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February 12, 2018

Imagining a better life

An unidentified child clutches antiretroviral drugs to fight the HIV virus.

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The AIDS epidemic has ravaged sub-Saharan Africa and caused a rapid decline in life expectancy, which has fallen by 14 years in southern Africa. But expanded access to effective drug treatment has begun to reverse the trend.

One of the most effective drug treatments in slowing the progression of AIDS is known as antiretroviral therapy, or ART. When the treatment was made available for free in 2003 in Malawi, where the epidemic has been particularly severe, it improved the health of individuals living with the disease.

But the AIDS therapy did more than that. The prospect of having a longer life also encouraged individuals to invest more in themselves and their communities, according to a paper in the January issue of the American Economic Journal: Applied Economics.

Authors Victoria Baranov and Hans-Peter Kohler study the impact that availability of the treatment had on savings, expenditures on children’s human capital, and schooling.

Figure 3 from Baranov et al. (2018)

Figure 3 from their paper shows an increase in education and health care spending after the treatment was introduced, and the effects were more pronounced closer to a treatment facility. Spending on clothing barely changed at all, which is to be expected, as people are less likely to treat it as a long-term investment.

Also, spending on long-term investments increased regardless of whether an individual had been diagnosed with HIV. HIV-positive individuals may have had the most to gain from the treatment, but the improved life expectancy overall led everyone to think more seriously about preparing for the future.