Paper #192

Title:

Health investment complementarities under competing risks

Authors:

William H. Dow, Tomas Philipson, Xavier Sala-i-Martin and Jessica Holmes

Date:

January 1997

Abstract:

Applying the competing--risks model to multi--cause mortality, this paper provides a theoretical and empirical investigation of the positive complementarities that occur between disease--specific policy interventions. We argue that since an individual cannot die twice, competing risks imply that individuals will not waste resources on causes that are not the most immediate, but will make health investments so as to equalize cause--specific mortality. However, equal mortality risk from a variety of diseases does not imply that disease--specific public health interventions are a waste. Rather, a cause--specific intervention produces spillovers to other disease risks, so that the overall reduction in mortality will generally be larger than the direct effect measured on the targeted disease. The assumption that mortality from non--targeted diseases remains the same after a cause--specific intervention under--estimates the true effect of such programs, since the background mortality is also altered as a result of intervention. Analyzing data from one of the most important public health programs ever introduced, the Expanded Program on Immunization (EPI) of the United Nations, we find evidence for the existence of such complementarities, involving causes that are not biomedically, but behaviorally, linked.

Keywords:

Complementarities tetanus programs, endogenous mortality, public health

JEL codes:

I10, H00, O1

Area of Research:

Macroeconomics and International Economics

Published in:

American Economic Review, (1999)

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