Kiel Working Papers, Kiel Institute for World Economics
No 1297:
The Welfare Costs of HIV/AIDS in Eastern Europe: An Empirical Assessment Using the Economic Value-of-Life Approach
Julia Fimpel and Michael Stolpe
Abstract: Based on the aggregation of individual willingness-to-pay
for a statistical life, we calibrate an intertemporal optimization model to
determine the aggregate welfare losses from HIV/AIDS in 25 Eastern European
countries. Assuming a discount rate of three percent, we find a total
welfare loss for the whole region of 1.2 trillion US-$, approximately 16
percent of the region’s annual GDP between 1995 and 2001. Although
prevalence and incidence rates diverge sharply between countries – with
central Europe far less affected than the major countries in the
Commonwealth of Independent States and the Baltics – the epidemic is likely
to spread to all countries unless a coherent strategy of prevention and
treatment is backed up by substantial increases in health care investments.
The sheer size of this task and the international nature of the epidemic
render this one of the most important current challenges for all of
Europe.
Keywords: HIV/AIDS; Survival Probabilities; Value of a Statistical Life; Willingness-to-Pay; Eastern Europe; (follow links to similar papers)
JEL-Codes: D91,; I12,; I18,; J17; (follow links to similar papers)
68 pages, September 2006
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