Obesity is a major health problem that has continued
to be a matter of public concern. The percentage of obese adults and children
has constantly doubled over the years. It has been associated with other health
issues such as; heart disease, diabetes, stroke, certain types of cancer, high
blood pressure and so on.  This is why
obesity is known to be one of the major causes of death and it lowers life expectancy.
The medical costs of obesity are extremely high due to the long treatments of
the disease and these costs are carried upon by healthcare
schemes rather than the patients.

Obesity is measured by the body mass index (BMI). Body
mass index is defined as weight measured in kilograms divided by height
measured in meter squared (kg/m2). (Grossman and Rashad, 2004). The
ideal BMI value for adults is considered to be between 18.5 and 24.9 regardless
of the gender. Also, adults with BMI value within the range of 25 and 29.9 are
considered overweight and if their BMI value is from 30 and above, they are
considered obese. (NHS, 2016).

In this essay, I will analyze
the economics of obesity by answering the following questions; what explains
increasing obesity? What are the costs of obesity? What are the justifications
for public health intervention? Which policies might be implemented to tackle

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Obesity is a health problem that has constantly
increased and gotten out of control even among educated individuals and
developed countries. Figure 1 below shows the rise in the body mass index of
educated adults over the years.

 Figure 1: Obesity for Adult Americans by
Education Groups


                                           1990                                    2000                                    2010

(Source: Sood and Bhattacharya, 2011)


The graph above shows that even among the educated
population, there has been an increasing
rate of obesity. This explains that obesity is a serious issue, as educated
individuals are believed to be less likely to be obese because they are more
informed about the risks associated with the disease. In order to tackle
obesity, we need to understand how and why obesity became a problem in the
first place.

Obesity could be transferred through genes i.e. it has
a large genetic component which is why a certain individual could be obese.
However, it does not explain why obesity has rapidly increased over the years.
Researchers explain that this increase could be as a result of the following;
changes in social environment, technological innovations, changes in taste and
consumer habits. (Grossman and Rashad, 2004).

In regard to technological innovation, the introduction
of changes such as; microwaves, preservatives, artificial flavors and so on has contributed to the
increase in obesity. The introduction of these innovations means individuals do
not need to spend a lot of time cooking as most food now come pre-cooked.
Whereas, in the past decades, when these types of technologies had not been invented,
families cooked their own food and ate it at home. The introduction of these
technologies has led to an increase in calories intake. (Cutler et al., 2003).

A theory was generated by (Cutler et al., 2003), and
this was illustrated by using a potato. The theory explains that before the
commencement of world war II, Americans were large consumers of potatoes and
they consumed it in various forms such as; mashed, boiled or baked. However,
after the war, technologies were introduced and this made it easier to make
potatoes in a different form i.e. french fries. This could not be done before
the technologies were introduced because of the time it takes in making it.
Now, french fries are made using new technologies and are packaged for
consumption, where it could be easily microwaved or even reheated using a deep
fryer or oven. This explains that individuals are more likely to demand these
kinds of food such as microwaveable meals because they are quicker and easier
to prepare but this could lead to health problems such as obesity as these
types of food are fatty and high in calories.

Also, technological changes in agriculture have also contributed to the increase in
obesity. As the introduction of these changes has led to the reduction in the
prices of food which has caused an increase in the demand for food by
consumers. The decline in physical exercise has also contributed to the
increase in obesity. Individuals living in environments that have recreational
centers and several stores within their reach are less likely to be obese. (Grossman
and Rashad, 2004).

The table above shows a
survey that was taken in several years. It shows the body mass index and the
percentage of obese adults. As seen from the table, the BMI has constantly
increased over the years.

