Obesity The Economics of an Epidemic

Outline Basic Facts Health Effects Economic Costs (Direct and Indirect) Model Problem – Economic vs Non-Economic Reasons Gov’t Intervention?

Measuring Obesity Body Mass Index (BMI) – Underweight = <18.5 – Normal weight = – Overweight = – Obesity = BMI of 30 or greater

Percent Adults Overweight/Obese 2011

Problems with being Overweight Hypertension Dyslipidemia (for example, high total cholesterol or high levels of triglycerides) Type 2 diabetes Coronary heart disease Stroke Gallbladder disease Osteoarthritis Sleep apnea and respiratory problems Some cancers (endometrial, breast, and colon)

Number of deaths for leading causes of death Heart disease: 652,091 Cancer: 559,312 Stroke (cerebrovascular diseases): 143,579 Chronic lower respiratory diseases: 130,933 Accidents (unintentional injuries): 117,809 Diabetes: 75,119 Alzheimer's disease: 71,599 Influenza/Pneumonia: 63,001 Nephritis, nephrotic syndrome, and nephrosis (kidney disease): 43,901 Septicemia (blood poisoning): 34,136

Number of Deaths from Obesity Allison et al – 280, ,000 Mokdad et al – 400,000 Flegal et al – 112,000

Paradoxical Effect of Overweight Historical evolutionary advantages to efficiently storing fat. It is a buffer against disease and famine

Economic Costs Around 10% of medical spending in US More than cigarette smoking 147 billion in 2008 Americans spend 33 Billion on weight reduction products

Economic Costs Direct – are costs where money is actually exchanged Indirect – are most often costs that measure productivity loss and represent the value of time

Direct Average increase in annual medical expenditures is $732 per person A total of 5.3% to 5.7% of total annual medical expenditures in the United States when combining per person costs and prevalence Government finances roughly half the costs attributable to obesity

Direct Perhaps only 4.3% of lifetime costs (in the United States) when accounting for increased annual costs and premature mortalitySource: (2005). Annu Rev Public Health, 26, Billion per year Finkelstein et. al (similar to smoking) 33 billion in weight loss aids. Rashad and Grossman 2004

Direct “Across all payers, obese people had medical spending that was $1,429 greater than spending for normal-weight people in 2006.” – Finkelstein 2009 The costs attributable to obesity are almost entirely a result of costs generated from treating the diseases that obesity promotes.

Lifetime Medical Costs of Obesity: Prevention No Cure for Increasing Health Expenditure Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.

Indirect How can we calculate indirect? – What are examples?

Indirect Absenteeism Presenteeism Disability Premature mortality Workers’ compensation Indirect costs ranged from $ million ($204 per obese person) in Switzerland to $65.67 billion ($1627 per obese person) in the United States (33).

Basic model of Weight Gain Calories In=Calories Out Women: BMR = ( 4.35 x weight in pounds ) + ( 4.7 x height in inches ) - ( 4.7 x age in years ) Men: BMR = 66 + ( 6.23 x weight in pounds ) + ( 12.7 x height in inches ) - ( 6.8 x age in year ) Dynamic Equations (150 calories = 10 pounds in 233 days) 3,500 calories = one pound

Calorie Expenditures

Calorie Consumption

Food Technology Price of food has fallen Time cost of food prep has fallen more

Fattening of America Since 1983 prices of “healthy foods” Fresh fruits: 190% increase Fresh vegetables: 144% increase Fish: 100% increase Dairy: 82% increase And not so healthy foods… Fats and oils: 70% increase Sugars and sweets: 66% increase Carbonated beverages: 32% increase

Non-Economic Reasons Women Working Medications Changes to Cigarette Prices Climate Control Pollution Sleeping Less

Behavioral Aspects of Eating

Obesity and Food Out Supersize Me. Anderson, M. L., & Matsa, D. A. Are Restaurants Really Supersizing America?

Obesity and Income White women pay a 9% wage penalty for being obese. Maternal employment and childhood obesity – Working mothers lead to obese children.

Economic Costs of Obesity and Health Insurance The problems with not pricing insurance for weight risk. This leads to non-optimal weights.

Government intervention and regulation in food South LA Transfats Ag subsidies. Import quotas on sugar.

Food Pantries and Poverty A Cruel sort of Altruism

Do food stamps cause obesity? Evidence from immigrant experience.

Misc Artifacts of food intake Improved nutrition has lead to early onset of menstruation among women. Taller population

Health care bill requires calories on menus at chain restaurants

Research No effect Why?

Social Norms 66% of the moms were overweight or obese, and 39% of kids were too heavy. Both numbers are close to the national trend. Most obese women (82%) underestimated their weight when looking at the silhouettes; 42.5% of overweight women did the same. About 13% of normal-weight women thought of themselves as thinner than they were.

Social Norms Most overweight or obese children (86%) underestimated their weight, compared with 15% of normal-weight kids. 47.5% of moms with overweight or obese children thought their kids were at a healthy weight. 41% of the children thought their moms should lose weight.

Is poor fitness contagious? contagious contagious More Peer Effects

Solving the Problem How?