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The Economics of Health Epidemics

Paper Session

Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PDT)

Marriott Marquis, Grand Ballroom 1
Hosted By: American Economic Association
  • Chair: Imran Rasul, University College London and IFS

Preventing the Spread of Antibiotic Resistance

Jerome Adda
Bocconi University


This paper studies the spread of antibiotic resistance and its determinants, relying on unique data at state, year, bacteria and drug level, covering all US states. I relate antibiotic resistance to the use of antibiotics in human prescription as well as in animal production. I use a triple difference in difference design to control for confounders at state and aggregate level. Despite that animal production absorbs most of the antibiotic production, I find that the main determinant of resistance is in fact human prescriptions, emphasising the role of policies targeting hospitals and ambulatory care. Resistance is particularly sensitive to antibiotic use for newer drugs, which presents a challenge for public health policies.

Building Resilient Health Systems: Experimental Evidence from Sierra Leone and the 2014 Ebola Outbreak

Oeindrila Dube
University of Chicago
Darin Christensen
University of California-Los Angeles
Johannes Haushofer
Princeton University
Bilal Siddiqi
World Bank
Maarten Voors
Wageningen University & Research


Developing countries are characterized by high rates of mortality and morbidity. A potential contributing factor is the low utilization of health systems, stemming from the low perceived quality of care delivered by health personnel. This factor may be especially critical during crises, when individuals choose whether to cooperate with response efforts and frontline health personnel. We experimentally examine efforts aimed at improving health worker performance in the context of the 2014-15 West African Ebola crisis. Roughly two years before the outbreak in Sierra Leone, we randomly assigned two social accountability interventions to government-run health clinics – one focused on community monitoring and the other gave status awards to clinic staff. We find that over the medium run, prior to the Ebola crisis, both interventions led to improvements in utilization of clinics and patient satisfaction. In addition, child health outcomes improved substantially in the catchment areas of community monitoring clinics. During the crisis, both interventions also led to higher reported Ebola cases, as well as lower mortality from Ebola – particularly in areas with community monitoring clinics. We explore three potential mechanisms: the interventions (1) increased the likelihood that patients reported Ebola symptoms and sought care; (2) unintentionally increased Ebola incidence; or (3) improved surveillance efforts. We find evidence consistent with the first: by improving the perceived quality of care provided by clinics prior to the outbreak, the interventions likely encouraged patients to report and receive treatment. Our results suggest that social accountability interventions not only have the power to improve health systems during normal times, but can additionally make health systems resilient to crises that may emerge over the longer run.

The Anatomy of a Public Health Crisis: Household and Health Sector Responses to the Zika Epidemic in Brazil

Imran Rasul
University College London and IFS
Ildo Junior
University College London


The global frequency and complexity of viral outbreaks is increasing. In 2015, Brazil experienced an epidemic caused by the Zika virus. This represents the first known association between a flavivirus and congenital disease, thus marking a 'new chapter in the history of medicine' [Brito 2015]. We use administrative records to document household and health personnel responses to the epidemic over two phases: (i) between May and October 2015, when it was known that Zika was in Brazil, but its symptoms were thought to be dengue-like and without consequence for those in utero; (ii) following an official alert on November 11th recognizing the link between Zika and congenital disease. On household behavior, we find a 7% reduction in pregnancies post-alert, a response triggered immediately after the alert, and driven by higher SES women. On responses during pregnancy, there is an increased use of ultrasounds (9%) and abortions (5%), especially late term abortions. These impacts are driven by mothers that conceived post-alert. There is a lack of response during pregnancy among mothers that conceived just pre-alert, despite their unborn children also being at risk. As a result, those conceived pre-alert are significantly more likely to be born with low birth weight, and the rise in microcephaly is concentrated in this cohort. On responses of health personnel, we document an increased administration of dengue tests to pregnant women post-alert (that lacking a formal test for Zika was the best approach to diagnosis), and no change in counseling on contraception for women seeking to become pregnant. Our results provide a rich picture of household and health personnel responses to an evolving epidemic. They suggest disseminating information about Zika is less effective among those already pregnant and at risk, but for those yet to conceive, the primary welfare cost of the epidemic is disease avoidance.

Designing Advance Market Commitments for New Vaccines

Christopher M. Snyder
Dartmouth College
Michael Kremer
Harvard University
Jonathan D. Levin
Stanford University


Advance market commitments (AMCs) have been proposed as mechanisms to stimulate investment by suppliers of products to low-income countries, where familiar mechanisms such as patents and prizes can fall short. In an AMC, donors commit to a fund from which a specified subsidy is paid per unit purchased by low-income countries until the fund is exhausted, strengthening suppliers’ incentives to invest in research, development, and capacity. A $1.5 billion pilot AMC was undertaken to speed the roll out of a pneumococcus vaccine to the developing world covering additional strains prevalent there. This paper undertakes the first formal analysis of AMCs. We construct a model in which an altruistic donor bargains with a supplier on behalf of a low-income country over vaccine price and quantity ex post, after the supplier has sunk ex ante investments. We use this model to explain the broad logic of an AMC—as a solution to a hold-up problem—as well as to analyze specific features of the pilot’s design that we argue enhance its efficiency. We study a variety of design features including capacity forcing, supply commitments, price ceilings, and accrued interest, and consider a variety of economic environments including competing suppliers, competing demand from middle-income countries outside the program. We show that optimal AMC design differs markedly depending on where the product is in its development cycle.
JEL Classifications
  • I0 - General
  • D4 - Market Structure, Pricing, and Design