Health Cycles and Health Transitions

Abstract

We study the dynamics of poverty and health in a model of endogenous growth and rational health behavior. Population health depends on the prevalence of infectious diseases that can be avoided through costly prevention. The incentive to do so comes from the negative effects of ill health on the quality and quantity of life. The model can generate a poverty trap where infectious diseases cycle between high and low prevalence. These cycles originate from the rationality of preventive behavior in contrast to the predator-prey dynamics of epidemiological models. We calibrate the model to reflect sub-Saharan Africa's recent economic recovery and analyze policy alternatives. Unconditional transfers are found to improve welfare relative to conditional health-based transfers: at low income levels, income growth (quality of life) is valued more than improvements to health (quantity of life). JEL Classification: O11, O40, O47.

Can HIV Alter the Quantity-Quality Switch and Delay the Fertility Transition in Sub-Saharan Africa?

“…Further extensions of the present work should consider model-based frameworks including 1) saving and accumulation of physical capital (deliberately avoided here to mirror SSA economies, which show the lowest aggregate saving [World Bank (2016)], the highest income inequality [IMF (2015)], and the most under-developed political and financial systems worldwide [Easterly and Levine (1997)]); 2) continuous-time to realistically capture the time scales of the interplay between HIV and fertility; 3) the impact of the HIV/AIDS on labour productivity, as in Chakraborty (2010Chakraborty ( , 2016.…”

“…In other words, and more generally, none of the above mentioned works consider an economy where an infectious disease with high longterm morbidity, such as HIV/AIDS, affects individual decisions with regard to fertility (directly) and mortality (indirectly through education investments). This work aims at contributing to this debate by a novel model integrating, for the first time in the literature, a simplified representation of HIV spread through sexual transmission [Chakraborty et al (2010[Chakraborty et al ( , 2016] into a Unified Growth Theory overlapping generations (OLG) framework [Galor (2011); Weil (1996, 2000)], including fertility and education decisions under endogenous child and adult mortality. The model corroborates the empirical results on fertility reversal due to HIV/AIDS obtained by [KalemliOzcan (2012)].…”

“…We represent HIV spread by following [Chakraborty et al (2010[Chakraborty et al ( , 2016], who proposed a clever and parsimonious approach to represent a deadly epidemics as a persistent phenomenon, characterised by a specific temporal profile induced by the patterns of transmission between individuals, rather than a mere mortality shock with a predetermined duration, as instead is used in the other contributions in the economic literature. In the subsequent model parametrization an effort has been made to harmonise the observed characteristic time scales of the fertility transition and the HIV/AIDS epidemics as observed in SSA, in order to represent both phenomena in a realistically correct relative time scale.…”

Infectious diseases, human capital and economic growth

“…We treat the demographic parameters, b and d, as exogenous and abstract from the fertility-mortality nexus. For papers that focus on this relationship seeAksan and Chakraborty (2014),Chakrabory et al (2010Chakrabory et al ( , 2016,Kalemli-Ozcan et al (2000) andSoares (2005). The microeconomic evidence on this relationship is mixed, seeBleakley and Lange (2009),Fortson (2009), and Kalemli-Ozcan and Turan (2011).…”

Taxation and Public Health Investment: Policy Choices and Tradeoffs

“…There is an emerging interest in the potential effects of health on development (see, e.g. Strauss and Thomas (1998); Deaton (2003); Chakraborty (2004); Bloom and Canning (2005); Soares 4 (2005); Lorentzen et al (2006); Weil (2007); Birchenall and Soares (2009); Chakraborty, et al (2013); Bhattacharya and Chakraborty (2016)). This literature focuses primarily on investigating the hypothesis that health status (measured as positively related to life expectancy, or inversely related to mortality or diseases) is a key determinant in explaining cross-country income differences via its direct or indirect effect on individuals' productivity and savings behavior.…”