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Diseases, infection dynamics and development

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  • Chris Papageorgiou

    ()
    (Louisiana State University)

  • Fidel Pérez Sebastián

    ()
    (Universidad de Alicante)

  • Shankha Chakraborty

    ()
    (Department of Economics)

Abstract

We propose an economic theory of infectious disease transmission and rational behavior. Diseases are costly due to mortality (premature death) and morbidity (lower productivity and quality of life). The theory offers three main insights. First, higher disease prevalence implies lower saving-investment propensity. Preventive behavior can partially offset this when the prevalence rate and negative disease externality are relatively low. Secondly, infectious diseases can generate a low-growth trap where income alone cannot push an economy out of underdevelopment, a result that differs from development traps in the existing literature. Since income per se does not cause health in this equilibrium, successful interventions have to be health specific. Thirdly, a more favorable disease ecology propels the economy to a higher growth path where infectious diseases are eradicated. Even so, diseases can significantly slow down convergence to this growth path. Taken together, our results suggest that the empirical relationship between health and income at the aggregate level may be more nuanced than realized.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-28.

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Length: 36 pages
Date of creation: Sep 2010
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2010-28

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Keywords: Infectious Disease; Rational Disease Behavior; Morbidity; Mortality; Productivity; Economic Development;

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Cited by:
  1. Shin, Inyong, 2013. "The Effect of Compressed Demographic Transition and Demographic Gift on Economic Growth," MPRA Paper 45003, University Library of Munich, Germany.
  2. Luciano Fanti & Luca Gori & Fabio Tramontana, 2014. "Endogenous lifetime, accidental bequests and economic growth," Decisions in Economics and Finance, Springer, vol. 37(1), pages 81-98, April.
  3. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer, vol. 27(2), pages 529-564, April.
  4. Chakraborty, Shankha & Papageorgiou, Chris & Perez Sebastian, Fidel, 2013. "Health Cycles and Health Transitions," MPRA Paper 50588, University Library of Munich, Germany.
  5. Aksan, Anna-Maria & Chakraborty, Shankha, 2013. "Twin Transitions," MPRA Paper 49929, University Library of Munich, Germany.
  6. Fenichel, Eli P., 2013. "Economic considerations for social distancing and behavioral based policies during an epidemic," Journal of Health Economics, Elsevier, vol. 32(2), pages 440-451.
  7. Tol, Richard S. J., 2011. "Poverty Traps and Climate Change," Papers WP413, Economic and Social Research Institute (ESRI).
  8. Shu-Chen Chang & Teng-Yu Chang, 2012. "Threshold Effects of Economic Growth on Air Pollution under Regimes of Corruption," Economics Bulletin, AccessEcon, vol. 32(1), pages 1046-1059.
  9. Arshia Amiri & Ulf-g Gerdtham & Bruno Ventelou, 2012. "HIV/AIDS-GDP Nexus? Evidence from panel-data for African countries," Economics Bulletin, AccessEcon, vol. 32(1), pages 1060-1067.
  10. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Society for Computational Economics, vol. 40(4), pages 333-353, December.
  11. Sheikh Shahnawaz, 2011. "Infectious disease outbreak and trade policy formulation," Economics Bulletin, AccessEcon, vol. 31(4), pages 2959-2967.

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