world is that people can know what the risks are concerning behavior that can transmit HIV/AIDS. If 60 percent of IDUs in your country are infected, the probability of getting infected from sharing a needle is not unknown. When youths are told that there are certain myths involved with the disease, for example, that a healthylooking person can still be infected, there is a purpose in mind. This is to let the teenager know that a “pretty face” can still transmit the disease to them through sexual relations. The complaint concerning HIV/AIDS interventions is not that people still do not know what is involved with certain risky behaviors. Rather, the criticism is that behavior has not changed enough in face of this information to prevent the pandemic. It would seem that this points to a glaring weakness of assuming consumer sovereignty. But, the reality is exactly the opposite. Western donors have spent over two decades deciding what is best for Africans concerning HIV/AIDS transmission. Africans must be abstinent, delay first sexual intercourse, have a single partner, use condoms every time they have sex (no matter the partner, except the spouse), never share needles, and so on. In the year 2007, there were still 1.9 million new infections in SSA. Telling people what to do has not worked. Now is the time to find out the preferences and WTP of those on whose behavior the future of the epidemic depends. Even as of 2009 we do not know the best way to control HIV/AIDS because we have not bothered to use extensively the evaluation methodology that is built on asking what people want and how much they are willing to pay for it. In a sense, the reason why mitigation is a third intervention alternative to prevention and treatment is the recognition that consumer sovereignty cannot be ignored, no matter how hard one tries to do so. Given that we seem to be unable to stop people choosing not to abstain from sex and be faithful, and individuals are going to go to CSWs, and injecting drugs into their veins, this has set up the need for harm reduction strategies. Looking after orphans, preventing mother-to-child transmission, providing clean needles for IDUs and circumcising males are all interventions that have accepted that risky behavior will take place and that the objective now is to reduce the cost to others of this risky behavior.

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SUMMARY AND CONCLUSIONS It is a fact of life that resources are limited. It clearly does not make sense to anyone that resources be wasted. Economic efficiency is a centrepiece of any economic evaluation methodology and is not controversial. The other fundamental ingredient that goes hand in hand with economic efficiency and its reliance on WTP is consumer sovereignty. If one does accept this assumption, there is no good reason not to accept willingness to pay as a measure of benefits, and therefore no good reason not to use CBA. We have spent more than 20 years largely ignoring consumer sovereignty in devising HIV/AIDS interventions. It is now time to give consumer sovereignty a try and use the economic evaluation methodology that is based on this assumption.

39.

Social and private perspectives in CBA

The perspective in CBA is very broad and very long. It embraces the effects on everyone in society, now and in future generations. A social evaluation does not consider just the parties that are directly involved with an intervention, that is, the firms (the hospitals and the physicians) and the consumers (the patients as clients). It also covers those indirectly affected, including the family members of the patients and even the general taxpayer. These third-party effects are called “external effects”. Strictly then, CBA should be called “social” cost–benefit analysis to recognize the all-inclusive nature of the evaluation. However, this usage is not widespread either within or outside the health care field (it has the connotation of “socialism”). So we have, throughout this book, just referred to the analysis as CBA, leaving the social connotation implicit. In the health care field it is considered good practice to make the perspective explicit at the outset of a study. It is thought necessary to specify whose perspective the study is from: is it that of the hospital, the client, the government or society. Although, as we show below, an economic evaluation has usefulness from any perspective, it is only the social perspective that is important for social decision-making. A study that ignores the costs for the families of care-giving to those sick with opportunistic infections due to AIDS is not very useful for deciding on the best place to treat AIDS patients. In this chapter we will go through a particular application, HIV testing, to compare and contrast the private and social perspectives in carrying out an economic evaluation. The evaluation is based on the study by Bloom and Glied (1991).

A PRIVATE EVALUATION OF HIV TESTING A firm is interested in HIV testing mainly from the point of view that, before employing someone, it can screen them out if they are likely be very costly to the firm in terms of claiming health benefits (and thus raising future premiums for the firm) and in lost production because of absences 180

Social and private perspectives

Table 39.1

Private (employer) calculation of benefits and costs of HIV testing of employees and hiring an HIV negative individual

Source of Avoided Costs

Health insurance Life insurance Disability insurance Pension Discounted total cost if develops AIDS Probability that HIV+ person develops AIDS during tenure Expected value of costs avoided (benefits) Testing costs range

Source:

181

Large Firm

Large Firm

Small Firm

Small Firm

High-cost City

Low-cost City

$80 000 $21 800 $13 400 –$2400 $90 900

$40 000 $21 800 $13 400 –$2400 $58 900

$32 000 $900 $600 –$360 $29 300

$16 000 $900 $600 –$360 $17 500

0.35

0.35

0.15

0.15

$31 000

$20 600

$4400

$2 300

$22 400– $310 300

$ 22 400– $310 300

$3700– $10 800

$3700– $10 800

High-cost Low-cost City City

Based on Table 1 and numbers given in the text in Bloom and Glied (1991).

due to illness. The costs averted become the benefits of screening to the firm. These benefits are reduced if the firm gets any savings due to an HIVinfected person dying and not claiming his/her pension. Of course, these costs averted are benefits only if the applicant is HIV positive. So the probability of being infected has to be applied to the costs averted to form the expected benefits. The costs of screening are the financing of the tests that have to be given to everyone who applies for employment. The magnitude of the firm benefits from HIV testing depend on the type of city where the firm is situated, since some cities (like New York City) provide generous health care packages, while other cities (like San Francisco) provide only minimal health care benefits. The amount of the firm costs mainly depend on the size of the firm. Large firms have to test a large number of potential employees. The resulting costs and benefits for different sized firms living in low- and high-cost cities are displayed in Table 39.1. We see that for most small firms, HIV testing is not beneficial (that is, profitable). This also would be true for many large firms except those who can experience low testing costs, because they: (1) purchase tests on a large scale and receive discounts for doing so, and (2) routinely give employees blood tests, so the HIV test would not require additional blood work. But,

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the point remains that HIV testing could be profitable for some firms who recruit workers in high prevalence cities (where the probability of a person being infected is high).

A SOCIAL EVALUATION OF HIV TESTING Because testing costs are likely to be the same from the social perspective as for the private perspective, the big difference between private and social outcomes of firm HIV testing come from the benefits side. The main private benefit (that the firm does not have to pay the health costs if an infected person is not employed) is basically a cost-shifting exercise. The health care costs still have to be incurred by someone. The difference is that if the person is employed the firm pays the costs, while if the person is not employed the government and others have to incur the costs. So from the CBA perspective the private benefits are not social benefits (they will not be costs avoided). There are, though, other categories of effects that are social benefits. The main ones are prolonging the life of an infected person (by giving drugs if people get a positive test result); removing a person’s uncertainty by having the test and preventing the transmission to others if people’s test results change their behavior. To estimate the social benefits of HIV testing, in terms of preventing transmission and saving lifetime costs of AIDS, Bloom and Glied made the following assumptions: (1) if the present value of direct and indirect costs of a newly infected person is $600 000; (2) if each infected person infects, on average, 0.8, individuals per year and (3) if one seropositive person who is tested now infects 10 percent fewer (that is, 0.72 persons) then the present value of savings over an 11-year testing period would be $25 million. This is much greater than the costs of testing. However, this positive social result is very sensitive to the assumptions made: (1) if the infection rate is 0.08 (and not 0.8), and the reduction is 3 percent (and not 10 percent), then the savings would be only $18 300. This is less than the cost of testing in low prevalence areas. (2) In some studies in the United States, individuals informed of their HIV status actually increased their high-risk behavior. So social benefits could be negative.

THE PRIVATE AND SOCIAL PERSPECTIVES OF FIRM HIV TESTING COMPARED Bloom and Glied summarize their overall findings as showing that the private net benefits could be positive, while the social net benefits are

Social and private perspectives

183

most likely negative. In this special case the policy prescription is clear. If social outcomes are negative, firm HIV testing should be banned as it is in a number of US states (on the grounds that it would discriminate against disabled people getting jobs). But, if firms are prevented from doing what is in their own best interests they will adjust their behavior and this could greatly impact outcomes from a social perspective. For example, if firms have to employ people who might be infected with HIV, they have an incentive to reduce the package of health and other benefits that they provide with employment; or the firm could simply not employ anyone who they think could potentially be affected (for example, young African Americans). So Bloom and Glied point out that there would be real social costs if the government bans all firms for HIV testing on equity/ discrimination grounds. Given the possible difference between private and social interests, subsidizing the health care package of firms (or providing national health insurance) could be necessary to reduce the social costs of banning firm testing.

