AIDS: what does economics have to offer?

AIDS is rapidly becoming a major health problem in developing countries. Limited empirical information is available about the impact of AIDS on the household, the community, the health sector and the broader economy. Special problems exist in estimating the direct economic costs of AIDS in developing countries, including large out-of-pocket expenditures on health care and shortages of drugs and supplies; the difficulties of valuing resources used in caring for people with AIDS; and the lack of treatment alternatives. The calculation of indirect costs is complicated by difficulties in calculating the value of non-market production and international comparisons of the value of healthy life years lost may be erroneous, due to the higher level of average wages in developed countries. Existing evidence on the impact of AIDS at the household, community, sectoral and macroeconomic level is reviewed. Special attention is given to the impact of AIDS on the health sector and the resource allocation decisions which are made at this level. A policy-relevant research strategy would include addressing the particular information needs of the health sector, as well as studies which can help to inform government policy to mitigate the impact of AIDS at the household, community, sectoral and macroeconomic levels.