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 = 18.5-24.9 – Overweight = 25-29.9 – Obesity = BMI of 30 or greater

2/mkgBMI

• 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

• 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

• 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”• 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?

• http://www.bakadesuyo.com/is-poor-fitness-contagious

• More Peer Effects

Solving the Problem

• How?