SUMMARY AND CONCLUSIONS One should always adopt the social perspective in an economic evaluation if one wishes to try to influence social decisions. Even though the social perspective is primary, other perspectives are not irrelevant. In a mixed economy, where the government makes decisions recognizing its interaction with the private sector, it is important to know outcomes from a narrower perspective. For example, if it is not socially worthwhile for people to be tested for HIV, but it is worthwhile from an individual firm’s point of view, then there could be an “incentive compatibility problem”, which is to say that the socially desirable outcome will not in this case be chosen by the individual. Therefore some government incentive must be given to induce individuals to adopt the socially optimal outcome if they do not think it is in their best interests. Note that the social dimension of CBA does not mean that it endorses “socialism”. The American Heritage Dictionary defines socialism as: “Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy”. CBA provides a basis for deciding whether public or private expenditures are worthwhile or not. It does imply that the government has to own and run the activity. Whether the firm does the employment testing or the government does the testing is not predetermined. The choice is decided by the relative sizes of the benefits and costs. If testing is socially worthwhile, then the firm should

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do the testing if the net benefits are greater; and the government should do the testing if it can organize the intervention with greater net benefits. We already saw this in Chapter 29 where three ways of treating TB patients were being evaluated. The public–private NGO model was preferable to the purely public model (and the public–private workplace model) only because it carried out the treatment at lower costs. Bloom and Glied (1991, p. 1798) conclude that because their analysis indicates that firm HIV testing is not likely to be socially worthwhile this means that; “Existing state and federal legislation related to HIV testing has been motivated primarily by concerns over social equity”. It is now time to deal explicitly with the equity issue in CBA, which is the subject matter of the next two chapters.

40.

CBA and equity I: allowing for ability to pay

We now address the heart of the complaint from non-economists about CBA – that it is not fair to value goods and services by a person’s willingness to pay. If someone has low WTP it may be because the person is poor and not because he or she does not want to have health care. Actually, many health care economists also think that WTP is unfair. What is more surprising is that mainstream economics assumes that, even if CBA can allow for equity, it should not do so, as it is more efficient to help the poor in other ways than by biasing heath care evaluation outcomes. In this chapter we will explain and examine the validity of all these viewpoints. Although much of the discussion appears controversial, the points that will be made to resolve the controversies are really obvious if one views CBA from a social perspective. The main argument will be that to throw out WTP from health care evaluations is equivalent to the proverbial “throwing out the baby with the bathwater”. WTP is to be an essential ingredient even if it will be shown to be not the only essential ingredient.

NON-ECONOMISTS’ CONCERN OVER EQUITY The concern that WTP does not allow for equity does not mean that WTP should not be a part of a health care evaluation. WTP reflects people’s preferences in general and the strength of these preferences in particular. If someone is WTP $30 for a skin cream, to deal with one of the opportunistic skin infections that accompany AIDS, one can plausibly assume that the skin infection really bothers that person, and bothers that person so much more than can be alleviated by just giving that person $10 to live with the inconvenience of the skin infection. WTP is a very good measure of how much people benefit from health care interventions. So the problem with WTP is not what it includes, but what it excludes. The critics are right to the extent that WTP does not automatically consider equity; this needs to be introduced into CBA as an additional ingredient. But how? 185

186


HOW TO INCORPORATE EQUITY INTO CBA: INTRODUCING DISTRIBUTIONAL WEIGHTS The problem with willingness to pay is that it does not allow for ability to pay. Everyone agrees that a dollar to a homeless person is worth much more than a dollar to a millionaire. So if the homeless person is willing to give up a dollar to pay for health care, then that dollar should not be treated the same as a dollar given up by a millionaire, or even the average person who is not homeless. The dollar to the homeless person should be worth more in the evaluation of the intervention than a dollar to an average person. The solution then in order to allow for equity in CBA is to weight the willingness to pay for the inputs and outputs of an intervention by the ability to pay of those receiving the benefits or incurring the costs. Let weightB be the weight on the benefits and weightC be the weight on the costs. Then the cost–benefit criterion becomes that the weighted benefits should exceed the weighted costs: (weightB) Benefits > (weightC) Costs The way to think about the weights is as numbers that can be equal to, less than, or more than unity (that is, 1). To simplify matters, assume that the costs are financed by the average person and so have a weight of 1. Since multiplying anything by 1 does not make a difference to its absolute or relative value, the cost–benefit criterion becomes: (weightB) Benefits > Costs The issue now is how to determine the distribution weight for the beneficiaries.

HOW TO DETERMINE THE DISTRIBUTIONAL WEIGHTS There is a whole literature on how best to determine distribution weights for CBA – see Brent (2006, Chapter 10) and Brent (1998, Chapter 3). Distribution weights have also played a role in CEA in the health care evaluation field – see Brent (2003, Chapter 10). Here we just want to outline a simple method that has been widely applied in CBA especially for developing countries so that we can illustrate how one can determine the weights in practice. The method was first devised by Squire and van der Tak (1975), two

Allowing for ability to pay

187

researchers working for the World Bank. The idea was that there should be diminishing social marginal utility of income, that is, the higher a person’s (or group’s income), the lower should be the social value of an increment in income. In other words, the distribution weights should decline with the person’s income. An easy way of ensuring this property is simply to have the weight inversely related to income. To ensure that the weights average to 1, the inverse relation was expressed relative to average income. So the distribution weight formula became: weightB = average income/income of beneficiary Obviously if the beneficiary is an average income earner, then the numerator of the formula would be the same as for the denominator and so the weight would equal 1 as expected. But, in line with how distribution weights have been applied in practice, we will interpret this formula as applying to people’s income in groups that are defined in multiples of average income. Say a person is poor if they are in an income group that has less than, or equal to, one-third of average income, and define a rich person as someone in an income group that has greater than, or equal to, three times the average income. A poor beneficiary would have a weight of 3 (the inverse of 1/3). This means that the poor would have each dollar that they received as benefits from the intervention valued in the social evaluation as $3. Conversely, the rich would have each dollar that they received as benefits from the intervention valued in the social evaluation as 33 cents (the inverse of 3/1). In this weighting scheme, the poor homeless person’s weight would be nine times that of the rich millionaire’s weight; quite a lot of preferential treatment. Note that whether an intervention that favors a low-income person will actually be approved does not depend solely on the values of the distribution weights. The size of the benefits and costs are also important. It the cost of the cream to treat a skin infection is $30, then the WTP of the poor would have to be at least $10 for the cream treatment to be judged socially worthwhile.

APPLICATION TO CBA OF CONDOMS IN TANZANIA As there are no published studies of CBAs of HIV/AIDS interventions that have used distribution weights, we can for illustrative purposes reconsider the condoms social marketing project for Tanzania covered in Chapter 27 and apply weights to this evaluation. Recall (from Table 27.2) that the original project involved a price subsidy that lowered

188


condom prices from 2000 TZSH to 100 TZSH. The social benefits were 17 168 TZSH and the costs were 10 794 TZSH, producing a worthwhile project judged on economic efficiency grounds (with positive net benefits of 6374 TZSH). Now let us weight the benefits and see what happens to the outcome. A distribution and efficiency CBA would weight a person’s willingness to pay by his/her ability to pay. As we have just seen, a group with an income higher than average would attract a weight less than 1; while lowincome groups would be assigned a weight more than 1. The PSI survey did not include an income question. But, Badru (2000) did state that the people surveyed were from urban groups that were “socio-economically better off” compared with the national 1996 demographic survey. So the weight attached to the benefits for the CSM intervention should be less than 1. The National Bureau of Statistics Tanzania (2002, p. 101) reported that households in urban areas (other than Dar Es Salaam) had average incomes of 30 426 TZSH when those in mainland Tanzania were 17 928 TZSH shillings. If we assume the Squire and van der Tak distribution weighting scheme that is inversely related to average income in Tanzania mainland, then the distribution weight to be applied to beneficiaries is 0.59 (that is, 17 928/30 426). The weighted social benefits would have been 10 116 TZSH. The decision outcome would have been altered by the distribution weight as the social benefits were not now sufficient to cover the costs of 10 794 TZSH. For the CSM program to be worthwhile with distribution weights, the alternative subsidy scheme mentioned in Chapter 27 would have had to be implemented. This involved increasing the subsidized price to 290 TZSH instead of implementing the original subsidized price of 100 TZSH. Weighted benefits at this reduced level of condom provision would have been 6369 TZSH, which would have far exceeded the costs of 3222 TZSH.

