Last Friday I asked “How would you spend an additional $10 billion on AIDS in Africa over the next five years?”  On Wednesday I learned how a panel of five distinguished senior economists who had never before worked on the AIDS epidemic would do so.   Here’s how they decided to spend the hypothetical additional $10 billion dollars.

Intervention Cost (Five years, Million US$)
1. Scale-up vaccine funding by $100 million per year 500
2   Introduce medical infant male circumcision 3,150
3   Prevent mother-to-child transmission 140
4    Make blood transfusions safe 2
5    Scale-up ART enrollment 6,208
Total $10,000

This seems a surprising list in several ways.  First, economists tend to give priority to government interventions which attempt to correct market failures, such as those caused by “externalities” (i.e. spillover effects) or “asymmetric information”.   Neither the authors nor the panelists analyze the two interventions which target populations where spillover effects and asymmetric information enhance the benefit cost ratio of interventions:  High risk groups and couple counseling.

Spillover effects: In situations where the behavior of identifiable subsets of the population make a disproportionate contribution to the HIV epidemic, a targeted intervention can have a much higher social benefit-cost ratio than an untargeted one.  While the heterogeneity of sexual behavior is evident both within and across African countries and has been known since the 1976 paper of Anderson and May to accelerate a sexually transmitted epidemic, the only assessment paper that recognized this heterogeneity is that by me and Geoff Garnett on ART.  In particular, the assessment paper on sexual transmission, authored by Jere Behrman and Hans-Peter Kohler, ignored the heterogeneity of behavior and therefore omits analysis of the potential benefit-cost ratio of interventions targeted at most at-risk populations (MARPs).

Asymmetric information:  As pointed out in Susan Allen’s comment on my Friday post, Behrman and Kohler’s analysis of “large scale testing and counseling” omits any consideration of targeting HIV testing to couples, an option that reduces the asymmetry of information regarding HIV status and therefore should have a higher benefit-cost ratio than would the individual testing on which the authors focus.

Another surprising feature of the Copenhagen Consensus list is its inclusion of an intervention which was never analyzed by any of the assessment papers and only mentioned as an additional or supplemental idea by one of the discussants: infant male circumcision.   It displaces the circumcision of adult men, which the panelists ranked in 7th place, and deprived of any of the $10 billion budget.   What happened?  How and why did the panel become so “creative”?

Here is the information that the assessment paper authors gave the panel on adult male circumcision (AMC) and on the intervention to which they allotted the largest budget share, ART.  At the discount rate of 3% and the value of a life-year of $5,000, these two interventions would have the following benefit-cost ratios:

Intervention Cost per life year saved Benefit -Cost Ratio
Adult male circumcision
Three rigorous randomized trials have confirmed 60% efficacy in protecting a man from infection -- Optimistic Scenario (60% effective) $41.50 120.5
-- Pessimistic Scenario (30% effective) $83 60.2
Anti-retroviral treatment
ART not only protects the patient from disease but one rigorous trial shows it is 96% protective of partner. -- Optimistic Scenario (90% effective) $780 6.4
-- Pessimistic Scenario (30% effective) $1,020 4.9

So despite the fact that the authors considered adult male circumcision to yield from 12 and 20 times more benefit per dollar of investment cost, the panel of distinguished economists decided, on the basis of this analysis, that antiretroviral therapy ranked in fifth place among all the interventions, two places above the seventh place ranking of adult male circumcision.  Since the panelists allocated their entire hypothetical $10 billion to the first 5 interventions, they provided no incremental funding, even hypothetically, for adult male circumcision.  This decision is remarkably obtuse given the evidence on this intervention and the fact that this most promising intervention needs support to be scaled up in African countries today.

Part of the problem was that the authors of the assessment paper analyzing AMC, Jere Behrman and Hans-Peter Kohler, chose to use the 30% effectiveness assumption for their main results instead of the 60% result found in the randomized trials.  This is a very conservative assumption.  Given that male circumcision has been consistently and rigorously shown to prevent 60% of infections in the trials, field effectiveness could only be degraded down to 30% if either of two offsetting behavioral effects is extremely powerful:  (a) Selection Bias: willingness to accept circumcision is much higher among men who would have otherwise protected themselves by condom use or having fewer partners or (b) Disinhibition: willingness to accept circumcision is much higher among men who, once circumcised, engage in many times more risky sex than they would have without the circumcision.  The first effect posits that prudent well-informed men will disproportionately seek AMC, while the second posits that circumcision converts such prudent men into reckless thrill seekers.  If the sexual behavior of African men were this sensitive to the risk of HIV infection, they would have ceased their risky behavior long ago, when awareness of the danger of risky sex became widespread in African societies.

But the panel of distinguished economists apparently thought Behrman and Kohler were not being conservative enough.  At the meeting on Wednesday reported in USA Today, two of the panelists explained why they had downgraded AMC.  They justified their decision partly by the selection and disinhibition arguments, but also partly based on the undocumented assertion that adult African men would simply find male circumcision unacceptable.   Apparently in reaction to the cognitive dissonance produced by these unsupported beliefs and the authoritative estimate that the benefit-cost ratio of AMC is 60 to one, the panelists creatively introduced an 18th intervention to be added to the list they had been given: neonatal circumcision.  Arguing that neonatal circumcision would be immune to the selection and disinhibition problems and would be more acceptable to African populations, they made this one of their top five interventions.

Now neonatal circumcision is not a bad idea.  It can be expected to cost about the same as adult male circumcision and to eventually achieve, after a lag of 15 years, the optimistic benefits of adult male circumcision.  Since the costs are incurred today, but the benefits accrue 15 years later, the benefit cost ratio must be discounted by multiplying it by (1/(1.03)^15 = .64, which yields a benefit cost ratio of about 77 to one, down from 120 to one.  However, during the fifteen years we wait until the children reach maturity, the epidemic will continue to spread to a larger and larger proportion of the population.

So if neonatal circumcision crowds out adult circumcision before adult circumcision has been widely scaled-up, that would be a bad thing indeed.

Which brings me to a more general criticism of the Copenhagen Consensus’ application of benefit-cost analysis to HIV/AIDS.  Epidemics are highly non-linear.  They are characterized by a parameter called Ro, the “reproductive rate”, which is described so compellingly by Kate Winslet in the super new movie, Contagion.  If Ro is above unity, the epidemic grows until it saturates the population.  If it is below unity, the epidemic gradually disappears.  The challenge then is to find the combination of interventions, which, when working together, will bring the value of Ro down below unity.  That solution might well be a combination of ART, male circumcision, behavior change and an eventual vaccine.  The Copenhagen Consensus process, by requiring each author to analyze only one of the 17 interventions at a time, makes it difficult or impossible to find the combination of interventions which can reduce Ro below 1.0.  Thus, when applied to the control of an epidemic, the Copenhagen Consensus should modify its process to require each author to evaluate a different combination of interventions, instead of a single one.  With this approach, the Copenhagen Consensus process might have had a better chance to produce sensible results for HIV/AIDS.