3. Health and Service Provision Takashi Yamano

1. Development Problems in AfricaSpring 2007 3. Health and Service Provision Takashi Yamano

2. Health and Service Provision 1) Health Concepts and Measurements 2) Child Health 3) Economics of Communicable Diseases 4) Market Failures for Vaccine Development 5) Push and Pull Programs

3. 1. Concepts and Measurements • Hunger: a condition, in which people lack the basic food intake to provide them with the energy and nutrients for fully productive lives. (Hunger Task Force, UNDP, 2003) • FAO: the prevalence of undernourishment • Per capita dietary energy supply: production + stocks – post-harvest losses + imports + food aid – export • Criticisms (i) poor data, (ii) poor information about distribution, (iii) evidence show underestimations of hunger. • But this is the only measure available for many years for many countries. See Behrman, Alderman, and Hoddinott (2004) in Global Crises, Global Solutions

4. Anthropometric Measures • Height for Age Z-score • Long-term health measure • Below -2: stunted • Below -3: severely stunted • Weight for Height • Short-term measure • Below -2: wasted • Below -3: severely wasted • Weight for height • Long & short measure • Below -2: underweight • Below -3: severely underweight

5. DALY: Disability Adjusted Life Years DALYs sum the years of life lost due to premature mortality (YLL) and the years lost due to disability (YLD), weighted by the severity of the disability. One DALY is equivalent to one year lost of healthy life. One DALY could be evaluated at the average income. DALY = YLL + YLD YLL = N x L (# of deaths x life expectancy at age of death) YLD = I x DW x L (# of incident cases x disability weight x average duration of disability)

6. Other Measurements • Anthropometric Measures of Malnutrition >> Next slide • Measures of Micronutrient Deficiency • Prevalence of iodine deficiency • Among pregnant women >> Low birth weight • Among children >> high mortality rates • Prevalence of low iron intake in children and women • Among women >> anemia, low birth weight • Among children >> low cognitive ability • Prevalence of vitamin A deficiency • Blindness • Child mortality

7. How about self reporting? Strauss and Thomas found that reported height is systematically shorter than the measured height for younger children. They speculate that this is because parents remember the last measurement, but younger children grow faster than older children. They also found that the difference between the two is related with income. High-income parents may monitor more closely. From Strauss and Thomas (1996) AER

8. 2. Child Health: Why should we care? • Humanitarian reasons • A link between child nutrition and cognitive development and education; and a link between child nutrition and life-time productivity • Previous studies have shown that school going children have higher academic records if they were healthy in their early childhood (0-5 years old). • Previous studies shown that adults who were healthy in their early childhood have higher education levels and income. • Saving resources: healthy children require less medical expenditure and higher returns from education systems. See Behrman, Alderman, and Hoddinott (2004) in Global Crises, Global Solutions

9. Child Mortality Rate Overview Under 5 mortality rate per 1,000 Source: World Bank Development Indicator 2004

10. Source: World Bank Development Indicator 2004

11. Illiterate rate among female in 2000 Source: World Bank Development Indicator 2004

12. Source: World Bank Development Indicator 2004

13. Factors that affect child health • Income • Education of mother Usually its impacts are stronger than father’s education • Education of father • Gender preference of parents (especially in South Asia) • Infrastructure • Micro-nutrients of food intake • Exposures to diseases >> Next Topic

14. Fertility by the education of mothers Created from Demographic and Household Surveys in the 1990s

15. HAZ by the education of mothers Created from Demographic and Household Surveys in the 1990s

16. Mother’s education and Child Health • Mother’s education has been found a key factor • Why does mother’s education improve child health? • Glewwe (1999) argues that • Formal education may directly transfer health knowledge • The literacy and numeracy skills acquired in school may enhance the capability to diagnose and treat child health problems • Increased familiarity with modern society through schooling may make women more receptive to modern medicine