ECONOMISTS’ CRITICISMS OF DISTRIBUTION WEIGHTS Economists have two main concerns with the use of distribution weights. We will explain and respond to each criticism in turn. First, mainstream economists prefer that the tax system be used to redistribute income to the poor, rather than applying distribution weights in projects for the same purpose. If the concern is that distribution weights are too “subjective”, then using the tax system to redistribute incomes does not avoid this

Allowing for ability to pay

189

problem, as one still needs to ascertain everyone’s social marginal utility of income to be able to know how much to tax a rich taxpayer relative to a poor transfer recipient. Second, mainstream economists think that using WTP is fundamental to economics as it recognizes that individuals have preferences. But, the distribution weights seem to be imposed externally and reflect government/ political preferences and so would not be fundamental to economics. The problem here is that this ignores the fact that individuals actually do have preferences about how much income the poor receive, just as they do about goods and services that they themselves receive. Distribution weights can then be interpreted to be expressions of WTP for redistribution. This is not a fanciful interpretation as, for example, Zarkin et al.’s (2000) survey found that people were WTP $37 per respondent for the successful drug treatment of 100 persons other than themselves or people that they know. In terms of the simple Squire and van der Tak formula, one could always ask people whether they prefer the inverse income weighting scheme to some other formulation. (I actually prefer distribution weights to be set by the square root of the inverse of a person’s income [Brent, 2006].)

SUMMARY AND CONCLUSIONS It is a weakness of traditional CBA that a person’s willingness to pay is to be recorded with no recognition of that person’s ability to pay. But, this can easily be remedied by weighting the benefits and costs in health care evaluation by a factor that reflects the social marginal utility of income. What does this weighted criterion represent? It is no more than the recognition that efficiency and distribution should be joint objectives when making health care evaluation decisions. Mainstream economics is based on WTP and so incorporates only economic efficiency. Non-economists often just focus on distribution and want to ensure that people can afford to receive interventions that are deemed necessary. What is needed is for both objectives to be incorporated simultaneously. The choice of distribution weights then represents the extent of the trade-off between objectives, that is, between distribution and efficiency. To be sure there are a large number of practical problems that have to be solved in applying distribution weights. But these problems can be manageable if the economics profession tries to solve these problems rather than pretending that distribution weights can be safely ignored when making health care evaluations. Note, that the option not to use distribution weights does not exist. The traditional criterion used throughout

190


this book, that is, calculating the difference between benefits and costs is just one special case of the weighted benefits and weighted costs criterion presented in this chapter. It is the special case where both weights are set equal to 1. Why is this set thought to be “scientific” by mainstream economists while any other set is “non-scientific”? I cannot tell you precisely how much more a dollar is worth to a homeless man than to a millionaire, but, I can tell you with certainty that they are not equal, and so the traditional CBA criterion cannot be correct. To repeat what is said at the beginning of this chapter: everyone can agree that a dollar to a homeless person is worth much more than a dollar to a millionaire. It is true that this is a value judgment. But, if it is a value judgment that everyone can agree on, then we should use it in CBA practice. It is already there in CBA theory.

41.

CBA and equity II: allocating by time and other non-price methods

As a complete alternative to allocating health care resources by willingness to pay and cost, non-economists often recommended using time as the basis for rationing (that is, restricting consumption of health care). They think this is fairer than using market-type principles. Much of the National Health Service (NHS) in the United Kingdom relies (or used to rely) on this system. So if one wants to see the local physician, one needs to wait one’s turn at the doctor’s offices. Rationing here is on a “first-come, first-served basis”. How long you are willing to wait is an indicator of how important it is for you to see the doctor. Similarly, to have a nonemergency operation, there is a waiting list. If you want the operation free of charge, you must be willing to wait weeks, months, or possibly, years till your turn comes up. In this chapter we will examine the effects and implications of using time as a rationing system. This discussion is very general and relates to any type of rationing of health care by using time. To consider particular issues that are specific to HIV/AIDS rationing, we will also cover other non-price rationing methods that are applicable to the dispensing of ARV therapy in Africa, based on some of the ideas given in Rosen et al. (2005).

RATIONING HEALTH CARE USING TIME If health services are to be given free of charge, it is almost inevitable that the quantity demanded is going to exceed the quantity supplied and rationing will be necessary. When time is used to do the rationing, WTP considerations still apply, even though this is now indirect rather than direct. As everyone knows: “time is money”. The people who value time the most will pay the highest “price” (have the highest opportunity cost). Note that time is involved not just in the waiting room, but will also be relevant in making the journey to and from the doctor’s office. To a certain extent rationing by time would be rationing by income and so recognizes the ability to pay principle. This is because the rich are usually paid more for their time. So when they give up their time they give up more of their 191

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income. But, the point that will be stressed here, and in the next section, is that rationing by non-price means can have unintended effects, and hence unintended equity effects. The NHS was explicitly set up in 1944 in the United Kingdom in order to ensure that people can receive health care irrespective of their ability to pay. The system involves a fixed quantity of doctors, surgeons and treatments being supplied and financed by the government out of taxation. Waiting times function as a rationing system of this fixed quantity by increasing when there is excess demand and falling when there is excess supply. To help understand some of the equity issues of rationing by time, let us look at the study by Propper (1990), which surveyed those on the United Kingdom’s waiting lists to estimate what they thought was the value of the time that they had to wait in order to get non-urgent care. The question asked of respondents was how much they would be willing to pay for a reduction in waiting time. Note that the patient here is not actually giving up time by waiting in an office (and hence not earning a wage). Instead, being on a waiting list involves the cost of having to wait for treatment when one is ill and uncertain as to how long the wait for treatment will be. The resulting WTP for waiting list reductions for different groups are given in Table 41.1. The valuations are given separately for those who earn more than £350 per month and for those who do not. As one would expect, and what the designers of the NHS would have hoped for, those with the larger ability to pay incur the higher waiting list “price”. But, what was revealed and was unintended is that the elderly had to pay the highest price. This is easily explained by the fact that, as the elderly have the least remaining time available, they have the most to lose by having to wait for treatment. Allowing for ability to pay came at the expense of other forms of inequity, that is, age discrimination.

RATIONING HEALTH CARE USING OTHER NONPRICE METHODS Rosen et al. state that the most accepted criterion for rationing ARVs is “disease progression”. That is, access to the ARVs is to be given to those who are in the most medical need as judged by CD4 (T cell) counts. This restriction is not applied in a standard way, as the US Department of Health and Human Services sets the recommended CD4 count at 350, while the World Health Organization’s eligibility guideline specifies a CD4 count of 200 (or an AIDS-defining illness). The amount of rationing involved varies enormously by the CD4 count restriction. Auvert et al. (2004) point out that, for South Africa, using the 350 CD4 count figure as a

Allocating by time and other non-price methods

Table 41.1

Estimated value of waiting list time (£ per month)

Segment

Full-time employed Part-time employed Housewife Retired Source:

193

Weekly Household Income Below £350 per Month

Weekly Household Income Above £350 per Month

41.90 35.70 20.40 43.43

49.43 42.11 24.06 49.90

Based on Propper (1990) Table 3.

limit instead of the 200 CD4 count figure would increase the proportion of HIV positive people eligible for ARVs from 9.5 percent to 56.3 percent. Of course, defining disease progression is only the first step in the rationing sequence. If one takes the high CD4 figure for South Africa, the country probably would be unable to actually provide drugs for the 56.3 percent who need them. Rosen et al. suggest that additional “socioeconomic criteria” will also be required to ration treatment. They give doctors, nurses, teachers, judges, police officers, or post-secondary students as example target groups. The most widely applied target group is HIV positive mothers as this will reduce transmission to their babies. The downside of this rationing criterion is that it discriminates against males, and women who are not pregnant. Apart from formal rules and procedures for rationing, restricting consumption of health care also takes place using informal and often illicit arrangements that favor specific individuals or groups implicitly. There are two main concerns here in countries such as those in SSA that have weak enforcement capabilities. First, there will be queue jumping by political and economic elites to ensure that they get the drugs at the expense of others. In these cases, ability to pay enters by the back door; the rich get the drugs free. Second, some will get the low-price drugs and then, because the drugs may not be a priority to the recipients, they will sell them on the black market for higher prices. Apparently this is taking place in Zimbabwe and Swaziland. Again, ability to pay ends up paramount because it is the rich who are buying the black market ARVs.

SUMMARY AND CONCLUSIONS We have seen that non-price rationing on equity grounds often leads to other equity problems. If one is concerned with ability to pay, introduce it

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formally into the evaluation criteria by using distribution weights rather than informally through non-price rationing. When it works well, nonprice rationing can ensure that ability to pay does not dominate outcomes. But usually, ability to pay will end up being very influential. The main result of non-price rationing is to ensure that people’s preferences are not being recognized. WTP reflects these preferences. After all, if a medical expert is to decide what your CD4 count must be in order to be eligible for ARVs, it means that the patient him/herself has no say in the decision. To try to rule out WTP on ability to pay grounds leads to results that could ensure that neither efficiency nor distributional considerations are included in the determination of outcomes. As Rosen et al. (2005, pp. 355–6) conclude: “Implicit rationing will foster both inequity and inefficiency”. To this we simply add that CBA with distribution weights was especially devised to foster both equity and efficiency.

