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Policy Area Papers on Healthcare

Financial Crises and Social Spending: The impact of the 2008–2009 crisis
Maureen Lewis & Marijn Verhoeven, World Economics, December 2010
Financial crises in developing and transition countries have often proven disruptive to policies and programmes due to procyclical trends in government spending growth. Given the importance and significant proportion of public budgets devoted to education and health, cuts in government expenditures during recessions potentially place social programmes at risk. This paper analyses the experiences from 1995–2007 for 131 countries, projects fiscal social spending to 2013, and examines specific issues around fiscal social spending in the current crisis, including donor responses and government and household coping mechanisms.

Growth rate trends in education and health spending fluctuate over time, with greater volatility in education. Despite the variation on growth rate trends, absolute levels of fiscal spending rise steadily over time, with brief flat trends over one or two years, reflecting periods of GDP growth decline. Public spending tends to be more counter-cyclical for education compared to health. While sharp declines in growth rates of fiscal social spending are projected, they are balanced by projected increases in absolute spending over the 2008–2013 period.

Public Health, Advertising and Reality
Tim Ambler, World Economics, December 2009
Advertising is often blamed as the, or a, cause of public health problems such as misuse of alcohol or obesity. This paper suggests that the conclusions drawn by researchers owe more to their a priori attitudes than to an even-handed review of the evidence from both sides of the argument. The British Medical Association Science Committee’s 2009 call to ban alcohol advertising and promotion in the UK is taken as a case study. It is characterised by sweeping unsupported assertions, selective use of the literature and factual misreporting. Yet there is, or should be, common ground which should be defined and developed scientifically.
HIV/AIDS: A Growing Concern to Business
David E. Bloom, Lakshmi Reddy Bloom, Paul De Lay, Fiona Paua, Richard Samans & Mark Weston, World Economics, December 2007
Recent years have seen calls for the private sector to become more involved in the fight against HIV/AIDS. Business has valuable skills and other resources that could assist government and civil society efforts, and some firms (although by no means all) also have strong reasons for involvement. HIV/AIDS hits hardest the working-age individuals who make up the bulk of the private sector’s workforce and consumer base. As well as a moral case for action, deflecting the virus's impacts on employees and economies can avert business costs and strengthen corporate reputations. This article presents some of the key arguments for business action on HIV/AIDS and provides examples of where business has less reason to be concerned about the impact of the epidemic in specific situations. It also outlines findings from the World Economic Forum's 2006 Executive Opinion Survey, which polls the views of over 11,000 business leaders in 125 countries. It finds a small proportion of firms reporting that the virus is seriously affecting their operations, with the greatest effects felt in Sub-Saharan Africa. A much larger proportion of firms believe the virus will affect them in the next five years. Despite this growing worldwide concern, it is primarily companies in the hardest-hit countries that have developed policies to cope with the threat. It is noteworthy that most firms are basing their action or inaction on a subjective perception of the risk posed by HIV/AIDS, rather than on a formal risk assessment.
Economic Drivers of Pharmaceutical Investment Location
David Lewis, Edward Bramley-Harker & Joshua Farahnik, World Economics, September 2007
The article examines the range of economic factors that underlie decision making about the location of investments by research-based pharmaceutical companies. Set in the context of the commercial challenges facing the industry, structured interviews with 34 senior executives in pharmaceutical companies examined hypothetical investment scenarios. Unsurprisingly, both cost and quality factors are important to decision making, but their nature and relative importance depend heavily on the type of investment being considered. For some investments, particularly in high value research, quality may be paramount. In other matters quality remains important but a wide and increasing range of locations are able to deliver acceptable levels of quality, so cost becomes much more relevant.
The Value of Vaccination
David E. Bloom, David Canning & Mark Weston, World Economics, September 2005
Despite advances during the twentieth century, immunization coverage is far from universal and faces significant obstacles in both developing and developed countries. Weak policy emphasis on vaccination may be the result of the narrow view of its benefits in scientific and policy-making communities, which focus mainly on the averted costs of medical treatment. An investigation of the broader impacts of immunization shows that the benefits of vaccine programs—in particular, their economic effects via improved health—have been underestimated, thereby causing the rate of return to be underestimated.
Measures of Progress and Other Tall Stories: From income to anthropometrics
John Komlos & Brian Snowdon, World Economics, June 2005
How should progress be measured? Today, economists and economic historians have available a rich array of data for a large number of countries on which to base their response to this important question. The need for alternative measures of the standard of living is particularly important for economic historians exploring the distant past where conventional estimates cannot be calculated. In this paper John Komlos and Brian Snowdon review several alternative measures of ‘progress’, both orthodox and unorthodox, including recent findings from ‘anthropometric’ history. The field of Anthropometrics blends history, economics, biology, medical science and physical anthropology and is now well established having helped to clarify ‘several questions important to economic historians’ including those related to slavery, mortality, inequality, and living standards during industrialisation. While malnutrition is the scourge of poor countries, obesity has become a major problem in many developed countries, particularly during the last quarter century. Research into the economics of obesity is now a burgeoning research area and the authors briefly review some of the major findings. Finally, Komlos and Snowdon comment on the recent literature on ‘happiness’. The achievement of a higher GDP per capita is, after all, not an end in itself, but a means to an end, that is, human happiness.
