Tomas
J. Philipson and Richard A. Posner
Obesity has increased in recent decades despite no increase in calorie
consumption and a rise in dieting and exercise. While typically treated
as a public health issue, obesity is also an economic phenomenon that
is avoidable through behavioral changes. Economists expect these behavioral
changes will be undertaken if their benefits outweigh their costs.
In their Harris School paper, The Long-Run
Growth of Obesity as a Function of Technological Change, University
of Chicago researchers Tomas J. Philipson and Richard A. Posner examine
whether the economic benefits and costs of obesity can be used to explain
its variations across time and populations.
Philipson and Posner argue that there are
important economic factors behind the growth in obesity. Technological
change (e.g. industrial revolution) has lowered the cost of calorie
intake by making food cheaper and has raised the cost of expending
calories by transforming physical exercise from a vocational activity
to an off-the-job leisure activity. In an agricultural or industrial
society, work is strenuous; in effect, the worker is "paid to exercise." Weight,
then, is the result of personal choices such as occupation, leisure-time
activity or inactivity, and food consumption. Furthermore, as personal
preferences and technology determine obesity, Philipson and Posner
question the effectiveness of expanding public intervention programs
designed to reduce obesity.
Key Findings
Philipson and Posner link the long-term growth
in obesity to technological changes and their effects on calorie
consumption and caloric expenditure. Technological advancements have
decreased the cost of calorie consumption by lowering food prices
and raising income. While it would seem that lower food prices and
higher income levels would increase calorie consumption, Philipson
and Posner find that changes in prices and income have only a partial
impact on the growing prevalence of obesity. When income levels are
very high or food prices very low, calorie consumption need not increase.
Philipson and Posner explain that the inelasticity of calorie consumption
at these levels is due to the nonmonotonic nature of weight. In other
words, weighing more is not always better, and past a certain point,
weighing more is bad. This characteristic of weight is captured in
the concept of "ideal weight."
Each individual has an ideal weight, or a specific weight he would
like to maintain. Economically, a person's ideal weight may be understood
as a reflection of individual preferences for weight, which in turn
determine calorie consumption choices. Ideal weight is a subjective
measure and may or may not be determined by good health, longevity
or external standards. Being over or underweight depends on how much
an individual cares about his or her weight. Beyond the caloric level
corresponding to an individual's ideal weight, the cost of consuming
more calories, even if they were free of charge, outweighs the benefits
gained from eating more.
The authors further elaborate on the relationship between income and
weight by comparing preferences for being thinner and fatter in more
and less developed countries, respectively. Wealthier countries exhibit
a negative relationship between income and weight, or a greater demand
for thinness. When food prices are low, people spend a smaller share
of their income on food. The tendency is to consume more calories,
but only up to a certain income level at which concern for being above
ideal weight will limit calorie consumption. Poorer countries, by contrast,
exhibit a positive relationship, or greater demand for obesity. When
food prices are high, people spend a larger share of income on food.
Those who cannot afford sufficient caloric intake may be underweight;
however, wealthier individuals may forgo other consumption in order
to gain weight. Obesity thus becomes a physical symbol of wealth. While
technological advancement does spur demand for increased calorie intake,
the effect is self-limiting. Preferences for weight change with stage
of development and corresponding income level.
As increase in calorie consumption does not
provide a full explanation for the rise in obesity, Philipson and
Posner also discuss a second effect of technological change on caloric
expenditure. Technological change has lowered the quantity of calories
expended at the work place. In agricultural or industrial societies,
labor is physically strenuous, thus the laborer is "paid to exercise." In
post-industrial society, the majority of work-related activities
do not entail physical exercise. People must therefore pay to undertake
physical activity by forgoing leisure. As technological change also
increases wages, the opportunity cost of time spent exercising is
higher, so at higher wages, people tend to exercise less and be heavier.
Researchers note that the decline in calories expended on the job
has led to a rise in off-the-job calorie expenditures. Growth in jogging
and health club memberships attests to the substitution of off-the-job
for on-the-job exercise. Individuals now choose how to allocate their
time among work, exercise and leisure in order to maximize their utility.
They examine the respective costs and benefits of work, exercise and
leisure to make their final time allocation decisions. Cost-benefit
assessments take preferences for weight and consumption into account.
Since a lack of exercise would lead to weight gain, weight has a positive
impact on utility for those who do not exercise. Conversely, it has
a negative affect on utility for those who do exercise.
Philipson and Posner challenge the potential
of other theories to adequately explain the rise in obesity. The
increase in convenience / fast food production implies an increase
in caloric intake, but calorie consumption has not increased. Additionally,
the decline in male cigarette smoking may explain weight gain in
the short-term; however, to date, the effects of smoking cessation
on permanent weight gain remain uncertain. Some theories attest to
a decreased "cost" of obesity resulting from
improvements in the medical treatment of heart disease; however,
this lower cost may have merely coincided with an increased cost
of exercise, such as higher wages for non-physical labor.
Philipson and Posner's rational-choice perspective on obesity calls
into question the relevance of public interventions to combat the problem.
If personal preferences and technology determine obesity, then public
educational campaigns will have little impact on actual levels of obesity.
Furthermore, the researchers question whether obesity generates negative
externalities that are large enough to warrant government intervention.
Background
Obesity is typically examined as a public health issue. There has
been little economic analysis of the forces contributing to the rise
in obesity, which is surprising. The number of obese Americans is higher
than the number of those who smoke, use illegal drugs, or suffer from
other physical ailments. Obesity is a major risk factor associated
with highly prevalent serious diseases such as heart disease, cancer,
and diabetes and thus affects public programs such as Medicare and
Social Security. Obesity also affects wages, as Americans spend billions
of dollars each year trying to lose weight through dieting and exercise.
Philipson and Posner model obesity as an economic phenomenon. They
apply a rational-choice economic model in which individuals weigh the
costs and benefits of calorie consumption against personal preferences
in such a manner that they maximize personal utility.
Research Summaries are
designed to help broaden the dissemination of current policy-relevant
research. These Summaries are funded by the Irving B. Harris Graduate
School of Public Policy Studies at the University of Chicago.
For more information, contact Jamie Rosman at HarrisSchool@uchicago.edu or
(773) 702.2287.
