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Who Pays for Obesity?

Authors: Bhattacharya, Jay; Sood, Neeraj

Source: The Journal of Economic Perspectives, Volume 25, Number 1, Winter 2011 , pp. 139-157(19)

Publisher: American Economic Association

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Abstract:

Adult obesity is a growing problem. From 1962 to 2006, obesity prevalence nearly tripled to 35.1 percent of adults. The rising prevalence of obesity is not limited to a particular socioeconomic group and is not unique to the United States. Should this widespread obesity epidemic be a cause for alarm? From a personal health perspective, the answer is an emphatic “yes.” But when it comes to justifications of public policy for reducing obesity, the analysis becomes more complex. A common starting point is the assertion that those who are obese impose higher health costs on the rest of the population—a statement which is then taken to justify public policy interventions. But the question of who pays for obesity is an empirical one, and it involves analysis of how obese people fare in labor markets and health insurance markets. We will argue that the existing literature on these topics suggests that obese people on average do bear the costs and benefits of their eating and exercise habits. We begin by estimating the lifetime costs of obesity. We then discuss the extent to which private health insurance pools together obese and thin, whether health insurance causes obesity, and whether being fat might actually cause positive externalities for those who are not obese. If public policy to reduce obesity is not justified on the grounds of external costs imposed on others, then the remaining potential justification would need to be on the basis of helping people to address problems of ignorance or self-control that lead to obesity. In the conclusion, we offer a few thoughts about some complexities of such a justification.

Document Type: Research Article

DOI: http://dx.doi.org/10.1257/089533011798837800

Publication date: December 1, 2011

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  • The Journal of Economic Perspectives (JEP) attempts to fill a gap between the general interest press and most other academic economics journals. The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of thinking; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and readings for classroom use; and to address issues relating to the economics profession.
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