Diseases, infection dynamics and development

Chris Papageorgiou, Fidel Perez Sebastian and Shankha Chakraborty

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We propose an economic theory of infectious disease transmission and rational behavior. Diseases are costly due to mortality (premature death) and morbidity (lower productivity and quality of life). The theory offers three main insights. First, higher disease prevalence implies lower saving-investment propensity. Preventive behavior can partially offset this when the prevalence rate and negative disease externality are relatively low. Secondly, infectious diseases can generate a low-growth trap where income alone cannot push an economy out of underdevelopment, a result that differs from development traps in the existing literature. Since income per se does not cause health in this equilibrium, successful interventions have to be health specific. Thirdly, a more favorable disease ecology propels the economy to a higher growth path where infectious diseases are eradicated. Even so, diseases can significantly slow down convergence to this growth path. Taken together, our results suggest that the empirical relationship between health and income at the aggregate level may be more nuanced than realized.

Keywords: Infectious Disease; Rational Disease Behavior; Morbidity; Mortality; Productivity; Economic Development (search for similar items in EconPapers)
JEL-codes: O40 O47 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2010-09
New Economics Papers: this item is included in nep-dev and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (52)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2010-28.pdf Fisrt version / Primera version, 2010 (application/pdf)

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Journal Article: Diseases, infection dynamics, and development (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2010-28

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