Economic Cost of HIV/AIDS in India: Integrating Mental Health in Welfare Evaluation

2007 
Using primary household data we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children’s schooling in determining household utility. We then estimate the monetary equivalent of the welfare loss at the all India level we due to the only 0.36% prevalence of HIV/AIDS is a staggering 2000 (50) billion rupees ($) per year, which exceeds the annual health expenditure of the country in 2004 and 7% of its GDP! This huge magnitude is not surprising as it includes private valuation of one's own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, dissavings and social insurance) account for 2.5% of annual health expenditure and 0.12% of GDP. 1 We are thankful to the World Bank for funding this study. We are also thankful to Dr. Anshu Goel, who specializes in treating HIV/AIDS patients, for answering our numerous questions and helping us with the health measurement data. We thank Dr. Phanender Khera, Dr. Archana Phuke, Dr. Sanjay Swain, the NGO SEED of Andhra Pradesh, the NGO Aruna of Orissa for guiding us in interviewing the patients. Thanks are also due to our surveyors D. Tiwari, S. Mishra, M. Kumar, R. Khowal, M. Durai, P. Gurunaidu and Anandraj who had to travel to remote areas, stay under very uncomfortable conditions and ask sensitive questions to the many suffering families. Needless to say, we are very grateful to the families who patiently answered our long survey and confided their unpleasant experiences to us. Inputs from Clive Bell, Shanta Devarajan, Michele Gragnolati, the seminar participants at the Indian Statistical Institute (Delhi), the World Bank and the International Food Policy Research Institute have been very helpful. We also thank the conference participants at the 2006 South and South East Asia Econometric Society Meeting and at the Conference on Sustainable Development and Livelihood at the Delhi School of Economics (2007). Errors, if any, are the authors’ sole responsibility.
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