Breadcrumb
Abstract
Thanks to anti-retroviral therapies, people living with HIV in developing countries can now have a near-normal life at a cost of a few hundred dollars per year. We postulate that given this newly low cost of maintaining lives, there is a moral duty to rescue those who are infected. The core of the paper quantifies a reasonable lower bound for the fiscal consequences of this duty, which we show creates a financial quasi-liability which for some African countries is comparable to their debt-toGDP ratios. Expenditures on prevention can pre-empt some of these liabilities. We construct a model to show that in some countries expenditure on prevention would be cost-effective, reducing liabilities by more than its cost. In principle, prevention should be pursued at least up to the point at which expenditure on it reduces the quasi-liability sufficiently to minimize the overall cost of accepting the duty to rescue. However, we show that even with optimal prevention the quasi-liability is likely to remain too high to be affordable for a significant number of African countries. Extending the model to two players, we show that if the international community accepts part of the quasiliability, (as it does), it should finance an equal share of prevention and treatment efforts. Any imbalance in this distribution would introduce moral hazard and lead to a sub-optimal level of prevention.