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Industry Papers on Healthcare

Endangering the War on Terror by the War on Drugs
Deepak Lal, World Economics, September 2008
The century-old US War on Drugs based on supply control measures is endangering its War on Terror in Afghanistan. With opium poppy cultivation the most profitable crop available to Afghan farmers, the Taliban has been able to use the illegal profits from the trade to buy arms and recruit farmers by offering protection from US led aerial spraying of the crops. These supply control measures are not warranted by welfare economics, classical liberal social ethics, or the actual outcomes of the US War on Drugs. The best policy to deal with US drug addiction would be to legalize drugs, concentrating on enforced treatment of chronic drug users. A successful War on Terror requires an end to aerial spraying, the buying up of Afghan opium and its conversion into morphine, for which there is excess demand in the Third World.
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, Neurobiological and Behavioral Perspectives on Building America’s Future Workforce
Eric Knudsen, James J. Heckman, Judy Cameron & Jack P. Shonkoff, World Economics, September 2006
A growing proportion of the US workforce will have been raised in disadvantaged environments that are associated with relatively high proportions of individuals with diminished cognitive and social skills. A cross-disciplinary examination of research in economics, developmental psychology, and neurobiology reveals a striking convergence on a set of common principles that account for the potent effects of early environment on the capacity for human skill development. Central to these principles are the findings that early experiences have a uniquely powerful influence on the development of cognitive and social skills, as well as on brain architecture and neurochemistry; that both skill development and brain maturation are hierarchical processes in which higher level functions depend on, and build on, lower level functions; and that the capacity for change in the foundations of human skill development and neural circuitry is highest earlier in life and decreases over time. These findings lead to the conclusion that the most efficient strategy for strengthening the future workforce, both economically and neurobiologically, and for improving its quality of life is to invest in the environments of disadvantaged children during the early childhood years.
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.
Measuring Global Drug Markets: How good are the numbers and why should we care about them?
Peter Reuter & Victoria Greenfield , World Economics, December 2001
The continuing demand for measures of the size of global drug revenues has produced a supply of numbers that consistently overstate international financial flows. This paper shows that, rather than $500 billion, the annual figure in trade terms may be about $25 billion. As with many refined agricultural products, most of the revenues go to distributors rather than to primary producing countries. The authors explore the need for estimates of the global drug markets, address the difficulties of obtaining ‘good’ numbers, and describe opportunities for developing better estimates of flows and revenues. There are at least three reasons for caring about the numbers: they can help to improve understanding of the drug production and consumption problem and identify appropriate policy responses.
Prohibition and the Market for Illegal Drugs: An overview of recent history
Suren Basov , Mireille Jacobson & Jeffrey A. Miron, World Economics, December 2001
Over the past 25 years in the United States, enforcement of drug prohibition has expanded dramatically. Over the same period, however, the trends in drug production and consumption have been essentially flat, and the real, purityadjusted prices of both cocaine and heroin have more than halved. This combination of facts raises questions about the effectiveness of prohibition enforcement, and it constitutes a puzzle that is interesting to explain. In this paper the authors document these facts and explore possible explanations. They do not claim to provide a complete answer, but shed light on which explanations are likely to be important.
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.