Some call economics the dismal science, I call it useful. When it comes to obesity one would argue that it offers the mechanisms to prevent a needless tide of early deaths, spiralling NHS costs and sore eyes on the beach. Obesity is an all too obvious condition and frequents the news on a regular basis e.g. http://www.bbc.co.uk/news/health-12566504 last week.
So how can economics inform the obesity epidemic?
At the end of the day weight gain arises as a result of a very basic equation: weight change = calories eaten – calories burned. Taking political motivations aside i.e. pandering to manufacturers, common sense tells us that obesity can be avoided by reducing calories eaten and increasing those burnt. Consuming less calories tends to be easier than burning more and this article shall focus on the first half of the equation accordingly. To lose one pound of fat you need to burn 3500 calories less than you consume, it’s as simple as that. A ‘nudge’ approach as previously discussed is frequently used in public health campaigns, obesity is so off course however that it has got to the point where a nudge is near pointless, one huge push would better suffice.
Using basic economic theory there are two clear ways to make a real impact on this equation and in turn obesity. Basic economic theory tells us that individuals seek to maximise their utility via consumption given a budget constraint. Thinking back to how a change in price of a good affects such an optimisation problem we can see that there are two affects. The first is the income effect, if a good i.e. junk food rises in price then relative income is reduced, the result is a decrease in junk food consumed. The second effect is the substitution effect, individuals will substitute away from junk food to other healthier food items.
So what does this mean for policy from an economics perspective? The two most obvious solutions are inherently interlinked, these are taxation and subsidisation. By taxing junk food you are increasing the relative price of junk food and reducing the relative cost of healthy alternatives. This leads to individuals switching to a reduced junk food diet whilst increasing tax revenues for the government. The tax revenues accrued could then be used to subsidise healthy low calorie alternatives and so increase the cost per calorie of food. This in principle is a simple task, so why doesn’t this happen? In part it does, there is some tax on junk food, however one would argue not nearly enough. Why isn’t there more tax on junk food and subsided healthier food I hear you ask? The answer is decades of weak governments which resort to short term political goals rather than long term and unpopular preventions with the potential to save countless lives. Such a policy would have been incredibly sensible a decade or two ago, now it is a last resort to try stem the tide before it’s too late. If current trends continue expect to see increased pressure on the government resources and spiralling NHS costs. Regardless of what happens now don’t expect to see too many bikinis at the British sea side resorts come 2030 but enjoy a long queue for bariatric surgery. A double pronged attack on obesity via substantial increases in junk food tax and subsidising healthy alternatives wont stop the wave but will certainly help to reduce the damage caused. Lets face it, at the end of the day money talks. Nudging wont lead to decreases in obesity, changes in cold hard cash however may make people think twice when they look at that chocolate bar.