42.

Conclusions I: how not to set priorities for HIV

It is time to sum up what CBA has to offer in the setting of priorities for interventions to deal with HIV/AIDS. In this chapter we look at three main ways that priorities are set in practice that do not rely on CBA methods. We see that all sorts of mistakes, and hence a large waste of resources, follow from ignoring CBA. Then in the next, and final, chapter we show how many concerns that people have, which are thought to be essential in setting priorities, are indeed included in CBA automatically.

1.

EVALUATING BY LABELING

In the HIV/AIDS field, many judgments are made about projects just by looking at the label associated with the intervention. Here we look at some of the main labels and explain why they are not helpful. (i)

“Prevention” is Better than Cure

A British saying is that “A penny’s worth of prevention is worth a pound’s worth of cure”. How can this not be true for HIV/AIDS interventions? There are two main surveys of a large number of HIV/AIDS evaluations by Creese et al. (2002) and Canning (2006). These surveys show clearly that treatment cost-effectiveness ratios are so much lower (we get so many more DALYs per dollar of expenditure) for prevention programs (such as condoms, blood safety, education and information) than for treatment projects (such as investing in ARVs). Surely, prevention is the way to go? Not necessarily. Here are some reservations: ●

Even if every prevention program were more cost-effective than every treatment (or care) program, it could be that none of the prevention programs may actually be worthwhile. As we explained in Part III (see especially Chapters 30 and 31) only a CBA can tell whether a health policy change is socially worthwhile. A CEA is not sufficient as a guide. 195

196 ●

●

(ii)


Even if every prevention program were more cost-effective than every treatment program, it could be that all of the treatment programs may actually be worthwhile. Again, only a CBA can tell whether a health policy change is socially worthwhile. We saw in Chapter 31 that a combined intervention with first line and second line drugs with intensive monitoring was the least cost-effective yet, using one benefit methodology, it was found to have positive net benefits. Of course, we should expect that both prevention and treatment programs would have a wide variation in their net benefits irrespective of their labels. This is because how they are implemented in detail will alter greatly the inputs and outputs, and hence the effectiveness, benefits and costs. For example, Table 31.1 shows that combined interventions that used only first line drugs had a cost-effectiveness ratio that was around one-tenth of the least cost-effective ARV therapy. This Program Does Not Need to be Evaluated Because it Involves “Scaling Up”

The idea behind this label is that if one has first identified something that has already been shown to have “worked” for a subset of a population (that is, a sample), then scaling up that intervention to the whole population can also be thought to be worthwhile. UNAIDS (see, for example, UNAIDS, 2008, p. 7), is a great believer that scaling up is what is now required, especially for ARVs. The optimum under this approach is a target of 100 percent. Anything less than 100 percent is not good enough. Hence, although almost 1 million more were receiving ARVs between 2006 and 2008 (making the total 3 million), ARV coverage was deemed “low” as it was only 37 percent of those who needed it in 2007. The trouble with scaling up is that it is hardly ever based on what “works”, and hence what should be scaled up, by reference to an evaluation that relies on a CBA. There is a real risk of the “blind leading the blind”, that is, if an intervention has never been properly evaluated, why should cloning the intervention be any less based on guesswork? Even if the existing 3 million people on ARVs were all shown to have been evaluated and judged worthwhile by a CBA test, we have no guarantee that net benefits of extensions to ARV coverage would also be positive. This is because one should not expect benefits or costs to stay constant. As explained in Part I, it can be expected that marginal benefits will decline as the scale of operations expands because of the principle of diminishing marginal utility. Marginal costs could go up or down, as there could be economies of scale over time (if the methods of mass production can

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be utilized), or there could be rising costs (if distributing the health care services to the general population involves traveling to more remote areas of the country). But, in either case, we would not expect MC to remain constant. (iii)

“High-risk” Groups Should be Targeted

The World Bank is a great believer in the need to identify high-risk groups. Traditionally, these groups were homosexual males, injecting drug users who share needles and prostitutes. Health care evaluations are very straightforward in this belief system. If expenditures target high-risk groups they are “good” projects. Dayton (1998, p. 22) used this approach in her evaluation of the World Bank’s lending of $550 million for HIV/ AIDS interventions between 1986 and 1996. Her review “identified a weakness in the Bank’s lending program: many of the activities supported by the Bank have not been well-focused on the groups in the population most at risk for HIV infection”. However, what was much more a real weakness of the Bank’s lending program for HIV/AIDS was Dayton’s finding that only one-third of the Bank’s projects prepared adequate cost– benefit or cost-effectiveness analysis. The biggest danger with using the “high-risk” label for setting HIV/ AIDS priorities is that it is tautological. If an intervention actually does target those most at risk then it will be most effective. One only knows whether one has targeted those most at risk if one first establishes that the intervention was most effective. This tautological problem is most evident in the revelation given in the book by Pisani (2008), The Wisdom of Whores, which we referred to in Part II. She informed us that a schoolgirl in South Africa is ten times more likely to be infected with HIV than a prostitute in Beijing. In this particular case, school girls need to be targeted, and not prostitutes, as they are the high-risk group. (iv)

The Myth About “Myths”

The problem with using the myth label as a way of setting HIV/AIDS priorities is that nearly all alleged myths in this area are in some circumstances true and in other circumstances false. A CBA tells us the veracity of the alleged myth. The myth label is not useful, notwithstanding the popularity of trying to uncover myths in the HIV/AIDS literature. Myths are not helpful because they ignore the details that are vital to determining intervention success. We first discussed myths in Part I of the book in order to make clear that some things we think we know may be false. Here we wish to emphasize the other side, that is, things that we think are false

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may be true. A recent set of ten alleged myths was presented by Shelton (2007). All ten “myths” are not myths in some circumstances and all ten are myths in other circumstances. For example, is the statement “Men are the problem” a myth? Obviously, what Shelton seems to want to debunk was the label that “men” always cause HIV transmissions, while “women” do not. So the fact that a large number of females in Kenya were HIV positive when their male partners were HIV negative is evidence that not all transmissions are initiated by males in Africa. This is a point worth making, but, the statement that men are the problem is not a myth when one considers all the male violence against women through rape (especially in the Democratic Republic of Congo), which does mean that much transmission is male initiated.

2.

DENIAL

There is a saying in the United States that “If something is not broke, then you don’t need to fix it”, so if one denies that there is an HIV problem for certain specified groups, then one thinks that one does not need to carry out any expenditure on their behalf. With no expenditure taking place, there is no need to carry out an evaluation for these groups. Denial is a major strategy for dealing with HIV/AIDS in the United States. Here we will focus just on two groups where denial is prominent, African Americans and the elderly. (i)

The United States Does Not Have an HIV/AIDS Problem

The international community is adamant that countries in Africa have to have a nationally coordinated HIV/AIDS program in order to combat the disease. This is presumably because HIV/AIDS is rampant in these countries. However, in the United States there is no national program even though HIV has a high prevalence among African Americans. As we have seen, AIDS is the number one cause of death among African American females ages 25 to 34. If Washington, DC were a country, its HIV/AIDS prevalence rate of 3 percent would place it above many West African countries by degree of severity. Of the blacks in DC, 7 percent are infected (according to the blog of Mark Cichocki, Tuesday, 17 March 2009). We know that partner concurrency caused by prison incarceration is one of the main reasons why the African American community is so affected, but, are prison HIV interventions a priority in the United States? Have such interventions been shown to be ineffective or otherwise not worthwhile?

Conclusions I

(ii)

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The Elderly Do Not Need to be Targeted

Prior to 2008, UNAIDS only tracked HIV prevalence for females between the ages of 15–49. They called this the “sexually active” age group, thus effectively denying that sex takes place over the age of 50! We should not be surprised then that in many countries of the world the elderly have experienced rising HIV rates. As we saw, CDC has reported that for the United States in 2008, 15 percent of new infections involve those who are over 50. Elderly women worldwide are especially likely to be vulnerable to HIV as many of them are post-menopausal, so they would not typically be using condoms when they have sex to protect themselves against getting pregnant. Karpiak et al.’s (2006) ROAH study (Research on Older Adults with HIV) reports that the immune system’s function declines with aging. This has two main implications. The elderly are more likely to become infected from a HIV positive partner and once infected the elderly are more likely to die (they are twice as likely to die as their younger untreated counterparts according to the ROAH study). In SSA, elderly women are even more vulnerable to HIV than in the West. According to the study related to Tanzania by HelpAge International (2004), elderly women have much lower levels of literacy (over one-third of adult rural women had no education) and therefore rely more on oral forms of communication to learn about HIV. However, prevention programs concentrate exclusively on younger persons and “highrisk groups” using modern communication methods. As a result, the elderly lacked information about the causes of HIV, prevention methods and opportunities for treatment. Not surprisingly therefore, 5.2 percent of female blood donors over the age of 55 in Tanzania tested HIV positive.