Changes in tastes and consumer habits are also
responsible for the increase in obesity. The rapid growth in the establishment
of fast food restaurants plays an
important role in determining the rate of obesity. According to a research
carried out by (Currie et al., 2010), they found that the proximity to fast
food restaurants could contribute to the increase in obesity. They explained
that schools that are within one-tenth of a mile of a fast food restaurant could
lead to an increase of about 1.7 percent of obese students relative to the presence
of a fast food restaurant that is at 0.25 miles. Also, they explained that the
establishment of fast food restaurants is not left out on the effect it has on
obesity. Most restaurants open their establishments in environments where the
demand for fast food is expected to be high and this leads to a high risk of
increasing obesity.

Smoking has been discovered to be one of the causes of the rise of obesity. This is as a result of
the spike in the prices of cigarette and the imposition of high taxes on cigarette. This led consumers to quit smoking, making
them eat more because of the ability of
cigarettes in suppressing the appetite had come to an end. Smoking has been considered
to be responsible for about 20 percent of the increase in obesity. For every 10
percent increase in the price of cigarette,
it led to a 2 percent increase in the number of obese people. (Grossman and
Rashad, 2004).

From the research carried out by (Grossman and Rashad,
2004), they found that an individuals’ social environment could influence the
risk of being obese. They further explained that there are some compromises
associated with achieving certain goals that favor
the society. These include; reduction in the prices of food has increased the living standard of individuals as they have
been able to save more. Labour markets favoring
women has given women the opportunity to work where ever they desire and it has
increased the equality of opportunities.


As stated earlier, obesity has been associated with
several health conditions and this has economic consequences on the government, insurance companies, and employers. The costs of obesity are divided
into two. These are direct and indirect cost.

The growth of obesity has been found to have direct
costs. These direct costs include the medical expenses spent on obese patients.
Obesity being a disease linked with other
health conditions has high medical costs. This means that an increase in
obesity leads to an increase in the annual medical expenses. Studies show that
the increase in obesity causes the annual medical expenses to increase by 9.1
percent per year. (Finkelstein et al., 2010).

Apart from direct costs, obesity has indirect costs.
Indirect costs have to do with the loss of
productivity. Most obese individuals tend to be absent from work and less productive
while at work (this is known as presenteeism). This costs the government and
employers a huge sum of money and also affects the profitability of organizations. As most employers find it
difficult to finance the high medical expenses of obese individuals. (Finkelstein
et al., 2010). The figure below shows the per capita medical expenditures and loss
of productivity as a result of being
obese and overweight. This graph analyses full-time
employees, both male and female.

Note: Grade I obesity (BMI 30 to 34.9), Grade II obesity
(BMI 35 to 39.9), Grade III obesity (BMI of 40 or greater)


(Source: Finkelstein et
al., 2010)

Another cost of obesity includes
the personal costs. Personal costs entail the negative effect it has on the
health of the individual. Knowing that obesity is linked to other medical conditions like hypertension,
type II diabetes, high blood pressure, psychological
disorder such as depression, heart disease and so on. This explains that obesity
has a high personal cost as it also reduces the life expectancy of an obese


As obesity has been
regarded as a public issue, health care schemes such as Medicare and Medicaid have
been introduced to relieve obese individuals from the high medical cost of
treating obesity. Also, the government has taken particular interests in child
obesity, as the government is already involved in the lives of children. So,
they could use this medium to tackle child obesity. Apart from the large
genetic component associated with obesity, most children are obese because they
do not have enough information about the consequences of their actions.

Availability of health care
programs like Medicare and Medicaid relieves obese individuals from the costs
of their medical treatments. However, a question that needs to be answered is if
health insurance programs contribute to the risk of an individual being obese. According
to a research carried out by (Sood and Bhattacharya, 2011), they ran an
experiment to find out if health insurance schemes contribute the risk of being
of obese. They used an intensive margin case i.e. the move from a less generous
health insurance coverage to a more generous health insurance coverage. At the
end of the experiment, they found that people gained weight over the years of
the experiment. However, they found that having a more generous health
insurance scheme does not necessarily contribute to weight gain.