17. 3. Economics of Communicable Diseases • Background on Communicable Diseases • Infectious and parasitic diseases account for one-third of the disease burden in low-income countries over half in Africa only 2.5 percent in high-income countries • A key reason for the spread of infectious diseases in low-income countries is weak health-care systems: Low budgets in general Absenteeism among health workers Poor conditions of clinics (often no drugs) • Chaudhury et al. (2006, JEP) found 25 to 40 percent of health workers were absent from their posts, and 40 percent of doctors were absent in surprised visits. More on this next week. Kremer and Glennerster (2003) “Strong Medicine”

18. Three Major Communicable Diseases • Every year, 1.1 million people, mostly children and pregnant women, die of malaria (90% of them are in Africa) • Every year, 1.9 million people die of tuberculosis (98% in developing countries, many in Africa). • In 2003, 2.9 million people died of AIDS (total of over 20 million since 1981). About 38 million people are living with HIV. Kremer and Glennerster (2004) “Strong Medicine”

19. Deaths from Diseases for which Vaccines are Needed Kremer and Glennerster (2004) “Strong Medicine”

20. 4. Failures in the Market of Vaccines • Under Consumption of Vaccines • Individuals who take vaccines not only benefit themselves, but also break the chain of disease transmission. They do not, however, such external benefits into account. • The chief beneficiaries of vaccines are often children. • Individuals seem much more willing to pay for treatment than prevention. Kremer and Glennerster (2004) “Strong Medicine”

21. Monopoly Market Monopoly Profit Alternatively: The government pay A + B + C + D to the firm, taxing Group X just below MP and Group Y just over MC. >> everyone is better off ! Monopoly Price (MP) A E Willingness to pay D Manufacturing Cost (MC) B C 0 Fraction of population vaccinated 1 Group A Group B Kremer and Glennerster (2004) “Strong Medicine”

22. Social vs. Private Returns • Private returns to curing the disease is based on the income saved by taking drugs or vaccines. • But because infectious diseases spread among people, the social returns have to take into account the saved incomes of potential patients who would be infected by the disease from the particular patient. • Thus, Social Returns of a communicable disease is higher than the private returns. Negative Externality! • Implication: medical costs of communicable diseases should be subsidized. Earlier the interventions are, the lower the costs. Kremer and Glennerster (2004) “Strong Medicine”

23. 5. Push and Pull Programs • Push Programs: subsidize research inputs through means such as grants to academics and tax credits for R & D investment. • Pull Programs: increase the rewards for developing specific products by committing to reward success, such as patent systems Push Programs Pull Programs R & D Kremer and Glennerster (2004) Strong Medicine

24. Advantages and Limitations Push Programs • Advantages: can support basic research, require sharing of research outputs • Limitations: misallocation of fund (fund providers may not know how to allocate fund or are unable to monitor research activities) Pull Programs • Advantages: fund is provided only when products are produced, scientists and firms allocate their resources efficiently, suitable for product developments • Limitations: no sharing information until the products are produced, difficult to specify research outputs Kremer and Glennerster (2004) Strong Medicine

25. The Patent Trade-off • Without patents, pharmaceutical companies have no incentive to develop vaccines and drugs. • With patents, pharmaceutical companies charge high (monopoly) prices on vaccines and drugs. The challenge is to achieve the following two goals: • Goal: Creating R&D incentives to develop new pharmaceuticals • Goal: ensuring wide access to pharmaceuticals once they are developed. Kremer and Glennerster (2004) Strong Medicine

26. Patents in Developing Countries • Many countries do not have effective patent laws on pharmaceuticals (vaccines and drugs). • In India, for instance, pharmaceutical products cannot be patented. Thus, Indian companies produce patented pharmaceuticals without paying patent fees and sell them at low prices domestically and internationally. • See the LA times new article on drugs in the Philippines. Kremer and Glennerster (2004) Strong Medicine

27. TRIPS: The 1994 Agreement on Trade-Related Aspects on Intellectual Property Rights • TRIPS requires all member countries to provide twenty-year patent protection for pharmaceuticals. • However, Article 31 states that the patent requirement “may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.” • Furthermore, WTO adopts a separate declaration that extends the transition period for instituting patent protection for pharmaceuticals to 2016 in the poorest countries. Kremer and Glennerster (2004) Strong Medicine