Friday, 17 November 2017

The economic non-impact of malaria on African development

When I was completing my PhD, there were a number of studies based on macroeconomic models that showed significant negative impacts of HIV/AIDS on economic growth and yet econometric studies based on observed HIV prevalence of GDP showed virtually no effect. Some people put the difference down to surplus labour (since AIDS deaths are concentrated among prime age adults who make up the majority of the labour force, if there is surplus labour then losing adults from that age group would have little effect on GDP), but even macroeconomic models with surplus labour tended to show some modest negative impact. So much for macroeconomic models (as we later learned during the Global Financial Crisis)?

So, I was interested to read this forthcoming paper in The Economic Journal (ungated earlier version here) by Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile) and David Weil (Brown University). In the paper, the authors do a number of really interesting things to evaluate the historical and recent economic (non-)impact of malaria. First, they construct an ingenious and deceptively simple model of malaria prevalence, which is based on the prevalence of the gene that causes sickle cell disease. The sickle cell gene provides protection against malaria deaths in childhood for those who have one copy of the gene, but is fatal for those who have two copies of the gene. So the overall prevalence of sickle cell genes can be used to evaluate the overall burden of malaria in the population. The authors estimate that malaria burden is high:
In areas of high malaria transmission, 20% of the population carry the sickle cell trait. Our estimate is that this implies that historically between 10% and 11% of children died from malaria or sickle cell disease before reaching adulthood. Such a death rate is roughly twice the current burden of malaria in such regions. Comparing the most affected to least affected areas, malaria may have been responsible for a ten percentage point difference in the probability of surviving to adulthood. In areas of high malaria transmission, our estimate is that life expectancy at birth was reduced by approximately five years. In terms of its burden relative to other causes of mortality, malaria appears to have been perhaps about as important historically as it is today.
They then use their measure of malaria burden to evaluate the impact of malaria on African development historically. Strikingly, their measure is positively associated with the log of population density (as a measure of development) at the ethnic group level (for 398 ethnic groups across Africa), even after controlling for geography, access to waterways, climate, cultural clustering, suitability for agriculture, and suitability for tsetse flies. Other measures of development, such as having a large (more than 20,000 population) town in the ethnic group's homeland, complexity of the ethnic group's settlement pattern, and centralisation of power, also have a positive or no relationship with malaria burden. Even after adopting an instrumental variables approach (with malaria suitability as the instrument), they still don't find statistically significant negative effects of malaria burden on African development (see here for more on instrumental variables models), though the effects are sometimes negative and not statistically significant.

Why is there no discernible negative economic impact of malaria on African development, given the high malaria burden and the high resulting mortality? One section of the working paper version of the paper that hasn't made it into the final paper is quite interesting. [*] In that section, the authors note that:
The reason that our estimate of the effect of malaria is so small is two-fold. First, malaria deaths are concentrated at young ages, and second, consumption of young children is low relative to consumption of adults. Putting these together, most deaths from malaria do not, in this model, represent a significant loss of resources to society. In our calculation, deaths beyond age five account for only 1/3 of the reduction in life expectancy due to malaria, but for 2/3 of the economic cost of the disease.
So, because malaria mainly kills young children, society wastes relatively few resources investing in children who die from malaria (and can instead expend those resources on surviving children). So, the economic cost of malaria is relatively slight. I don't know why that part of the analysis didn't make it into the final version of the paper, but I think it is one of the more important insights from this work, as it usefully explains why we might not find any economic impact of malaria in Africa.


[*] Actually, there are a lot of substantial differences between the NBER Working Paper version of the paper and the final accepted publication, which might explain why there was a four-year time delay between the two versions of the paper. I'm glad I read the working paper version first, since otherwise I would have missed some of the greater detail.

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