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Some comments on obesity

A recent post over at Ezra Klein’s excellent Wonkblog caught my attention, both for being a post about a health economics issue, but also due to comments users had posted below. The post is about a recent set of projections about obesity and reports that there are new estimates that the burden of obesity in the US, if current trends continued, will be $550 billion over the next two decades. But this could be cut by almost 10% if trends continued 5% slower than they currently do. While this raises awareness of the importance of targeting healthcare interventions at preventing obesity and the diseases associated with obesity such as diabetes, it also raises important questions about responsibility for health. The comments section raises some important points:

MikeSoja wrote:

It wouldn’t cost “us” a dime, if “we” weren’t forced to pay it.

How about fat people pay for their own problems?

This, perhaps uneloquent, point illustrates the quite common opinion that behaviour matters. Those individuals to whom a causal responsibility could be assigned for their condition, such as smokers, should have a smaller right to healthcare resources. The negative externality that arises from unhealthy food may be countered with a Pigouvian tax – fat people ‘paying for their own problems’. One country, Denmark, is already trying this by taxing butter. However, this tax is foolish – it is not butter consumption that leads to obesity! People are becoming ever more aware that it is refined carbohydrates that are more to blame. So, should a tax be placed on these products?

Obesity, and other diseases that may be viewed as being caused by personal behaviour, are more prevalent among the poor. A tax on the products consumed more by the poor (inferior goods) would be regressive and would contribute to inequality. You might argue that the (threat of) restriction to healthcare is enough to reduce consumption of these harmful goods, but, it is unlikely that that threat will make much difference, particularly since the negative effects occur in the future and time preference matters. This could lead you to the comment made by AnonymousBE1:

But, if obesity affects mortality, which it does on average, then there will be huge cost savings in terms of unpaid Social Security and other pensions. In addition, people who live longer do not have less expensive final years – it’s just that those final years come later. Obesity is a quality of life issue, but I am not convinced that it is a fiscal issue….

This is a salient point, and it is something which health economists know much about. But as liamdc710 points out (in not a strictly polite way):

Your analysis is as stupid as those who say smokers save people money because they die young from cancer. In fact, far fewer than half of smokers die from cancer at an age younger than the national life expectancy. For the majority of obese Americans, much like smokers, insurance companies, families, and the public health systems in place will see increasing expenditures on related diseases that require expensive life long treatment.

To which AnonymousBE1 replied:

Okay, well, there needs to be comparison studies of LIFETIME expenses, medical and pension and disability.

I think this final point is something on which most economists would agree. But, even if costs are greater for the obese, does this mean they have less of a right to quality of life?

Many commentators ascribe to a luck egalitarian point of view whereby health differences that are due to sheer luck should be ‘evened out’ after which personal responsibility should play a role – we should be responsible for the consequences of our actions. It is what John Roemer calls ‘the cost of freedom’. However, how individuals respond to the same diet or lifestyle is often a matter of sheer luck; an individual’s genetic lot plays a big role in their propensity for obesity or the damage they receive from alcohol, for example. Separating luck from behaviour is highly difficult, if not impossible. Furthermore, saying that an individual ought to behave in a certain way or else face the consequences does not necessarily mean that an individual can behave in that way.

arm3a posted:

Man, is this troubling. Looks like a Pigouvian moment to me.

Perhaps it is, but I think it comes down to what you view the function of the health system to be. Some view it as an insurance system. So those most likely to require healthcare should pay more which could be funded by such a Pigouvian tax. But, I believe a national healthcare system acts more as a system of redistribution. As I have mentioned in a previous post, health is a special good and a precondition for achieving any of the things we have reason to want in life. The socioeconomic differences in unhealthy behaviours are large. Working class men smoke more than the middle classes. But these differences in behaviour only account for some of the socioeconomic differences in health outcomes. We should see reducing inequalities as a greater social responsibility than punishing those who become ill partly as a result of their behaviour.

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My big fat tax

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.

 
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Posted by on March 2, 2011 in Public Health

 

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