Innovation and Health Disparities During an Epidemic: The Case of HIV

62 Pages Posted: 31 May 2021 Last revised: 20 Jul 2021

See all articles by Barton H. Hamilton

Barton H. Hamilton

Washington University, Saint Louis - John M. Olin School of Business

Andrés Hincapié

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Emma Kalish

The Urban Institute

Nicholas W. Papageorge

Johns Hopkins University Department of Economics

Date Written: May 2021

Abstract

We examine whether medical innovation can reinforce existing health disparities by disproportionately benefiting socioeconomically advantaged patients. The reason is that less advantaged patients often do not use new medications. This may be due to high costs of new drugs, but could also reflect differences in how side effects of new treatments interact with labor supply. To investigate, we develop a dynamic lifecycle model in which the effect of medical treatment on labor supply varies across sociodemographic groups. We estimate the model using rich data on treatment choices and employment decisions of men infected with HIV. In the model, treatments can improve long-run health, but can also cause immediate side effects that interact with the utility cost of work. Estimates indicate that HIV-infected men often forego medication to avoid side effects, in part to remain employed. This effect is stronger for people with fewer years of education, leading to lower use of treatment and worse health outcomes. As a result, while a breakthrough HIV treatment - known as HAART - improved lifetime utility for all patients, it disproportionately benefitted those with higher levels of completed education, thereby reinforcing existing inequality. A counterfactual subsidy that increases non-labor income reduces employment for all education groups, but only increases adoption of HAART and improves health among lower-education individuals, who face a starker health-work tradeoff.

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Suggested Citation

Hamilton, Barton H. and Hincapié, Andrés and Kalish, Emma and Papageorge, Nicholas W., Innovation and Health Disparities During an Epidemic: The Case of HIV (May 2021). NBER Working Paper No. w28864, Available at SSRN: https://ssrn.com/abstract=3856845

Barton H. Hamilton (Contact Author)

Washington University, Saint Louis - John M. Olin School of Business ( email )

One Brookings Drive, Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-8057 (Phone)
314-935-6359 (Fax)

HOME PAGE: http://www.olin.wustl.edu/faculty/hamiltonb/

Andrés Hincapié

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

102 Ridge Road
Chapel Hill, NC 27514
United States

Emma Kalish

The Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
United States

Nicholas W. Papageorge

Johns Hopkins University Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

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