HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing

J. Lammers, A.C. Meijdam, H.A.A. Verbon

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper models the effect of a HIV/AIDS epidemic on saving behavior and studies the welfare effects of testing for HIV. The model specifies a utility function that includes both regular consumption, and medical expenditures. Medical expenditures generate more utility if individuals are HIV infected, but they are only able to purchase the optimal medical consumption after being tested HIV positive. The paper describes different effects on aggregate savings according to different stages of the epidemic. We show that the HIV epidemic decreases savings if especially young individuals are (perceived to be) affected by the virus, but may increase savings if individuals perceive a sizable probability of getting infected later in life. By the same token, the welfare effects of testing young individuals differs greatly from the welfare effects of testing older individuals, the reason being that the savings responses to testing differ according to whether old or young individuals are tested.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages21
Volume2007-50
Publication statusPublished - 2007

Publication series

NameCentER Discussion Paper
Volume2007-50

Fingerprint

Diagnostics
Welfare effects
Contamination
Testing
Savings
Medical expenditures
Virus
Utility function
Saving behavior
Purchase

Keywords

  • saving behavior
  • perceived risk
  • HIV/AIDS
  • HIV testing
  • mortality
  • life-cycle model

Cite this

Lammers, J., Meijdam, A. C., & Verbon, H. A. A. (2007). HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing. (CentER Discussion Paper; Vol. 2007-50). Tilburg: Macroeconomics.
Lammers, J. ; Meijdam, A.C. ; Verbon, H.A.A. / HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing. Tilburg : Macroeconomics, 2007. (CentER Discussion Paper).
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Lammers, J, Meijdam, AC & Verbon, HAA 2007 'HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing' CentER Discussion Paper, vol. 2007-50, Macroeconomics, Tilburg.

HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing. / Lammers, J.; Meijdam, A.C.; Verbon, H.A.A.

Tilburg : Macroeconomics, 2007. (CentER Discussion Paper; Vol. 2007-50).

Research output: Working paperDiscussion paperOther research output

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AB - This paper models the effect of a HIV/AIDS epidemic on saving behavior and studies the welfare effects of testing for HIV. The model specifies a utility function that includes both regular consumption, and medical expenditures. Medical expenditures generate more utility if individuals are HIV infected, but they are only able to purchase the optimal medical consumption after being tested HIV positive. The paper describes different effects on aggregate savings according to different stages of the epidemic. We show that the HIV epidemic decreases savings if especially young individuals are (perceived to be) affected by the virus, but may increase savings if individuals perceive a sizable probability of getting infected later in life. By the same token, the welfare effects of testing young individuals differs greatly from the welfare effects of testing older individuals, the reason being that the savings responses to testing differ according to whether old or young individuals are tested.

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Lammers J, Meijdam AC, Verbon HAA. HIV/AIDS Contamination Risk, Savings and the Welfare Effects of Diagnostic Testing. Tilburg: Macroeconomics. 2007. (CentER Discussion Paper).