3.

TOTAL BURDEN OF DISEASE

Canning (2004, p. 134) points out that many people believe that if there is more death and suffering caused by one disease than another, then more resources should be devoted to that disease. In 2004, HIV/AIDS accounted for 12 percent of the DALYs lost to diseases in Africa. This is more than malaria (11 percent), respiratory infections (10 percent) and injuries. On this basis, HIV/AIDS would seem to have the greatest priority for health care expenditures in Africa. But, as Canning makes clear, this line of reasoning makes an elementary mistake: if nothing can be done to reduce the spread of HIV, nothing should be spent on it. Assessing the effectiveness of interventions is crucial to the setting of priorities. As we have seen, CBA

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relies on marginal analysis: changes in benefits and changes in costs. If there are no changes in benefits, there should be no changes in costs. Interestingly, the same burden of disease argument has recently been made by England (2008), but this time to make the opposite case, that too much money has been devoted to HIV/AIDS. Although HIV causes 3.7 percent of global mortality, it receives 25 percent of international health care aid (as well as large amounts of domestic expenditures). Again the point is that only by looking at the margin and seeing how effective particular evaluations are, and feeding this information into a CBA, can one tell whether HIV is more or less deserving of funds than other diseases.

SUMMARY AND CONCLUSIONS As stated at the beginning of this book, the most important message is that deciding on priorities for HIV/AIDS is too difficult a task to be left to guesswork and intuition. Health care evaluations must be made on the basis of data reflecting actual behavior, which is the approach that is fully reflected in CBA. This chapter pulled together a number of attempts that relied on guesswork and intuition and explained why they were not helpful. Labels such as “prevention”, “high risk”, and “scaling up” to mean “good” projects, and “treatment”, “low risk” and “myths” for “bad” projects, are not useful even if they were first conceived with data in mind. It is the data that relates to a particular set of circumstances, that is, a specific project based on information for a given set of inputs and outputs that needs to be the basis for the setting of priorities. Similarly, simply denying that HIV is a problem for a particular country (the United States) or demographic group (the elderly) is just another way of guessing what is likely to be worthwhile. Lastly, we made the point that “number one killer” and “number one priority” is not necessarily the same thing in the context of HIV/AIDS. The issue is whether a particular intervention can alter the course of a disease, not whether, unaltered, the course of a disease causes a lot of pain and suffering. CBA is valuable not just because it relies on data; its value lies in the way it uses this data. In the final chapter we explain why it is that CBA uses data in the best possible way.

43.

Conclusions II: using CBA to set priorities for HIV

Critics of CBA, who wish to avoid its use on the grounds that willingness to pay does not allow for ability to pay, risk the proverbial problem of “throwing out the baby with the bathwater”. So the strengths of using WTP are ignored by the critics. This is unfortunate as much of the politics of HIV/AIDS involves activists thinking that they have to get organized and petition governments in order that a particular perspective be incorporated in the HIV/AIDS decision-making process when, in fact, every perspective would automatically be included if a cost–benefit framework using WTP were used. We have throughout the book emphasized that CBA tries to include all the effects of an intervention by estimating the WTP of everyone who is affected by it. The main task in this chapter is to spell out some of the implications of this all-inclusive property of CBA. As this is the final chapter, the summary and conclusions section briefly sums up what this book has tried to achieve.

WILLINGNESS TO PAY AND SOCIAL INCLUSIVENESS WTP records individual preferences and the intensity of those preferences. When we say that the net benefits of a project are the sum of the WTP of all those affected, we are stating that, no matter whether these net benefits are positive or negative, we have included everyone’s preferences in the evaluation and these preferences will determine the decision outcome. Only if decisions are not made on the basis of WTP do activist groups need to be set up to ensure that the interests of special groups be included. We will illustrate this point with reference to women, those living with AIDS and the elderly.

WOMEN AND HIV Women make up around half of the world’s population and about half of the total number of people living with HIV and AIDS (PLWA). Gender 201

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inequality means that women’s preferences are not given full weight, especially in the context of HIV/AIDS. To use Stephen Lewis’s (2005) words, in the fourth lecture in his book Race Against Time, “Women: Half the World, Barely Represented”, he argues that the UN has never really represented women’s preferences adequately. As he says (p. 125): “The proof is in the reality: just look at the death toll that AIDS has taken on women”. What is Lewis’s solution to this problem, which he argues is the most important HIV issue? He wants there to be an international women’s organization set up as part of a multilateral UN system. This agency would be larger than any existing UN women’s organization and be an amalgam of the UN Development Fund for Women (UNIFEM), the UN Population Fund (UNFPA) and the Division for the Advancement of Women (DAW). This new agency should be funded at the same level as UNICEF, with a budget of around $2 billion a year. One does not have to be a feminist to agree with Lewis’s sentiments that there is a problem in getting the preferences of women included in HIV decision-making. However, one can question his solution in the context of women and HIV (although his proposal can still be worthwhile in other contexts). If instead of male bureaucrats at the UN agencies making HIV expenditure decisions, say UNAIDS took CBA seriously? What would this imply about how HIV priorities would be set? The answer is that women’s preferences would automatically be taken seriously. To see how this works, let us reconsider the CBA of the condom social marketing program in Chapter 27. The benefits of the subsidized condoms were measured by the area under the demand curve, where the demand curve measures WTP. Using the WTP measure, the condom subsidy program was just about worthwhile if one ignores the values of the condoms to the partners. As 50 percent of the partners were not regular partners or spouses, it is likely that the market demand curve reflecting private preferences was an underestimate of the social (total) WTP for the condoms (that is, the purchasers of the condoms plus their partners). For this reason the private benefits were increased by 50 percent to obtain the social benefits. With this added element, the condom subsidy program was highly worthwhile. What has this evaluation got to do with women and their preferences? Nowhere in the Brent (2009c) study did he mention women’s preferences. Does this mean that women’s preferences were not included in the evaluation? Not at all. It is true that it was the men who actually did most of the purchasing of the condoms. But (assuming we are mainly talking about heterosexual use of the condoms) 100 percent of the partners (that is, 50 percent of the beneficiaries) would be women. So when the external benefits of condoms were being calculated, it was the WTP of women that was

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being recorded. In other words, total benefits, that is, total WTP, were the sum of male WTP and female WTP. As long as externalities were allowed for, women’s preferences were included. It will not always be the case that external benefits and female benefits will be the same thing, But, even where there are no externalities, it will always be the case that total WTP will be the sum of male and female WTP.

PLWA AND HIV People living with AIDS are one of the most discriminated against groups of all. It is likely that none of the scientific advances that have been made in terms of AIDS treatment (such as the invention of ARVs) would have occurred in the absence of political activism by gay rights groups. The research expenditures would never have taken place unless the US government had been convinced that there was a human rights and public health issue concerning HIV/AIDS that had to be addressed. Having acknowledged this fact, it is also true that PLWA do not need to organize around every HIV/AIDS intervention to ensure that the preferences of those HIV infected are not ignored by decision-makers. What is required for the preferences of those PLWA to count is only that a CBA be carried out of all HIV/AIDS interventions using the WTP of all those affected, and for the expenditure decisions to be based on the CBA outcomes. The condom social marketing program also illustrates this point. One reason why people purchase condoms is because they are HIV infected and do not want to transmit the disease to their sexual partners. Again, the Brent (2009c) condom subsidy evaluation did not mention PLWA explicitly. Nonetheless, some of the Tanzanian respondents surveyed would have been HIV positive. What these people would be WTP for condoms would be included as part of the demand curve estimate. This means that effectively, total benefits equal the WTP of PLWA plus the WTP of those uninfected by HIV. The demand curve estimate does not discriminate; a dollar is a dollar no matter who is willing to give it up.

