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Why We and the Rest of the World Are Getting Fatter — and What We Can Do About It
In a way, getting fat makes sense.
Indeed, people are growing obese on a global scale. As nearly the whole world gets steadily fatter, economists are taking a closer look at why we make the unhealthy choices we do. Our fattening decisions make rational economic sense, they say, but only if we ignore the future.
The obesity crisis is no longer limited to the U.S., but we are most familiar with its consequences. For years lawmakers and health activists have tried in vain to prevent the alarming rise in body mass in this country. Efforts such as slapping a tax on soda and other sweetened drinks have not panned out.
Now economists are drawing fresh attention to the health crisis and providing new ways to think about it. With the exception of Sub-Saharan Africa and a handful of less developed countries, obesity is an area of global concern, according to a recent study by the National Bureau of Economic Research. The report found obesity is spreading in countries that span the entire spectrum of economic development and geographic regions.
Bentley University Economics degree Professor Dhaval Dave, co-author of the study on global obesity, which is the first to document the trend in more than 100 countries, says we need to look at the problem from a different perspective. Our health-care policies are based on what we know about the cause of obesity — things such as poor nutrition, unhealthy fast food, failure to exercise. But too often we fail to pay attention to a key element: individual cost calculus.
We must consider the ways in which people make rational decisions in a changing economic environment, he says. People are accepting higher obesity in exchange for income, leisure, and a less active lifestyle. They return from a long day at work too tired to cook a healthy meal and so order takeout. They choose to exercise less and spend more time at desk jobs. They may have a vague sense that healthy is better but because the consequences are unspecified, as opposed to the apparent benefits of the immediate decision, what they choose to do makes sense.
Unfortunately, people who make daily calculations in that way are ignoring long-term costs, which can indeed be specified, Dave says. For example, he says, someone decides on a Big Mac from McDonald’s rather than a fresh salad. Fast food is a lot cheaper than healthier fruits and vegetables from the standpoint of price per calorie. The selection is a reasonable short-term economic choice that captures the law of demand. The calorically dense food at a lower cost is the way to go.
Think ahead and the economic decision looks quite different. Factor in future health-care expenditures associated with obesity, such as heart disease and stroke, high blood pressure, diabetes, and some cancers. The same food that was cheaper on a per-calorie basis is costlier on a nutrient basis. The healthier salad is the better deal.
“We need a comprehensive approach that is informed by how individuals respond to changes in relative costs and benefits — an understanding of behavioral economics,” says Dave.
“People act rationally in the moment. If we know more about these established behaviors, we will stop making policy choices that make no sense.”
The need for effective strategies to stop the obesity trend is incredible. According to the Centers for Disease Control and Prevention, the nation’s obesity rate among adults has doubled since 1980. For children, it has tripled. And we’re talking about everybody — men and women, rich and poor, all races and ethnicities, in every state.
Evidence suggests that, by 2040, roughly half of our adult population may be obese if federal preventive health policies continue to fail, according to a report by Matrix Global Advisors, an economic policy consulting firm. Our current health-care spending due to obesity is already estimated to be as high as $210 billion annually, or 21 percent of total national health-care spending. When accounting for the non-medical costs of obesity, the overall annual cost is estimated to be $450 billion.
There’s no shortage of studies trying to explain our collective weight-gain but there are few policies offering adequate solutions. Behavioral economics can help explain why. For instance, from that perspective, the use of punitive taxes can be a highly inefficient tactic fraught with complications.
A tax on soda must take into account the way individuals tend to react in terms of cost analysis. We assume people will drink less soda and that might be a small response, says Dave. But the benefit of the tax will be weakened because many more will engage in compensatory behaviors — substituting the higher-cost soda with sports drinks, juice, and other beverages with a similarly high-calorie profile. If we try to tax all sweetened drinks above a particular calorie count, the situation becomes untenable. Either way, compensatory behaviors will always come into play.
“Obesity is a reflection of cumulative behavioral decisions and choices,” says Dave. “We need to understand how individuals respond to changes in the relative costs and benefits of various inputs into food consumption and physical activity in order to devise and implement effective policy solutions.”
Policies that draw from behavioral economics tend to meet with more success, such as when businesses design incentives that make rewards salient and immediate. Think subsidized gym memberships and individual financial incentives to lose and maintain a healthy weight. Investing in such strategies has been shown to raise productivity, reduce turnover and absenteeism, and lower health-care costs for the company.
Research in health economics shows educated people make better and healthier diet and exercise choices. Over the long term, our government investing in more free education would have a positive impact on obesity trends. Policies that offer universal community college, for example, or that raise the high-school graduation rates and college enrollment would have a positive spillover in reducing obesity. Restricting junk-food advertising and demanding products carry visible nutritional information would also help.
Dave suggests that, when it comes to thinking about our obesity crisis, “Go ahead and take economics and apply that to individual behavior and the choices people make. Then you’ll begin to understand more about what works.”