Several policies
have been introduced to help in tackling obesity. Some of these policies
include; imposing taxes on food with high caloric content or subsidies, social
marketing, nutrition labeling, raising
premiums for the obese. If the government puts in the same effort into tackling
obesity just like how they made effort in reducing smoking, it could go a long
way. However, if a subsidy on physical activity is introduced, it could have a
negative effect in controlling obesity. An increase in physical activity may lead
to individuals consuming more food, as weight control could also stimulate food
consumption. (Philipson and Posner, 1999). Also, imposing taxes on food with
high caloric content affects other individuals that consume these types of food
in moderation. As they will have to pay more to consume these types of food.

In regard to nutrition labeling,
most individuals do not always look at the nutritional contents of their food.
This is because a lot of people nowadays are always busy with work hence, they
do not have the time to read the labeling
on their food before eating it. Also, raising premiums for the obese could
reduce the rise in obesity. However, this could raise equity concerns that
could be considered as obesity has a large genetic component. Social marketing
also has a role to play in tackling obesity. Social marketing campaigns could be
used to raise awareness to the public about the risks associated with obesity.

Some other policies that could be implemented include;
producers should make an effort in reducing the sugar and fat content in their
food, Controlling the advertisements of unhealthy food to children, laws that
are implemented in discouraging unhealthy food should be strengthened, the food
standards of food served in schools should be monitored. Children are easily influenced
by what they see, so if more advertisements containing healthy food are
displayed, this might encourage children to eat more of healthy food rather
than unhealthy food. As child obesity is also an issue, schools could play a
role in reducing the risks of obesity in children. If more schools start
serving healthier meals, it could contribute to children having a healthier
lifestyle. In local communities, the government could support them in planning
laws that encourage healthy eating rather than having an unhealthy lifestyle. (The
Food Foundation, 2016).  

 Some of these
policies have been helpful but we need to take into consideration that the risk
of obesity depends on the individual. For example, if a person goes to a
grocery store, the individual has the option of picking fruits and vegetables
or junk food. If the individual decides to pick junk food, the consumer cannot
be forced to pick the healthy option (fruits and vegetables).


As we can see, obesity is a serious health problem
that could lead to early death and it is constantly increasing. It has been
deemed a public concern because of how deadly the disease could be. Some of the
causes of obesity are as a result of positive changes made to the nation, such
as; technological changes etc. However, we cannot necessarily say that these
positive changes are bad because of the negative effect it has on obesity. The
reduction in the risks of getting obese solely depends on the individual and
lifestyle changes. As the costs of obesity are high, individuals need to evaluate
the risks associated with their lifestyle. Even though the government can try
to curtail the increase in obesity, by implementing some policies, these changes
can only be determined by the individual. As the government cannot control what
individuals eat. Imposing food taxes could be a means of managing the rise in
obesity, however, a better way could be by encouraging people to exercise with
incentives like giving benefits to individuals who exercise and by reducing the
prices of weight loss programs and facilities.





Currie, J., DellaVigna, S., Moretti, E. and Pathania,
V. (2010), The Effect of Fast Food
Restaurants on Obesity and Weight Gain, American Economic Journal: Economic
Policy, Vol. 2, No. 3, pp. 32–63

Cutler, M. D., Glaeser, L. E. and Shapiro, M. J. (2003),
Why Have Americans Become More Obese?
Journal of Economic Perspectives, Vol. 17, No. 3, pp. 93–118

Finkelstein, A. E., Strombotne, L.K. and Popkin, M. B.
(2010), The Costs of Obesity and
Implications for Policymakers, Agricultural and Applied Economics
Association, 25(3)

The Food Foundation (2016), Priorities for tackling the obesity crisis in England: Expert agreement
on what needs to be done, The Food Foundation

Grossman, M. and Rashad, I. (2004), The Economics of Obesity, Research

NHS (2016), What
is the body mass index (BMI)?

Philipson, J. T. and
Posner, A. R. (1999), The Long-Run Growth
in Obesity as a Function of Technological Change, Working Paper 7423

Sood, N and Bhattacharya, J. (2011), Who Pays for Obesity? Journal of Economic
Perspectives Vol. 25, No. 1, pp. 139–158





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