Malaria infects somewhere between 350 and 500 million people every year, and only a small, small number of them are well-equipped, healthy adults from developed countries where we have access to great medicine. In many societies it is the leading cause of death, and especially death among young people. We spend a lot of money trying to prevent deaths that are hard to prevent--like cancer among very old people--but very little money trying to prevent deaths that are the easiest to save. This is a very bad way to save lives, and I'm glad that in the last few years (really, since I got Malaria), our willingness to deal with the Malaria issue has changed profoundly. Aid has ramped up significantly: President Bush Pledged 1.2 Billion dollars to prevent Malaria in 15 African nations over five years. Without question, this is the the cheapest way his administration has committed itself to saving lives.
In Gary Becker's human capital class, we talked about the statistical value of a human life, a discussion that I think most people can apprecaite, but which may also inspire violence against economists. Here is a descriptive way to imagine the world: people have two goods in the world, consumption and liesure, that they prefer more of both at any point in time, but that they enjoy both goods at a diminishing rate (the nth hour of liesure was not as nice as the n-1th hour of liesure). Imagine that they live for M number of years, and that this number of years can be increased if they give up some consumption and spend it on healthcare. They seek to maximize their utility over all period, so clearly they would spend all their money on healthcare, becuase they they woudln't enjoy life very much and it wouldn't be worth living. But now ask yourself: why do they spend any money on healthcare? Why not live for one period and consume EVERYTHING? Why would you give up some money to live longer and poorer. The ONLY reason you do this, is because you get diminishing marginal utility from your consumpion and your liesure: If I gave you a box of oranges on an island, you would not eat them all today and starve tomorrow. you would drag out the process of death. And you would drag out the process because by the time you get to the last orange in the box, it won't be nearly as good as the first orange. you would rather each orange be the first orange of a different day.
This has a few implications: we can now say how much a person is willing to pay to extend their life (and it isn't a function strictly of income!): The more oranges you have, the longer you will want to live. (Read: rich people are more interested in extending their lives than poor people, even if you ignore the fact that they buy more of everything. Wealthy people will spend a larger share of their income on healthcare so more of their oranges can be the 'first orange' rather than the last orange of the day. poor people.... only eat one orange a day.).
Second, our legal system has long valued a human life as the discounted presentvalue of future wages (in wrongful death suits). But since you get utility from consumption and liesure, it is not accurate to value people's lifes as simply the present value of future income. This is especially true for people who don't work much. Since the wage rate is, by definition, equal to your willingness to substitute liesure for consumption (to see why, imagine it wasn't! if you were willing to pay seven dollars for an hour of liesure, and you worked for five dollars an hour, you should just work less. If you were willing to give up an hour of liesure for four dollars of consumption, you would work more!). So an non-work is worth at least as much as an hour of no work. If you consider that most people spend 2/3s of their time not working, you will see that most of the value of a person's life is liesure (unless your a U of C student!).
So how does this relate to Malaria? well, first you'll see that most people would be willing to pay a whole lot relative to their wages or assets for their life. That is to say, if I am poor and in Uganda and I have Malaria, I would be willing to pay the present value of all my earings and all my liesure for the rest of my life (and more based on how concave my utility function is... this is the part about spreading oranges out over time), for my life. Now, I don't know, but let's say I earn one dollar each day, which is accurate in rural uganda. I might spend 1/3 of my time working... so 8 hours/day. The other 16 hours a day are liesure. Since my wage is only the dollar value of the working hours, the value of a day is, at a minimum, three times that since i value liesure just as much as consumption each day, and since i consume twice as much liesure. so 8hours = 1 dollar => 24 hours = 3 dollars. To me, one year is worth 3*365, or about one thousand dollars. Say I have twenty such years of life ahead of me, if I survive Malaria now (this would be ignoring the fact that I might have to try to survive Malaria again, which would change the calculation drastically--consider that i would live with certainty). If I discount at five percent/year, the present value of this time is approximately 1000/.05 = 20,000 (actually this is the value of a 1000
perpetuity, but it's going to be very similar because 20 years is a pretty long time). So I value my next twenty years of life at at least twenty
thousand dollars. Now consider the degree of concavity: the amount that I am interested in extending my life simply so that I can consume more 'first' oranges and less 'nth' oranges. Some estimates suggest
taht we should multiply by 2 to account for this. so now, we get $40,000 as the value of life for someone who makes $1 a day. (if you do this with an American, you get around 5 million dollars).
Absolutely, the implication is that a rural Ugandan should be willing to pay $40,000 to save his life with certainty. Now, someone who makes a dollar a day is exceedingly
unlikely to have access to forty thousand dollars (he will never earn that much money in his life, unless he has to pay a debt). It's unlikely that any Malaria treatment costs anything near this price, but even if it was one tenth of this, he would be GLAD to do it and pay off the debt. So why do middle class
Americans manage to come up with 5 million dollars for a life-saving medical treatment but Ugandans can't? Because Americans can borrow in good credit markets. And they do. They have houses as
collateral, and access to efficient credit markets. Rural Uganda simply does not have banks that will do this. And even if they did, laws against slavery and
indentured servantry would prevent this person from using his human capital (his labor) as
collateral in a loan for life-saving treatment. It's also usually impossible for him to pass on this debt to his children, which even they might prefer to being raised with no father. If Uganda had better access to capital markets, and if they could borrow against their human capital, they would invest in life-saving treatment more often. Malaria would kill fewer people. Uganda would get to experience high-class problems like heart disease, obesity, and cancer (a disease that is fundamentally what happens to your body when nothing else kills it and your cells get tired of replicating).
My other point is that it's SO much harder to save
somone's life from cancer than from Malaria. This is, in fact, part of the reason we spend so much on Cancer: it costs a lot to treat. Another lesson from the human capital model was more years you have ahead of you, the more you would be willing to pay to extend your life, if you have a perfect capital market. If you are twenty years old and expect to live to forty (like our Ugandan), you are more willing than if you are 88 years old and expect to live to
ninety. But this is only true if you have perfect capital markets. In reality, old people spend a ton of money on health care (treating things like cancer) often
because they can't consume anything else (vacations, wine,
leisure) until they don't have cancer--even if they know they are unlikely to survive. In other words: a huge share of the money this country spends on medical treatment is unlikely to extend a single life. In terms of human life, it would be far more useful spent saving people in Uganda.
In what I thought was an interesting approach to solving a problem that is clearly hard to solve, Magnum Photos has partnered with the non-profit Malaria No More with the objective of drawing the
public's attention to Malaria. They have sent photographer
Chien-Chi Chang to document the malaria crisis and efforts to confront it. You can see his photo blog here: http://blog.magnumphotos.com/2007/04/magnum_on_malaria.html
The President has declared today National Malaria Awareness Day in part of the President's Malaria Initiative, which is the only part of his Presidency I am optimistic about. I hope you will consider donating ten dollars to buy a malaria net for Uganda. If not, kill a
misquito: they are fuckers.
https://secure.groundspring.org/dn/index.php?aid=17186
