The Moral and Fiscal Implications of Anti-Retroviral Therapies for HIV in Africa

Paul Collier, Olivier Sterck and Richard Manning

No 2015-05, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Thanks to anti-retroviral therapies, people living with HIV in developing countries can now have a near-normal life at a cost of a few hundred dollars per year. We postulate that given this newly low cost of maintaining lives, there is a moral duty to rescue those who are infected. The core of the paper quantifies a reasonable lower bound for the fiscal consequences of this duty, which we show creates a financial quasi-liability which for some African countries is comparable to their debt-to-GDP ratios. Expenditures on prevention can pre-empt some of these liabilities. We construct a model to show that in some countries expenditure on prevention would be cost-effective, reducing liabilities by more than its cost. In principle, prevention should be pursued at least up to the point at which expenditure on it reduces the quasi-liability sufficiently to minimize the overall cost of accepting the duty to rescue. However, we show that even with optimal prevention the quasi-liability is likely to remain too high to be affordable for a significant number of African countries. Extending the model to two players, we show that if the international community accepts part of the quasi-liability, (as it does), it should finance an equal share of prevention and treatment efforts. Any imbalance in this distribution would introduce moral hazard and lead to a sub-optimal level of prevention.

Date: 2015
New Economics Papers: this item is included in nep-afr, nep-dev and nep-hea
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Citations: View citations in EconPapers (7)

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Journal Article: The moral and fiscal implications of antiretroviral therapies for HIV in Africa (2018)
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