Essays on the role of life expectancy in economic development

The Indirect Impact of Antiretroviral Therapy: This chapter is joint work with Daniel Bennett and Hans-Peter Kohler. We examine the effect of the free AIDS treatment on subjective mortality risk and mental health in rural Malawi. We find that the availability of antiretroviral therapy (ART) substantially reduces subjective mortality risk and improves mental health, including among HIV-negative respondents. ART availability is also asso- ciated with increased labor supply and cultivation of maize, the subsistence staple. These results suggest a novel link between disease conditions and economic development through the channel of mental health. They also demonstrate that the impact of the AIDS epidemic and ART are broader than previously understood.;The Impact of AIDS Treatment on Savings and Human Capital Investment in Malawi: This chapter is joint work with Hans-Peter Kohler. Antiretroviral therapy (ART), a treatment that significantly delays the onset of AIDS, has recently become avail- able throughout many African countries, rapidly reversing the downward trend in life ex- pectancy due to AIDS. Economic theory predicts that a longer life expectancy increases the value of human capital investment. The effect of life expectancy on savings, however, is theoretically ambiguous and ultimately an empirical question. This paper uses spatial and temporal variation in ART availability in Malawi to evaluate the impact of ART provi- sion on savings and human capital investment. We find that ART has large and significant impacts on savings behavior and child expenditures, particularly for schooling and medical expenses. Additionally, grade attainment and health improve for the sample of the respon- dents' children near ART. We show that the results are not driven by the direct effect of HIV-positive respondents receiving treatment or by caretaking effects from reducing mor- bidity and mortality of household members. Rather, the effects seem to be a consequence of broadly improving perceptions of life expectancy, as measured by self-reported mortality risk.