THE ELDERLY AND HIV As we explained in the last chapter, until recently, UNAIDS ignored the number of HIV cases that were elderly. Does there need to be a new UN agency introduced especially to look after the interests of the elderly? Again the answer may very well be yes, for many different reasons. But, for including the preferences of the elderly in health care evaluations all

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that is required is that a CBA be used to guide the decisions based on WTP. In principle, the reasoning that we applied for total WTP for women and PLWA applies to the elderly. So we have the identity that total WTP is the sum of the WTP of the elderly plus the WTP of the young. This means that the demand estimate for condoms could automatically include the preferences of the elderly. Whether this reasoning is realized in practice depends on how the data is collected for the particular demand estimate study. It turns out that for the Tanzanian condom study, the WTP of the elderly was not a part of the total WTP. This was because the PSI survey was designed so that only those between 15 and 49 years were asked to respond. This age restriction was a peculiarity of this particular study and not a weakness of the WTP concept, which should include everyone in a total WTP estimate. The restriction was not nearly as binding in the estimate of the WTP for an HIV vaccine covered in Chapter 25 where those surveyed for their WTP had to be in the age range 18 to 60 years. To sum up: if, which may in some cases be a “big if”, benefit estimates actually do represent total WTP, then automatically everyone’s preferences are incorporated in the CBA outcome. One does not need to set up an organization to represent each and every group who make up the total. If hospital staff have a bias against women, PLWAs and the elderly these people will go to clinics where there is less bias. If the hospital treatment is then being compared to the clinic treatment on the basis of a CBA using WTP, the clinic will have higher net benefits and the hospital treatment will be closed and the clinic will be kept open. The stigmatized groups do not need special representation; their WTP would have “spoken up” for them.

SUMMARY AND CONCLUSIONS Some are going to be disappointed with the main findings of this book. The conclusion is not going to be that investing in X has the highest priority while intervening through Y should be discontinued. This is not to say that at this point in time there are not promising generic categories of intervention. Male circumcision and information and education programs have been shown to be effective in a large number of different situations. However, even when generically promising interventions do exist, whether the promise will be actually realized will depend on the details of the intervention. If local conditions are such that inputs are freely available and costs are low, and outputs are highly valued by certain communities producing large benefits, then worthwhile interventions will have been

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identified. But, the local conditions may not be so supportive in other contexts. For example, if male circumcision is carried out by trained surgeons or doctors who know what they are doing, then widespread MC can be worthwhile. If, on the other hand, there are tribal doctors who carry out the male circumcision by using the same blunt knife for all patients, then MC can go horribly wrong as it could actually spread HIV transmission. If one is not going to list specific intervention priorities, what then is the main contribution of this book? The answer can be understood by an analogy. When economists are asked to help people on an island who are starving they respond by saying that to give the islanders fish will save them today, but to give them a fishing rod the islanders will be helped by having fish over their lifetimes. In the same way, we are suggesting a “fishing rod” solution to HIV/AIDS problems, where the rod this time is cost–benefit analysis. Interventions that have been suggested in the past (for example, condoms), or at present (male circumcision), or will appear in the future (for example, microbicides or vaccines) can all be evaluated by a common CBA methodology that does allow decision-makers to separate the wheat from the chaff. And what does one get when one uses CBA? One gets a comprehensive methodology that has been applied to many different policy decisions (for example, transport, the environment, education, agriculture, as well as all areas of health and mental health) that can deal with many different considerations (airport noise, road congestion, global warming, pain and suffering from injuries, and so on). As a result, one already has available a framework that can deal with all the ingredients that make HIV/AIDS interventions impossible to evaluate by guesswork and common sense (for example, information programs seeking sexual behavior change and HIV testing where people do not want to know the outcomes). One does not need to reinvent the wheel and pretend that the CBA methodology does not exist by going back to first principles and asking basic questions, such as, “What do we want to achieve with HIV/AIDS interventions?”, and “How can we best go about securing what we want to achieve?”. Policy economists have been asking these sorts of questions for decades and have come up with an extensive CBA theoretical framework linked to an extensive body of real world applications. The reader can find out more about CBA by consulting the many text books for the theoretical and practical details. The purpose of this book is to motivate the reader to consult this literature and to try to convince the reader that all this hard work in finding out more about CBA is likely to be necessary and worthwhile, as there is no workable alternative to CBA for setting priorities for HIV/AIDS. To be sure, CBA does have its problems. But, these problems are basically of the nature of trying to get meaningful data and dealing

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with uncertainties about the effects of inputs on outputs. Methods to value the inputs and outputs once they are known are well established and there are a wide range of valuation methods available. The reader just needs to adopt the CBA valuation method he or she feels comfortable with and accept the resulting interventions that using that method endorses. Lastly, the reader needs to go out and advocate the use of CBA to all those who are involved in deciding on HIV/AIDS interventions. UNAIDS and the World Bank should be the first targets for this advocacy.

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Index ability to pay 185, 186, 191, 192, 193–4 abstinence 17–18, 19 acquired immunodeficiency syndrome see AIDS Adimora, A.A. 86, 90 Africa condom use 85 HIV prevalence rates 37 see also South Africa; Sub-Saharan Africa age discrimination 192, 199 age of first sex 95, 96, 98 agricultural households, impact of HIV adult death 68–74 consumption, long run 71–2 household’s downward spiral 68–9 labor supply, short run 70–71 parents’ finances 73 small-scale farm 69–70 women’s land rights 72–3 agricultural policies 75–7 AIDS 3, 11 complexity of 11 deaths worldwide 15 alcohol prohibition 65 Aldy, J.E. 154, 156 Aliber, M. 72 antioxidants 41–2 antiretroviral drugs (ARVs) 13, 15, 67, 75, 77, 196 black market 193 cost-effectiveness analysis 141, 144–5 rationing, criterion for 192 South Africa, use of 47 toxicity 75 Arnesen, T. 140 ARVs see antiretroviral drugs (ARVs) Asia, HIV prevalence rates 37 Auvert, B. 192

Badru, A. 188 Bailey, R.C. 66, 67 Barnett, T. 56, 57 Beegle, K. 70, 71, 72 behavioral disease, HIV/AIDS as 175 see also risky behavior black market antiretroviral drugs 193 blood donors with HIV 199 blood transfusions 4 Bloom, D.E. 180, 181, 182, 183, 184 Boily, M.-C. 65 Bollinger, L.A. 95 Boozer, M.A. 20 Botswana, income inequality 56 Brazil 60, 84, 85 bread program cost–benefit analysis 27–9 breastfeeding 76 Brent, R.J. 53, 55, 57, 58, 59, 60, 62, 64, 82, 117, 118, 122, 125, 126, 142, 143, 144, 147, 149, 150, 152, 158, 159, 161, 162, 169, 186, 189, 202, 203 budgets, variable 169–70 burden of disease 143, 200–201 Burkino Faso, HIV transmission knowledge 12–13 calorie increase, effect on HIV/AIDS 51–2 Cambodia, impact of HIV on agricultural households 73 Cameroon, HIV transmission knowledge 13 Canning, D. 195 capital punishment 66 Caraël, M. 84 casual partners 81, 82, 84 Caulfield, L.E. 49 CBA see cost–benefit analysis (CBA) CD4 T cells 45, 66, 192–3

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CEA see cost-effectiveness analysis (CEA) Centers for Disease Control and Prevention (CDC) budget 112 choices in policy-setting, need for 7–10 circumcision 65–7, 178, 205 Cohen, J. 86 commercial sex workers 4, 56 , 65, 122, 163 common sense 3, 171, 205 commodification 172–5 competitive markets 117–19, 126 concurrency 84–8, 91, 198 African Americans 86–7 Sub-Saharan Africa 85–6 condom promotion 16, 85, 122, 169 condom social marketing program 117–18, 122–3, 127, 169, 202–3 distribution weights 187–8 private benefits and costs 123–5 social benefits and costs 125–6, 169 condom use 81–2, 95–8 and education 62 and low income 60 in marriage 62 consumer sovereignty 177–8, 179 consumer surplus 124 contingency valuation 114 cost minimization 99, 128–31 as a cost–benefit analysis 128–9 costs, what to include 129–30 strengths and weaknesses 130–31 TB treatment in South Africa 132–3 conclusions 135–6 costs, estimating 133–5 drug costs 135 patient costs 134 cost–benefit analysis (CBA) 4, 8, 164, 201, 205–6 distribution weights 186–90, 194 economic efficiency 176–9 equity 185–90 first level (101) 27–9 HIV testing, evaluation 180–84 private and social perspectives, comparison 182–3 private perspective 180–82 social perspective 182 second level (201) 30–32

social inclusiveness 201–5 value judgements 176, 177, 190 cost-effectiveness analysis (CEA) 99, 137–8, 195 antiretroviral drugs 141, 144–5 as cost–benefit analysis 138–9 revealed preference approach 141–2, 145 strengths 139 weaknesses 139–40, 169–70 costs 99–100 cost-utility analysis 137 Côte d’Ivoire, sexual partners 85 counterintuitive results abstinence 17–18, 19 marriage 18–19 testing 19–20 Creese, A. 138, 195 crop selection 76 cross-section analysis 55 DALYs see disability adjusted life years (DALYs) Dayton, J. 197 De Walque, D. 12, 13, 61, 66 death penalty 66 Democratic Republic of Congo as origin of epidemic 82 denial 11, 46–7, 198–9 developing countries, HIV prevalence rates comparison 54–5 diminishing marginal utility, law of 119, 157 disability adjusted life years (DALYs) 50, 110–12, 137, 140, 142, 143, 199 discordant couples 158 discrimination 192, 193 disease progression 192–3 distribution weights 186–7, 189–90, 194 condom social marketing project 187–8 criticisms of 188–9 Drain, P.K. 65 economic efficiency 176–9 consumer sovereignty 177–8, 179 willingness to pay 176 education and HIV 58–63 African Americans 87

