Economic Principles in Epidemiology Matthew H. Bonds The François-Xavier Bagnoud Center for Health and Human Rights Harvard School of Public Health Partners in Health

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity Efficiency

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity Efficiency

Principles of Economics Public Health as a Public Good The Wealth of Nations - Adam Smith, Free Markets are guided by an “invisible hand” “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Principles of Economics Public Health as a Public Good The Wealth of Nations - Adam Smith, Free Markets are guided by an “invisible hand” “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” Principles of Free Market Economics 1.Goods and services tend to be efficiently allocated in that consumers are able to purchase goods if the costs are less than the benefits (willingness to pay). 2.Competition results in ever more efficient – i.e. lower costs or higher quality – way of producing goods and services.

Public Health as a Public Good 0 Quantity Principles of Economics Demand Price

Public Health as a Public Good 0 Quantity Principles of Economics Marginal Benefit Price

Public Health as a Public Good 0 Quantity Supply Principles of Economics Price

Public Health as a Public Good 0 Quantity Marginal Cost Principles of Economics Price

Public Health as a Public Good Principles of Economics Market Equilibrium 0 Quantity Marginal Private Cost $* Q* Marginal Private Benefit Price

Public Health as a Public Good Principles of Economics Market Equilibrium 0 Quantity Marginal Private Cost $* Q* Marginal Private Benefit Surplus Value Price

Public Health as a Public Good Principles of Economics Market Equilibrium 0 Quantity Supply $* Q* Demand Surplus Value Price

Principles of Economics Public Health as a Public Good Condition for Efficiency: Goods are private – i.e., the benefits and costs of the production and consumption of the good are exclusively incurred by the producers and consumers who voluntary participate in the transaction.

Principles of Economics Public Health as a Public Good Condition for Efficiency: Goods are private – i.e., the benefits and costs of the production and consumption of the good are exclusively incurred by the producers and consumers who voluntary participate in the transaction. A good is not purely private if there are “externalities” – i.e., a “spillover” of an economic transaction that affects third parties.

Principles of Economics Public Health as a Public Good Public Good A good that is jointly consumed by everyone - individuals cannot be excluded

Public Health as a Public Good Principles of Economics Market Equilibrium 0 Quantity Marginal Private Cost $* Q* Marginal Private Benefit Price

Public Health as a Public Good Principles of Economics 0 Quantity Marginal Private Cost $* Q* Marginal Private Benefit Marginal Social Benefit Price

Public Health as a Public Good Principles of Economics 0 Quantity $* Q* Marginal Private Cost Marginal Private Benefit Marginal Social Benefit $** Q** Price

Public Health as a Public Good There is a ‘public’ interest in ‘private’ health behavior because many diseases are infectious. Therefore the free market allocation of health services can be considered “inefficient” in an economic sense. 0 $ Quantity Marginal Private Cost $* Q* Marginal Private Benefit Surplus Value Marginal Social Benefit Surplus Value Lossed value Principles of Economics $** Q**

Principles of Economics Public Health as a Public Good Goods and services that affect infectious diseases: - drugs, vaccines and healthcare services - bed nets - waste management - water sources - hygiene - condoms

Public Health as a Public Good 0 Vaccination Coverage V* I

Public Health as a Public Good 0 QuantityQ* Demand Price 0 Vaccination Coverage V* I

Public Health as a Public Good 0 QuantityQ* Marginal Private Benefit Price 0 Vaccination Coverage V* I

Public Health as a Public Good 0 Quantity $* Q* Marginal Cost Marginal Private Benefit Price 0 Vaccination Coverage V* I I*

Public Health as a Public Good 0 Quantity $* Q* Marginal Cost Marginal Private Benefit Marginal Social Benefit $** Q** Price 0 Vaccination Coverage V* I*

Principles of Economics Public Health as a Public Good Important Economic Concepts for Epidemiology 1.Marginal benefits and costs change with respect to a. Quantity of the good consumed b. The time of the consumption 2.There are marginal external benefits and costs of economic behavior because diseases are infectious 3.The outcomes of interventions are nonlinear

Public Health as a Public Good Policy Example: User Fees at Health Clinics in Rwanda How many secondary infections are prevented by removing user fees at the clinics?

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity Efficiency

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity Efficiency

Three Paradigms of Global Health 1.Health as a human right 2.Public health as a public good 3.Public health as economic development Equity Efficiency

Public Health as Economic Development extreme poverty – subsistence economic activity high disease burden Fertility – high population growth conflict poor education Highly Correlated Development Indicators: climate Syndrome:

Public Health as Economic Development extreme poverty – subsistence economic activity high disease burden Fertility – high population growth conflict poor education Highly Correlated Development Indicators: climate Syndrome:

Per capita Income Public Health as Economic Development

Per Capita Income Across Temperature GEOGRAPHY MATTERS Public Health as Economic Development Income

Per Capita Income Across Latitudes GEOGRAPHY MATTERS Public Health as Economic Development Income

Infectious Disease Burden Across Temperature Burden of Infectious Diseases Public Health as Economic Development GEOGRAPHY MATTERS Burden of Infectious Diseases

Infectious Disease Burden Across Latitude Burden of Infectious Diseases Public Health as Economic Development GEOGRAPHY MATTERS

Per capita Income Malaria Public Health as Economic Development

HIV Per capita Income Public Health as Economic Development

Hookworm Per capita Income Public Health as Economic Development

Explaining the Global Distribution of Wealth and Poverty Increase Life Expectancy by 5 years = Increase in Growth rate of economy by.5% (Bloom, 2004) Public Health as Economic Development

1.Income determines health - Nutrition - Sanitation and Waste Management - Access to Clean Water - Prevention, such as mosquito nets 2. Health determines income - Labor Productivity - School Attendance Rates - Longevity, Savings, and Investments - Fertility, household size Theory of a Disease-Driven Poverty Trap Public Health as Economic Development From Economics Literature (Sachs, 2001, 2005, Bloom and Canning, 2005): Note: Individual health is part of a population-level ecological process.

Explaining the Global Distribution of Wealth and Poverty Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap S I transmission natural death recovery disease- induced death     birth  Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap S I transmission natural death recovery disease- induced death     birth  income Public Health as Economic Development

1. Economics Determines Distribution of Diseases Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

2. Diseases Determine Distribution of Income Theory of a Disease-Driven Poverty Trap Public Health as Economic Development Time spent healthy (i.e., uninfected)

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Poverty Trap Economic Growth Theory of a Disease-Driven Poverty Trap Public Health as Economic Development Longterm impacts require substantial sustained interventions

Poverty Trap Economic Growth Theory of a Disease-Driven Poverty Trap Public Health as Economic Development

Summary Introduction to Partners in Health 1.Public health as a ‘public good’ - Because infectious diseases are infectious, there are externalities to the allocation of goods and services relevant to disease management. - the value of those externalities depends on the dynamics of the disease. 2.Public health as economic development - health and economic development are dynamic ecological processes that depend on a range of variables: climate, geography, population density, education, that interact with each other. - health and economic development have some qualities of public goods – i.e., because the health of an individual is dependent on the health of his/her community, their economic well-being may be as well.