Disease, Disparities, and Development: Evidence from Chagas Disease Control in Brazil

In Latin America—the world’s most unequal region—non-white rural populations disproportionately suffer from Chagas disease, a neglected tropical disease (NTD) that causes weeks of acute symptoms and can lead to chronic heart problems decades later. We demonstrate that Brazil’s post-1983 campaign to eliminate the transmission of this disease significantly reduced (racial) income inequality, the intergenerational transmission of low human capital, and burdens on the world’s largest government-run health care system. Exploiting the pre-treatment presence of Chagas disease’s main vector, we find that controlling this NTD increased municipalities’ GDP per capita by 11.1% and reduced their Gini coefficients by 1.1% in the long run. Furthermore, averting childhood exposure to Chagas disease increased the share of non-white adults with above-median incomes by 1.4 percentage points (p.p., or 2.8%) and their children’s literacy rates by 0.4 p.p. (0.5%). Coinciding with the expected reduction in chronic heart problems, we also find that public spending on circulatory disease hospital care declined by 16%, contributing to a 24% internal rate of return and an infinite marginal value of public funds. These results suggest that NTD control can improve the economic and fiscal health of developing countries while mitigating (racial) disparities and intergenerational cycles of poverty.