Obesity
The Economics of an Epidemic
Outline
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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)
BMI  kg / m
– Underweight = <18.5
– Normal weight = 18.5-24.9
– Overweight = 25-29.9
– Obesity = BMI of 30 or greater
2
• http://www.cdc.gov/obesity/data/adult.html
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
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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. 1999
– 280,000-325,000
• Mokdad et al. 2004
– 400,000
• Flegal et al. 2005
– 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, 239-57.
• 147 Billion per year Finkelstein et. al. 2009
(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
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Absenteeism
Presenteeism
Disability
Premature mortality
Workers’ compensation
Indirect costs ranged from $448.29 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 = 655 + ( 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”
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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
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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?
• http://www.bakadesuyo.com/is-poor-fitnesscontagious
• More Peer Effects
Solving the Problem
• How?