Insights from economicepidemiology

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Insights from economic-epidemiology
Ramanan Laxminarayan Resources for the Future,
Washington DC
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Economic Epidemiology

• Mathematical conceptualization of the interplay
  between economics, human behavior and disease
  ecology to improve our understanding of
• the emergence, persistence and spread of
  infectious agents
• optimal strategies and policies to control their
  spread

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Economics

• Measuring health outcomes
• Provides a single metric to compare costs and
  benefits both contemporaneously and over time.
• Incorporating behavior
• Can alter conclusions reached by purely
  epidemiological models by incorporating behavior.
• Comparing public policies
• Increases relevance for application in the real
  world.

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Overview

• Individual response and disease
• Incentives of institutions (to invest in hospital
  infection control)
• Optimal allocation of resources between two
  regions (or hospitals)

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Individual response and disease

• Vaccinations
• Insufficient incentives to vaccinate prevent
  attainment of herd immunity thresholds
• Drug resistance
• Insufficient incentives to make appropriate use
  leads to ineffective drugs and increasing
  prevalence
• Testing
• Private testing behavior adds to public
  information on disease prevalence

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Rational epidemics

• Prevalence response elasticity
• Hazard rate into infection of susceptibles is a
  decreasing function of prevalence (opposite of
  epidemiological model predictions)
• Application to HIV
• Application to Measles

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Geoffard and Philipson, Int. Econ. Rev., 1996
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Blower et al, Science, 2000
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Blower et al, Science, 2000
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When should governments intervene?

• Disease prevalence increases adoption of public
  programs
• Impact of public program may be zero if
  prevalence has already reached an individuals
  threshold prevalence
• Paradoxically, the role of government subsidies
  is lowest when prevalence is highest since
  individuals will protect themselves regardless

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Philipson, NBER, 1999
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Public price subsidies

• Can price subsidies or mandatory programs achieve
  eradication?
• Increase in demand by folks covered by the
  program lowers the incentives to vaccinate for
  those outside the program
• Do monopolistic vaccine manufacturers have an
  incentive to eradicate disease?
• Market for their product would disappear with
  eradication

Geoffard and Philipson, Int Econ Rev, 1997
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Disease Complementarities

• Incentive to invest in prevention against one
  cause of death depends positively on probability
  of dying from other causes
• Intervening to prevent mortality not only
  prevents a death but also increases incentives
  for the family to fight other diseases

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Dow et al, Am Econ Rev, 1999
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Does the theory fit the facts?

• Do individuals actually observe prevalence?
• Why dont we see prevalence responsiveness at
  work everywhere?
• Importance of observational learning (herd
  behavior)?

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Stoneburner and Low-Beer, Science, 2004
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Stoneburner and Low-Beer, Science, 2004
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Stoneburner and Low-Beer, Science, 2004
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NNIS Data, 2004
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Optimal infection control
Infection dynamics are given by
Equilibrium prevalence is given by
Smith, Levin, Laxminarayan (PNAS, 2005)
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Objective
Minimize costs of infection control and infections
Local minima, if they exist, are solutions to
Smith, Levin, Laxminarayan (PNAS, 2005)
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Smith, Levin, Laxminarayan (PNAS, 2005)
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Strategic interactions with other hospitals
The focal institution decides how much to invest
in HIC by minimizing the net present value of
discounted costs of HIC and hospitalization
Smith, Levin, Laxminarayan (PNAS, 2005)
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Implications for policy

• Dutch experience frequency of MRSA infections is
  lt 0.5 after an intensive search-and-destroy
  campaign, compared with 50 in some areas
• In Siouxland (Iowa, Nebraska, S. Dakota), an
  epidemic of VRE was reversed
• Regionally coordinated response to epidemic
• Does this explain higher prevalence of ARB in
  areas with high concentration of health care
  institutions?

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Rowthorn, Laxminarayan, Gilligan Submitted
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Rowthorn, Laxminarayan, Gilligan Submitted
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Rowthorn, Laxminarayan, Gilligan Submitted
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Rowthorn, Laxminarayan, Gilligan Submitted
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Allocating resources

• Expenditure on drugs is subject to the budget
  constraint
• Finance is not transferable through time.
• Problem is to choose F1and F2 so as to minimise
  the following integral

Rowthorn, Laxminarayan, Gilligan Submitted
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Optimal allocation

• At low levels of infection in both populations
• Preferentially treat population with higher
  transmission coefficient because of greater
  economic value associated with greater potential
  to prevent secondary infections
• At high levels of infection
• Preferentially treat population with lower levels
  of infection since the higher probability of
  re-infection in high infection populations
  reduces the economic value of treatment

Rowthorn, Laxminarayan, Gilligan Submitted
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Rowthorn, Laxminarayan, Gilligan Submitted
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Closing thoughts

• Epidemiological models take little or no account
  of economic constraints or incentives faced by
  individuals or institutions
• Economic models mostly ignore the spatial and
  temporal dynamics of disease.