Economists do not expect thin times ahead. Unfortunately, this prediction does not herald the end of the global financial crisis. The counterintuitive evidence suggests that recession is likely to favour rising obesity rates. Four economic forces push towards this outcome. First, lower incomes reduce leisure-time physical activity. Second, higher unemployment reduces both job and leisure-time physical activity. Third, this crisis is deflationary and lower food prices have been historically associated with higher calorie intakes. Fourth, tighter budgets may drive people to substitute healthier and more expensive foods with those with lower cost per calorie, energy-dense, or junk-foods.
Tackling obesity has become a top priority policy in Europe. The European Commission estimated that about one in six European adults was obese in 2005. The situation is rapidly deteriorating in those countries where the healthy Mediterranean diet was born, in which one - third of children are thought to be at risk of becoming obese adults. These statistics raise public health concerns – obesity has been linked to chronic conditions like diabetes and heart disease – although medical progress is making excess weight less and less life-threatening risk.
Despite the declining trend in obesity-related deaths, the public policy interventions designed to reduce obesity rates are often justified by economic arguments about increased health care costs. In Europe, health expenditure is largely public, so the financial burden is spread across all taxpayers, fat and thin. Economic theory says that this is a bad thing – if individuals had to bear the full financial consequences of excess weight, they would have an incentive to control their diets, stay active and remain thin. Of course, this presumes that obesity can be – at least partially – avoided by self-control and is not an unavoidable genetic outcome.
Economic research findings on nutrition and obesity are often counterintuitive and suggest remedial actions that would not necessarily be promoted by public health experts. For example, Britain produces less than half of its current fruit and vegetable consumption. If all of the British people aimed at the five-a-day target, the outcome could be a price increase, which would offset consumption and generate health inequalities. If bad diets and weight gain are a free choice of consumers, who perceive lower risks or rely on public health systems, then information campaigns are unlikely to succeed. Remedies favoured by (some) economists for their effectiveness would not exactly be popular among citizens, policymakers and the food industry. Placing taxes on ‘bad’ foods or even directly on obese people (through more expensive health care access) raise many concerns, so that the “information” route is generally the easiest.
Instead, there is a certain consensus on the main economic culprit for rising obesity rates: technological progress. A widely regarded study by Harvard economists Cutler, Glaeser and Shapiro blames innovation in food processing and packaging for the US obesity “epidemic”, as progress has made junk food cheaper and easier to prepare than more healthy alternatives. While one could eat hyper-calorific and unhealthy snacks sixty years ago, their cost – in terms of preparation effort – was much higher than the pocket change needed for today’s vending machines in schools and train stations. Technological progress is also the main explanation of a seeming paradox: within developed countries, poorer individuals are more at risk of obesity than their better-off fellow citizens. Similarly, throughout the world richer countries are fatter. In developing countries, the situation reverses and obesity rates are usually higher among the upper income class.
An interesting – and still unchallenged – explanation was published by Lakdawalla, Philipson and Bhattacharya in 2005 in the American Economic Review. They looked at the energy expenditure –physical activity – side of the equation, rather than food intake. Calories are “spent” either at work or in play. Job-related physical activity declines with technological progress as tasks become more sedentary, and likewise as salary increases and manual tasks are less likely to be performed. Thus, economic growth and technological progress promote obesity. Counterbalancing this trend, as income increases, individuals are more willing to pay for a healthy lifestyle and a better-looking body. Health and sport centres are relatively expensive and empirical findings suggest that income growth raises leisure-time physical activity.
This explains the picture. Within a single country like the US, technological progress has acted more or less evenly across the population, pushing towards higher obesity rates. Pushing back, the richer part of the population has been able to substitute manual work with leisure-time physical activity. Disparities between countries reflect differences in terms of technological progress. In developing countries, the transition from manual work to sedentary jobs is ongoing and incomes are not yet sufficiently high to promote slimmer lifestyles. In contrast to the picture in the developed world, obesity is a status symbol in some poor countries. If this theoretical explanation is correct – as empirical evidence seems to confirm – then the economic crisis will work towards weight gain in advanced economies. Relatively lower incomes will reduce leisure-time physical activity and unemployment would reduce manual activity in the workplace. Even if technological progress were to slow down, the decline in macroeconomic activity and the falling inflation rates so feared by central banks suggest that prices are going down – and this might be especially true for those goods demanded by lower income classes. Recently, the economy has been contracting and waistlines expanding – we can only hope for a swift reversal. Meanwhile, perhaps shrinking dress sizes can forewarn market analysts of the next boom.
See also: Mazzocchi, M., Traill, W.B., Shogren, J.F.S. (2009), Fat Economics: Nutrition, Health, and Economic Policy. Oxford: Oxford University Press.
Short Biographical Note on the Author
Mario Mazzocchi – University of Bologna
Mario Mazzocchi (born 10 November 1972, PhD in Agricultural Economics and Policy, Laurea degree in Statistics) is a senior lecturer in Economic Policy at the Department of Statistics, University of Bologna since 2005. He has been nominated Visiting Research Fellow by the University of Reading for the period 2005-2009. Between 2002 and 2005 he was a lecturer in Applied Economics and Consumer Behaviour at the University of Reading (UK). He has been a consultant to FAO and the European Commission. In 2005 he received the ERAE/EAAE award for best paper by young author published in the European Review of Agricultural Economics (2003 issue) and the Teaching Excellence Award - Rising Star by the University of Reading. He is currently workpackage leader in two EC projects. He has published two books with leading international publisher ("Fat Economics", Oxford University Press and "Statistics for Marketing and Consumer Research" , Sage Publications) and 30 articles in peer reviewed journals including – among others - the American Journal of Agricultural Economics, Computational Statistics & Data Analysis, the European Review of Agricultural Economics, Applied Economics. He has reviewed papers for more than 20 international journals including the American Economic Review and the Journal of the Royal Statistical Society.
