The Economic Impact of Pain: A Look at how AIDS has Shaped the World Today
How does pain shape the economy? This article explores how AIDS impacts mortality, healthcare costs, and psychological well-being.
The HIV / AIDS pandemic began in 1981, and has since killed over 40.4 million people. The destruction brought about by this virus can be seen in many parts of life, as well as in death. In 2002 alone, it was estimated that $36.4 billion was lost in the United States, to the cost of HIV infections, from a mixture of direct medical costs and productivity losses. In a study carried out in 1993, on 25 AIDS-afflicted rural families in Ethiopia, it was found the average cost of the burden of AIDS on a family was several times the value of the average household income. Clearly, treatment and funeral expenses play a large part in this fact, but what is also interesting to explore, is the other ways in which AIDS manifests itself as an economic burden, revealing how other diseases and forms of suffering play a significant role in the economy.
The most obvious economic impact of AIDS is the raise in mortality, which reduces the population of workers which, combined with illness hindering access to education, leads to a smaller population of skilled workers, and slower economic growth. As can be seen in Figure 1, the age category with the greatest percentage of AIDS sufferers has consistently been 30-39, with 40-49 as the second highest. These age categories take up a significant portion of the workforce, without which an economy cannot hope to succeed.
Figure 1 - Percentage of persons with AIDS by age category, in the USA
The generally accepted age range for working age in the US is 16-64. As the data available is grouped according to the age ranges shown in Figure 1, when comparing the percentage of the working age population suffering from AIDS, to the GDP per capita, in order to assess the real impact on the US economy, the age range of 13-59 had to be used instead, to represent the working age. As is shown on Figure 2, the lower the percentage of the working age population who have AIDS, the higher the GDP per capita. Although correlation is, of course, not causation, the graph certainly supports the notion that AIDS, through causing illness and death, has shaped the US economy.
Figure 2 - Percentage of persons with AIDS in the USA, age 13-59, compared to GDP per capita of USA
The second burden which an AIDS pandemic carries, is the cost of healthcare. There is an opportunity cost involved in the expenditure by governments, as well as households and firms, towards healthcare-related activities, such as a reduction in the amount of resources available to invest. The combined effect of older infrastructure and fewer skilled workers decreases productivity for firms, and hence increases the costs of production. Thus, fewer goods are produced at a given price, within a given time period, further adding to the crippling effect of AIDS on the economy.
AIDS, like many other diseases, also carries a psychological burden, which in turn, significantly impacts the economy. It was stated in 2012, by the American Psychiatric Association, that whilst 2.1% of the general population has been diagnosed with a general anxiety disorder, 15.8% of HIV+ people have received this diagnosis. The Consumer Confidence Index (CCI) gauges optimism and pessimism. It consists of a set of surveys which are sent to 5,000 households, asking for opinions on matters such as current employment conditions, business conditions six months from now, and total family income six months from now. In general, as stress levels rise in a population, the CCI value decreases, and vice versa. This can be shown by overlaying the graph depicting the monthly CCI for the UK from January 1974 to March 2019 on the graph depicting levels of financial stress in the UK over the same time period (Figure 3).
Figure 3 - Financial stress compared to CCI in the UK 01/1974 to 03/2019
The CCI is not only important in recording the opinion of the general public, but also in influencing the decisions which shape the economy. CCI data is viewed as a leading indicator in helping to determine the consumption component of GDP. The Federal Reserve uses CCI data when making decisions on whether and how to change interest rates, and banks use it when forecasting lending. In this way, the anxiety from a pandemic can manifest itself in records, such as the CCI, and has a ripple effect on the rest of the economy.
There is known to be a strong cyclical relationship between pain and anxiety, with around double the number of patients suffering from chronic pain from arthritis also experiencing an anxiety disorder, and 40% of patients with a panic disorder experiencing chronic pain as well. Thus, other forms of pain, outside of AIDS, can also carry the same psychological burdens, which, as we have seen, extend beyond the private life of the patient, and into the economy. As it is estimated that 20% of adults suffer from pain worldwide, this is not at all an insignificant point.
When we think of pain in an economic light, we think of hospital fees and lives lost to disease, but even when people survive treatment, and an efficient healthcare system prevents costs from rising too high, the psychological impact still remains, and has very real consequences for the world.
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