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Cost Optimization in the SIS Model of Infectious Disease with Treatment

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  • Steven M. Goldman and James Lightwood.

Abstract

We consider the intertemporal social optimization problem of minimizing the present value of the costs incurred from both disease and treatment. Though the analysis is complicated by the analytical failure of concavity, we are able to substantially characterize both the long run equilibria and the adjustment paths. The cost minimizing program is shown to exhibit a tendency towards decreased levels of treatment in the presence of higher disease levels. The socially optimal program is compared to individually rational behavior and the inefficiencies in private behavior from the infection externality are shown to cause potentially large increases in the equilibrium rate of infection.

Suggested Citation

  • Steven M. Goldman and James Lightwood., 1996. "Cost Optimization in the SIS Model of Infectious Disease with Treatment," Economics Working Papers 96-245, University of California at Berkeley.
  • Handle: RePEc:ucb:calbwp:96-245
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    Cited by:

    1. Barrett, Scott & Hoel, Michael, 2007. "Optimal disease eradication," Environment and Development Economics, Cambridge University Press, vol. 12(05), pages 627-652, October.
    2. Anderson, Soren T. & Laxminarayan, Ramanan & Salant, Stephen W., 2012. "Diversify or focus? Spending to combat infectious diseases when budgets are tight," Journal of Health Economics, Elsevier, vol. 31(4), pages 658-675.
    3. Aadland David & Finnoff David C. & Huang Kevin X.D., 2013. "Syphilis Cycles," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 297-348, June.
    4. St├ęphane Mechoulan, 2007. "Market structure and communicable diseases," Canadian Journal of Economics, Canadian Economics Association, vol. 40(2), pages 468-492, May.
    5. Park, Hojeong, 2016. "A real option analysis for stochastic disease control and vaccine stockpile policy: An application to H1N1 in Korea," Economic Modelling, Elsevier, vol. 53(C), pages 187-194.
    6. Acemoglu, Daron & Malekian, Azarakhsh & Ozdaglar, Asu, 2016. "Network security and contagion," Journal of Economic Theory, Elsevier, vol. 166(C), pages 536-585.
    7. Goyal, Sanjeev & Vigier, Adrien, 2015. "Interaction, protection and epidemics," Journal of Public Economics, Elsevier, vol. 125(C), pages 64-69.
    8. Rowthorn, Robert & Toxvaerd, Flavio, 2012. "The Optimal Control of Infectious Diseases via Prevention and Treatment," CEPR Discussion Papers 8925, C.E.P.R. Discussion Papers.
    9. David Aadland & David Finnoff & Kevin X. D. Huang, 2016. "Behavioral Origins of Epidemiological Bifurcations," Vanderbilt University Department of Economics Working Papers 16-00004, Vanderbilt University Department of Economics.
    10. David Aadland & David Finnoff & Kevin x.d. Huang, 2013. "The Equilibrium Dynamics of Economic Epidemiology," Vanderbilt University Department of Economics Working Papers 13-00003, Vanderbilt University Department of Economics.
    11. Toxvaerd, Flavio, 2010. "Infection, Acquired Immunity and Externalities in Treatment," CEPR Discussion Papers 8111, C.E.P.R. Discussion Papers.
    12. Toxvaerd, Flavio, 2010. "Recurrent Infection and Externalities in Prevention," CEPR Discussion Papers 8112, C.E.P.R. Discussion Papers.
    13. 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.
    14. Berry, Kevin & Finnoff, David & Horan, Richard D. & Shogren, Jason F., 2015. "Managing the endogenous risk of disease outbreaks with non-constant background risk," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 166-179.
    15. Terrence August & Tunay I. Tunca, 2006. "Network Software Security and User Incentives," Management Science, INFORMS, vol. 52(11), pages 1703-1720, November.
    16. Telalagic, S., 2012. "Optimal Treatment of an SIS Disease with Two Strains," Cambridge Working Papers in Economics 1229, Faculty of Economics, University of Cambridge.

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