NOTHING TO LOSE BUT OUR BELLIES (via Robert Schwartz):

The Economics of Obesity (Inas Rashad & Michael Grossman, Summer 2004, The Public Interest)

Hardly a day goes by that we do not read about the dire consequences of the increase in obesity. In March, the Centers for Disease Control and Prevention predicted that obesity will overtake smoking as the leading cause of preventable deaths in the United States by next year if current trends continue. “This is a tragedy,” Julie Gerberding, director of the Centers, told the Washington Post. “We’re looking at this as a wakeup call.” The obesity problem is real, Gerberding’s melodrama notwithstanding, and seems to be worsening each year. The percentage of adults who are obese has doubled since the late 1970s, and tripled among children. From increases in the size of coffins, to increases in the size of pets, to the appearance of new diets and new surgical techniques to lose weight, and to a patent for an in-car system for dieters that weighs them and tells them when they have strayed, the evidence of
America’s obesity problem is everywhere.

Obesity and sedentary lifestyles accounted for approximately 400,000 deaths in 2000 compared to 435,000 from cigarette smoking, 100,000 from alcohol abuse, and 20,000 from illegal drug use. Obesity costs more in annual medical care expenditures than cigarette smoking — around $75 billion in 2003 — because of the long and costly treatments for its complications. A large percentage of these costs are borne by Medicare, Medicaid, private health-insurance companies, and ultimately by the population at large rather than by the obese. [...]

Obesity has a large genetic component, and this plays an important role in explaining why a given individual is obese. But genetic characteristics in the population change very slowly, and so they clearly cannot explain why obesity has increased so rapidly in recent decades. Researchers have instead sought to explain obesity by looking at technological changes, changes in taste and consumer habits, and at changes in the social environment. Economists have taken the lead in these efforts. Not surprisingly, they have emphasized the role of prices.

According to the economists Darius Lakdawalla and Tomas Philipson, declines in the real prices of grocery food items caused a surge in caloric intake that can account for as much as 40 percent of the increase in the body mass index of adults since 1980. Technological advances in agriculture caused grocery prices to fall, the authors show, and these declines caused consumers to demand more groceries. Government policy only heightened the effect by encouraging overproduction. Journalist Michael Pollan points to a shift in the early 1970s toward direct farming subsidies as another source of the rise in caloric intake. The old system, an agricultural-support arrangement designed to discourage overproduction of corn and other storable commodities, had much smaller effects on producers’ decisions. But the new system “free[d] them to dump their harvests on the market no matter what the price.”

Important technological changes in the home kitchen seem to have fostered more caloric intake, too. Economists David M. Cutler, Edward L. Glaeser, and Jessie M. Shapiro, present evidence that the tools responsible for reductions in the time we spend preparing meals at home — at least for certain groups in the population — have contributed to an increase in caloric consumption. Microwaveable meals and other foods that are easy to cook are desirable because they are quicker to prepare; they are also fattier and higher in caloric content.

Other factors that have contributed to the growth in obesity include the decline in physical activity and urban sprawl. [...]

While these various factors all clearly matter, we have found in our research with colleagues Shin-Yi Chou and Henry Saffer that several others seem to be more important in explaining trends in obesity. First and foremost, eating out at fast-food restaurants and full-service restaurants seems to be the most important factor in explaining the rise in obesity.

According to our research, as much as two-thirds of the increase in adult obesity since 1980 can be explained by the rapid growth in the per capita number of fast-food restaurants and full-service restaurants, especially the former. [...]

If obesity were purely a cosmetic problem, the pressing need for answers as to why this has happened and solutions to reverse it would not seem necessary. Yet obesity has been linked to various medical conditions such as hypertension, high cholesterol, coronary heart disease, type 2 diabetes, psychological disorders such as depression, and various types of cancer. Clearly, obesity carries a high personal cost. But does it carry a high enough social cost to make it a concern of public policy? The answer is no if consumers are fully informed, and if the obese bear all the consequences of their actions. The answer is yes if consumers do not have full information or something that reasonably approximates it, or if third parties like Medicare, Medicaid, private health insurance companies and ultimately the non-obese end up bearing significant amounts of the costs.

It would seem, then, that obesity is a matter for public concern. Clearly, the non-obese do subsidize the obese.

One of the great advantages of the re-individualization of health care through things like Health Savings Accounts will be that consumers will pay the cost of their own irresponsibility again. In the meantime you should be able to make some not too draconian changes that would foster better fitness habits--mandatory walking programs (in place of physical education) for schools and limiting the use of school buses and such like. Higher gas taxes would likewise encourage adults to walk more.

Posted by Orrin Judd at September 14, 2004 9:11 AM