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The Impact of AIDS Treatment on Savings and Human Capital Investment in Malawi

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  • Victoria Baranov
  • Hans-Peter Kohler

Abstract

Antiretroviral therapy (ART), a treatment for AIDS, is rapidly increasing life expectancy throughout sub-Saharan African countries affected by the AIDS epidemic. This change in life expectancy has potentially profound influences on life-cycle decisions. A longer life expectancy increases the value of human capital investment, while the effect on savings is theoretically ambiguous and life-cycle saving could increase or decrease. This paper uses spatial and temporal variation in ART availability to evaluate the impact of ART provision on savings and investment. We find that ART availability significantly increases savings, expenditures on education, and children's schooling, including among HIV-negative individuals who do not directly benefit from ART. These results are not driven by the direct health effects of treatment or reductions in caretaking responsibilities, but rather by reduced perceptions of mortality risk after ART has become available.

Suggested Citation

  • Victoria Baranov & Hans-Peter Kohler, 2018. "The Impact of AIDS Treatment on Savings and Human Capital Investment in Malawi," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 266-306, January.
    • Handle: RePEc:aea:aejapp:v:10:y:2018:i:1:p:266-306
    Note: DOI: 10.1257/app.20150369
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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