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Diversify or focus? Spending to combat infectious diseases when budgets are tight

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  • Anderson, Soren T.
  • Laxminarayan, Ramanan
  • Salant, Stephen W.

Abstract

We consider a health authority seeking to allocate annual budgets optimally over time to minimize the discounted social cost of infection(s) evolving in a finite set of groups. This optimization problem is challenging since the standard SIS epidemiological model describing the spread of the disease contains a nonconvexity. Neither optimal control nor standard discrete-time dynamic programming can be used to identify the optimal policy. We modify the standard dynamic programming algorithm and show how familiar, elementary arguments can be used to reach conclusions about the optimal policy. We show that under certain conditions it is optimal to focus the entire annual budget on one group at a time rather than divide it among several groups, as is often done in practice. We also show that under certain conditions it remains optimal to focus on one group when faced with a wealth constraint instead of an annual budget.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 31 (2012)
Issue (Month): 4 ()
Pages: 658-675

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Handle: RePEc:eee:jhecon:v:31:y:2012:i:4:p:658-675

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Dynamic programming; Dynamic optimization; Infectious disease; SIS dynamics;

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  1. GAUDET, Gérard & HERRMANN, Markus, 2007. "The Economic Dynamics of Antibiotic Efficacy under Open Access," Cahiers de recherche 2007-04, Universite de Montreal, Departement de sciences economiques.
  2. Mark Eiswerth & Wayne Johnson, 2002. "Managing Nonindigenous Invasive Species: Insights from Dynamic Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(3), pages 319-342, November.
  3. Goldman Steven Marc & Lightwood James, 2002. "Cost Optimization in the SIS Model of Infectious Disease with Treatment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-24, April.
  4. Philipson, Tomas J & Posner, Richard A, 1996. "The Economic Epidemiology of Crime," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 405-33, October.
  5. Lars Olson & Santanu Roy, 2008. "Controlling a biological invasion: a non-classical dynamic economic model," Economic Theory, Springer, vol. 36(3), pages 453-469, September.
  6. Gardner Brown & Ramanan Laxminarayan, 1998. "Economics of Antibiotic Resistance," Working Papers 0060, University of Washington, Department of Economics.
  7. Gersovitz, Mark & Hammer, Jeffrey S., 2005. "Tax/subsidy policies toward vector-borne infectious diseases," Journal of Public Economics, Elsevier, vol. 89(4), pages 647-674, April.
  8. Mark Gersovitz & Jeffrey S. Hammer, 2004. "The Economical Control of Infectious Diseases," Economic Journal, Royal Economic Society, vol. 114(492), pages 1-27, 01.
  9. Alan D. Lopez & Colin D. Mathers & Majid Ezzati & Dean T. Jamison & Christopher J. L. Murray, 2006. "Global Burden of Disease and Risk Factors," World Bank Publications, The World Bank, number 7039, October.
  10. Laxminarayan, Ramanan, 2003. "ACT Now or Later: The Economics of Malaria Resistance," Discussion Papers dp-03-51, Resources For the Future.
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