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The Welfare Costs of HIV/AIDS in Eastern Europe: An Empirical Assessment Using the Economic Value-of-Life Approach

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  • Julia Fimpel
  • Michael Stolpe

Abstract

Based on the aggregation of individual willingness-to-pay for a statistical life, we calibrate an intertemporal optimization model to determine the aggregate welfare losses from HIV/AIDS in 25 Eastern European countries. Assuming a discount rate of three percent, we find a total welfare loss for the whole region of 1.2 trillion US-$, approximately 16 percent of the region’s annual GDP between 1995 and 2001. Although prevalence and incidence rates diverge sharply between countries – with central Europe far less affected than the major countries in the Commonwealth of Independent States and the Baltics – the epidemic is likely to spread to all countries unless a coherent strategy of prevention and treatment is backed up by substantial increases in health care investments. The sheer size of this task and the international nature of the epidemic render this one of the most important current challenges for all of Europe.

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1297.

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Length: 68 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:kie:kieliw:1297

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Related research

Keywords: HIV/AIDS; Survival Probabilities; Value of a Statistical Life; Willingness-to-Pay; Eastern Europe;

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  1. Ashenfelter, Orley & Greenstone, Michael, 2004. "Estimating the Value of a Statistical Life: The Importance of Omitted Variables and Publication Bias," IZA Discussion Papers 1037, Institute for the Study of Labor (IZA).
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  7. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc.
  8. Philipson Tomas J & Jena Anupam B, 2006. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," Forum for Health Economics & Policy, De Gruyter, De Gruyter, vol. 9(2), pages 1-33, January.
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  16. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2003. "The Quantity and Quality of Life and the Evolution of World Inequality," NBER Working Papers 9765, National Bureau of Economic Research, Inc.
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