References Index and condom use 62 education/income positive relation 62–3 female education evaluation 150–52 HIV positive link 53, 58–9 intervention types 150 neutral relation 61 positive/negative link paradox 59–61, 62–3 universal primary education 61 education programs 105, 150, 178 threshold analysis 105–8 effects, threshold estimate 106–7 intervention 105–6 threshold value 107–8 education vaccine 61, 62 effectiveness of interventions 95–100 elderly people discrimination 192 and HIV 199, 203–4 Eley, B.S. 47 The End of Poverty (Sachs) 4–5 England, R. 200 epidemics, types of 3–4, 132 Epstein, H. 56, 85, 87, 122 equity ability to pay 185–90 distribution weights 186–7 non-price rationing 191–4 time as rationing system 191–2 willingness to pay 120, 185–6 Europe, HIV prevalence rates 37 external costs 130 Fawzi, W.W. 44, 46 female education 58, 63 effectiveness evaluation 150–52 and HIV positive relation 53, 58–9 see also women fixed budgets 169–70 free radicals 41–2 gender and HIV transmission knowledge 12–13 and HIV transmission rates 81, 82 gender inequality 201–2 generalized HIV epidemics 4, 36 genital ulcers 80

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GFATM 15, 143, 145 Ghana, HIV transmission knowledge 13 Gillespie, S. 4, 41, 68, 75–6 Glied, S. 180, 181, 182, 183, 184 Global Fund to Fight AIDS, Tuberculosis and Malaria see GFATM Glynn, J.R. 60, 61 Gray, P.G. 64 Grüne-Yanoff, T. 157 Guinness, O. 173 Haacker, M. 160 Haddad, L. 41 Halperin, D.T. 85 Hargreaves, J.R. 60, 61 harm reduction interventions 175, 178 health care firms’ packages 181 non-price rationing 191–4 healthy-looking people 12–13, 16 HelpAge International 199 heterosexual transmission of HIV 5, 38, 39, 78–9 high-risk groups 4, 17, 39, 86, 90 interventions, effectiveness of 95–8, 122 targeted for intervention 197 testing 20, 182 see also risky behavior HIV 3–4 HIV education, evaluation 105–8 effects, threshold estimate 106–7 intervention 105–6 threshold value 107–8 HIV prevalence rates developing countries, comparison 54–5 Muslim countries 64 United States 38–9 worldwide 36–8 HIV testing 183–4 counterintuitive results 19–20 and the elderly 203–4 private evaluation 180–82 private and social perspectives, comparison 182–4 social evaluation 182

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see also voluntary counseling and testing (VCT) HIV transmission 4 and donor instructions 178 and education 105–8 healthy-looking people 12–13 knowledge of 11–13, 16 malnutrition, direct role of 41–2 malnutrition, indirect role of 42–3 mother-to-child 4, 105, 138 sexual behavior 5, 78–83 sexually transmitted diseases, role in 80 and testing 20 HIV/TB dual epidemic 132 Holtgrave, D.R. 106, 109, 110, 112 home-making services, value of 174 homosexual men, micro-nutrient deficiencies 45 see also MSMs housework, value of 173–4 human capital approach 146–9, 168 female primary education evaluation 150–52 strengths and weaknesses 149 voluntary counseling and testing 160, 162 human immunodeficiency virus see HIV hunger see malnutrition illegal activities 174, 175 immune system 11, 41, 44, 79, 132, 199 incarceration 86–7, 90, 198 income and education relation 62–3 and HIV 53–7, 60, 86 negative relation 54, 57 positive relation 54, 55–6, 57, 60 income inequality 56–7 India, HIV cases 14 information programs 150, 178 interracial sex 90 interventions 4, 74, 85 and agricultural policy 75–7 as commodities 173–4 details, importance of 168–9 education, types of 150 effectiveness of 95–100 priority-setting

burden of disease 199–200 denial 198–9 difficulties of 4 labeling 195–8, 200 social inclusion 201–4 intravenous/injecting drug users (IDUs) 4 HIV education 105–6, 107–8 HIV transmission 39, 90 micro-nutrient deficiencies 44, 45 Irwin, A. 13, 14 Islam and HIV rates 53, 64–7 Jayne, T.S. 69 Kadiyala, S. 4 Kagera see Tanzania: agricultural households, impact of HIV Karpiak, S.E. 199 Kenya agricultural households, impact of HIV on small-scale farm 69–70 on women’s land rights 72–3 HIV transmission knowledge 12–13 land ownership 72–3 male circumcision 66 marriage and HIV levels 19 sexual partners 84, 85 women’s land rights 72–3 Knodel, J. 73 knowledge of HIV transmission 11–13, 16 Kremer, M. 17–18 Kretzschmar, M. 85 Krutikova, S. 72 Kumaranayake, L. 132, 134 labeling, evaluation by 195–8, 200 Lagarde, E. 87 Latin America, HIV prevalence rates 37 Laumann, E.O. 89 Lesotho, sexual partners 84, 85 Lewis, S. 9–10, 15, 26, 202 localized HIV epidemics 4, 36 Loevinsohn, M. 75–6 Mackay, J.L. 66 macro-malnutrition 41, 42, 51–2

References Index malaria 8, 79 intervention analysis 30–32 Malawi, agriculture and HIV link 75 male circumcision 65–7, 178, 205 males having sex with males (MSMs) 4, 39, 67, 86, 90, 97 malnutrition 41, 57, 79 and antiretroviral drugs 75 calorie increase, effectiveness 51–2 cause of AIDS claim 46–7 as consequence of HIV/AIDS 68–9 at country level 50–51 and HIV, vicious circle 41–2 HIV transmission, direct role in 41–2 HIV transmission, indirect role in 42 measures of 47, 49–50 see also micro-nutrient deficiencies Manila, concurrent partners 85 marginal benefits 27–8, 30–31, 117–19 marginal costs 27–8, 30–31, 117–18 markets 117–19, 126 marriage and concurrency 87 condom use in 62 as HIV risk factor 18–19 Mbeki, Thabo 46 MEASURE 79 medication see antiretroviral drugs (ARVs) Mexico, willingness to pay for vaccine study 113–16 micro-malnutrition 41 see also malnutrition micro-nutrient deficiencies 42, 44, 45 micro-nutrients 41, 44 multivitamin supplementation 44–7 vitamin A 44, 46, 47–8 Millennium Development Goals (MDGs) 5, 21, 24 feasibility as economic issue 24–5 feasibility as political issue 25–6 Miller, T.R. 155, 157 mining industry 56, 86, 133, 154, 157 mitigation 77, 169, 178 monogamy 84, 85 Moore, M.L. 154 Morris, M. 85 mosquitoes 79 mothers with HIV 4, 46, 47, 193

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mother-to-child transmission of HIV 4, 105, 138 MSMs see males having sex with males (MSMs) multivitamin supplementation 44–6 South Africa, use of 46–7 Muslim countries and HIV negative relationship alcohol prohibition 65 capital punishment 66 male circumcision 65–7 Muslim population and HIV rates 53, 64 myths 13–15, 197–8 National Health Service (NHS) 191, 192 National Institute on Drug Abuse (NIDA) 105 nations’ values 174 Nattrass, N. 15, 47 network analysis 88–9 African American HIV rates 89–91 Ngamvithayapong, J. 132 NHS see National Health Service (NHS) Niger, religion and HIV rates 53–4 Nigeria, HIV cases 14 non-governmental organizations (NGOs) 7, 133 non-price rationing of health care 191–4 Nord, E. 140 North America, HIV prevalence rates 37 North Carolina Cooperative Agreement Program (NC CoOP) 105 Norton, E.C. 105, 106, 107, 108 nutrition see malnutrition; micronutrient deficiencies; micronutrients nutrition supplements 77 cost–benefit analysis 27–9 obesity 56–7 occupational fatality rates 154 Oceania, HIV prevalence rates 37 opportunity costs 8, 130, 133 Oster, E. 80, 82, 84