The Anomalous Case of HIV/AIDS: A critical response to Clive Bell & Maureen Lewis, ‘The Economic Implications of Epidemics Old and New’
Barrie Craven, Christian Fiala, Etienne de Harven & Gordon Stewart, World Economics, March 2005
In a recent issue of World Economics (Vol. 5, No. 4, 2004) Bell and Lewis discuss ‘The Economic Implications of Epidemics Old and New’. In their article those authors examine several historic and recent epidemics including HIV/AIDS, currently regarded as the greatest threat to economic and human survival in the affected countries. Craven et al. are responding to the authors’ views about HIV/AIDS because they think that they have misinterpreted the record, and accepted conventional but questionable assumptions about the epidemiology, morbidity and mortality of this syndrome which varies in distribution geographically and statistically, and therefore in economic impact. Craven et al. suggest reasons for this misinterpretation and offer an alternative analysis of the epidemic, with very different human and economic implications.
The Economic Implications of Epidemics Old and New
Clive Bell & Maureen Lewis, World Economics, December 2004
The outbreak of Severe Acute Respiratory Syndrome (SARS) in the winter of 2002–03 raised the specter of a new, unknown and uncontrollable infectious disease that spreads quickly and is often fatal. Certain branches of economic activity, notably tourism, felt its impact almost at once, and investor expectations of a safe and controlled investment climate were brought into question. Part of the shock of SARS was the abrupt reversal of a mounting legacy of disease control that had altered societies’ expectations from coping with waves of epidemics of smallpox, cholera, and measles, among other diseases, to complacency with the virtual elimination of disease epidemics. This paper analyzes the economic implications of the Great Plague in the fourteenth century, the 1918–19 influenza epidemic, the HIV/AIDS curse and SARS to demonstrate the short- and long-term effects of different kinds of epidemics. The magnitude and nature of economic effects vary according to the duration and characteristics of the
The Health and Wealth of Africa
David E. Bloom & David Canning, World Economics, June 2004
Among Africa’s problems, chronic poverty and poor health stand out. Traditional development thinking has maintained that health improvements are a consequence of income growth. But new evidence shows that investing in health, with the aid of the international community, could make a big difference in Africa’s economic prospects. Moreover, some feasible, low-cost interventions would likely have high returns. The pathways by which health can make a difference economically include those based on the heightened effectiveness of labor, increased savings, more effective educational investments, and demographic change.
How Demographic Change can Bolster Economic Performance in Developing Countries
David E. Bloom & David Canning, World Economics, December 2003
Falling mortality rates spurred by medical, nutritional and lifestyle changes have spurred a ‘demographic transition’ in a majority of the world’s countries. As couples realize their children are more likely to survive, they need, and eventually have, fewer of them to attain their desired family size. In addition, desired fertility tends to decline as earnings opportunities improve since forgone income is such a large portion of the cost of childrearing. In the lag between mortality and fertility declines, a ‘boom’ generation is created, which is larger than both preceding and successor cohorts. As this boom generation reaches working age, the combination of a greater supply of workers and fewer dependents to support gives countries the opportunity to collect a ‘demographic dividend’. If an appropriate policy environment is in place for making the most of this opportunity, the economic benefits can be, and in many cases have been, great.
Regulating Tobacco in the United States: The Government and the Courtroom
Jonathan Gruber, World Economics, September 2002
There has been a dramatic turn of events against the tobacco industry in the past few years, raising the question of the appropriate future path for smoking policy in the US. This paper discusses the theory and evidence on regulation of smoking. The author begins by reviewing the background on this industry. He then turns to a discussion of the motivations for regulating smoking. He argues that the available evidence suggests that we move from the traditional model, which ties regulation to costs external to the smoker, to a new framework where regulation is related to the internal costs of smoking (the damage the smoker does to him- or herself). The paper reviews the evidence on the effects of existing regulations. It concludes with a discussion of future policy directions.
Why is There No AIDS Vaccine?: A new economic explanation
Pedro Rey Biel, World Economics, December 2001
This paper provides an economic explanation for the non-existence of a vaccine against AIDS. It comments on previously claimed economic reasons why private laboratories do not have incentives to invest in an AIDS vaccine and provides a new one: private companies already operate in the market for treatment of already infected patients, which market is threatened by the eventual emergence of a vaccine that cuts the cycle of infection. Finally, the paper discusses some mechanisms to provide incentives for further private research in diseases where a treatment product already exists.