1. Introductionto Economics Of Medical Treatment In The

Abstract

We consider the intertemporal social optimization problem of minimizing the present value of the costs incurred from both disease and treatment. Though the analysis is complicated by the analytical failure of concavity, we are able to substantially characterize both the long run equilibria and the adjustment paths. The cost minimizing program is shown to exhibit a tendancy towards decreased levels of treatment in the presence of higher disease levels. The socially optimal program is compared to individually rational behavior and the ine±ciencies in private behavior from the infection externality are shown to cause potentially large increases in the equilibrium rate of infection