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Oster simulation model 80–83 Over, M. 56, 58 Owens, D.K. 112 oxidative stress 42 panel data 55 parasitic diseases 42, 43, 79 partnerships see sexual partners patient costs 174 people living with HIV/AIDS (PLWA) 36–7, 201, 203 Philipson, T.J. 19, 20 Pisani, E. 39, 75, 77, 197 policy-setting, difficulties 4–5 Posner, R. 19 Potts, M. 122 poverty 5, 54, 77, 80, 91 preferences 141–2, 164, 178 non-price rationing 194 of people living with AIDS 203 willingness to pay 185, 189, 201 of women 202–3 pregnant women with HIV, decline in 15 micro-nutrient deficiencies 44, 45, 72 multivitamin supplementation 44–6 President’s Emergency Plan for Aids Relief (PEPFAR) 15 prevention programs 14, 95–8, 195–6, 199 priority-setting burden of disease 199–200 denial 198–9 difficulties of 4 labeling 195–8, 200 social inclusion 201–4 “prison industry” 86 see also incarceration private costs 130 Propper, C. 192, 193 public–private partnership (PPP) and cost minimization 132–6 Qualls, N.L. 106, 109, 110, 112 Race Against Time (Lewis) 9–10, 202 Rath Health Foundation 47 rationing of health care non-price methods 191–4

socio-economic criteria 193 by time 191–2, 193 religion as determinant of HIV see Islam and HIV rates resource constraints 9–10 revealed preference approach 141–2, 145 Rio de Janeiro, sexual partners 84, 85 risky behavior 11, 19–20, 54, 65, 175, 178 see also high-risk groups Rispel, L. 56 Rosen, S. 191, 192, 193, 194 rural–urban migration 56 Sachs, J. 4–5 Sampson, L.A. 90 scaling up 196–7 Schelling, T.C. 9, 153 schistosomiasis 43, 79 Semba, R.D. 41, 42, 44, 45 serial monogamy 84, 85 Setswe, G. 56 sexual behavior concurrency 84–7 HIV transmission 5, 78–83 networks 88–91 Oster simulation model 80–83 sexual networks 88–9 sexual partners casual 81, 82, 84 concurrency, African Americans 86–7 concurrency, Sub-Saharan Africa 85–6 serial monogamy 84, 85 sexually transmitted diseases (STDs) 43, 60, 80 sexually transmitted infections (STIs) treatment 95, 97, 98 Shelton, J.D. 85, 198 Sinanovic, E. 132, 134 Singapore, sexual partners 85 social benefits of condom social marketing program 125–6, 169 of HIV testing 182–3 social complexity of AIDS 11 social costs 130, 133–4, 135, 183

References Index social evaluation 180, 182–4 social inclusiveness elderly with HIV 203–4 people living with AIDS 203 women and HIV 201–3 socialism 183 South Africa antiretroviral drugs (ARVs) 15, 47 denial of HIV as cause of AIDS 46–7 HIV cases 14, 37 income inequality 56 multivitamins as AIDS cure 46–7 obesity 56–7 TB treatment, cost minimization 132–3 costs, estimating 133–5 drug costs 135 patient costs 134 vitamin A in HIV prevention 47–8 Squire, L. 186 Sri Lanka, concurrent partners 85 STDs see sexually transmitted diseases (STDs) stigma 11, 91, 169 Stillwaggon, E. 42, 43, 44, 51, 52, 55, 56, 78, 79, 80 STIs see sexually transmitted infections (STIs) treatment stunting 47, 49–50 Sub-Saharan Africa concurrency 85–6 condom use 82 elderly women, vulnerability to HIV 199 female education and HIV 53, 59, 61 HIV determinants 53–4 HIV prevalence rates 37, 80–83 HIV transmission 78–9, 80, 81, 82 hunger as consequence of HIV/ AIDS 68–9 malnutrition 50–51 marriage and HIV 19 parasitic diseases 43 sexual behavior and HIV transmission 81, 82 and United States, HIV comparison 90–91 switching values 101

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Tang, A.M. 41, 42, 44, 45 Tanzania agricultural households, impact of HIV on consumption, long run 71–2 on labor supply, short run 70–71 agriculture and HIV link 75 condom social marketing program 117–18, 122–3, 127, 169, 202–3 distribution weights 187–8 private benefits and costs 123–5 social benefits and costs 125–6, 169 condom use 85 education of females 60, 147–9 and HIV 60, 62–3 primary 147–9 elderly women, vulnerability to HIV 199 HIV transmission knowledge 12, 13 income 55, 57, 188 multivitamin supplementation 44–6 sexual partners 84, 85 voluntary counseling and testing 158–64 targets 21–3 desirability of 21–3 feasibility 21 as economic issue 24–5 as political issue 25–6 TB treatment, cost minimization 128–9, 132–6 TB/HIV dual epidemic 132 T-cell counts 45, 46, 66, 192–3 testing see HIV testing; voluntary counseling and testing (VCT) Thailand agricultural households, impact of HIV 73 condom use in brothels 122 sexual partners 84, 85 THIS 12 Thomas, J.C. 90 “3 by 5 Initiative” 21, 26 threshold analysis 101–2 HIV avoidence, benefits 109–12 benefits, calculation 112

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benefits, threshold estimate 109–10 DALY, estimating 110–12 HIV education, evaluation 105–8 effects, threshold estimate 106–7 intervention 105–6 threshold value 107–8 HIV/AIDS vaccine, cost 113–16 benefits, contingency valuation 114 costs, threshold estimate 114 willingness to pay, estimating 114–16 strengths 103 weaknesses 103–4 time as rationing system 191–2 time series studies 55 trade-offs 8–10, 76 transmission see HIV transmission transport infrastructure 76 Tshabalala-Msimang, Dr. 46–7 Uganda 19, 61, 122 UNAIDS 15, 16, 19, 196 HIV/AIDS data 35–6 underweight 47, 50 United Kingdom 155 HIV contracted abroad 14 HIV transmission knowledge 16 National Health Service (NHS) 191, 192 United States and Africa, HIV comparison 90–91 African Americans concurrency 86–7 education of 87 HIV prevalence 87, 89–90, 198 sexual networks 89–90 antiretroviral drugs (ARVs) 67 condom use 81–2 denial of HIV/AIDs problem 198 female HIV/AIDS rates 14 HIV prevalence rates 38–9, 80–83, 87, 198 HIV testing 19 HIV transmission 39, 81–2 incarceration 86–7, 90, 198 malnutrition, measures of 49–50 micro-nutrient deficiencies 44 occupational fatality rates 154

sexual partners 81, 84 value of a statistical life 155 unprotected sex 11, 19, 105, 160, 163 value judgments 176, 177, 190 value of a statistical life approach 153–5 foregone benefits 160, 163 strengths and weaknesses 156–7 voluntary counseling and testing 158–64 cost–benefit analysis 160–64 cost–benefit results 161–2, 163–4 costs 160, 163 effectiveness, estimating 158–9 van der Tak, H. 186 Viscusi, N.K. 154, 156 vitamin A 44, 45, 46, 47–8 vitamins shortage of 41, 42, 47–8 South Africa, HIV policy 46–7 supplementation 43, 44–8 voluntary counseling and testing (VCT) 158–64 cost–benefit analysis of 160–64 benefits 160 cost–benefit results 161–2, 163 costs 160, 163 effectiveness, estimating 158–9 human capital method 162 see also HIV testing Voluntary HIV-1 Counseling and Testing Efficacy Study Group 159 Walker, C. 72 wasting 47, 49 Whiteside, A. 56, 57, 113 Whittington, D. 113, 114, 115 widows’ land ownership 72–3 willingness to pay (WTP) 117–21, 172 condom social marketing program 122–3, 127 private benefits and costs 123–5 social benefits and costs 125–6, 169 and economic efficiency 176 elderly and HIV 204 equity concerns 120–21, 185, 186

References Index and non-price rationing 191–2 people living with AIDS 203 social inclusion 201 strengths 119–20 vaccine 113, 114–16 weaknesses 120–21, 185, 186 women and HIV 202–3 Wilson, Phill 86 The Wisdom of Whores (Pisani) 197 women education 58, 63 effectiveness evaluation 150–52 and HIV positive relation 53, 58–9 elderly, vulnerability to HIV 199 and HIV 201–3 land ownership 72–3 mothers with HIV 4, 46, 47, 193

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preferences 202–3 see also gender workplace programs 96, 98 World Bank 9, 58, 62, 82, 150 lending program 197 World Development Report (1993) 140 World Food Program (WFP) 10 World Health Organization (WHO) “3 by 5 Initiative” 21, 26 WTP see willingness to pay (WTP) Yamano, T. 69 Youm, Y. 89 Zambia 19, 84 zero price 173, 175

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