Negative Reality of the HIV Positives : Integrating Mental Health in Welfare Evaluation

Using primary household data we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children's schooling in determining household utility. We then estimate the monetary equivalent of the welfare loss to an HIV family to be Rs. 65,690 per month. Aggregating to the all India level we find that the annual welfare loss due to the only 0.9% prevalence of HIV/AIDS is a staggering 3,800 billion rupees per year, which is about two and a half times the annual health expenditure of the country in 2004 and 13.4% of its GDP! This huge magnitude is not surprising as it includes private valuation of one's own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, dissavings and social insurance) account for 5% of annual health expenditure and 0.23% of GDP. The significance of mental health can be gauged from the fact that had we not included it in the family welfare analysis, the welfare loss would have been just about 0.067% of GDP