Econometric issues in modeling the costs of AIDS

The goals of AIDS or HIV econometric modeling efforts are: (i) to evaluate or project the costs-of-illness to the individual and to society; and (ii) to examine the efficiency and cost-effectiveness of medical and social services provided to patients. Most of the standard theoretical and statistical approaches are not applicable because of the scarcity, incompleteness and non-representative nature of available data. This paper discusses specific methodological approaches concerning AIDS and HIV epidemiology, medical cost estimation techniques, evaluation of the cost-effectiveness of social support programs and valuation of human life. The epidemiologic projection approach--a simplified 'back calculation' method--suggests that the number of Americans infected with the AIDS virus in 1987-88 was likely to be between 500,000 and 800,000. This estimate is between 2 and 3 times lower than the U.S. Centers for Disease Control estimates. Methods for estimating both the direct and indirect costs of illness are described.