1. Obesity The Economics of an Epidemic

2. Outline • Basic Facts • Health Effects • Economic Costs (Direct and Indirect) • Model Problem • Economic vs Non-Economic Reasons • Gov’t Intervention?

6. Measuring Obesity • Body Mass Index (BMI) • Underweight = <18.5 • Normal weight = 18.5-24.9 • Overweight = 25-29.9 • Obesity = BMI of 30 or greater

8. http://www.cdc.gov/obesity/data/adult.html

9. Percent Adults Overweight/Obese 2011

17. Problems with being Overweight • Hypertension • Dyslipidemia (for example, high total cholesterol or high levels of triglycerides) • Type 2 diabetes • Coronary heart disease • Stroke • Gallbladder disease • Osteoarthritis • Sleep apnea and respiratory problems • Some cancers (endometrial, breast, and colon)

18. Number of deaths for leading causes of death • Heart disease: 652,091 • Cancer: 559,312 • Stroke (cerebrovascular diseases): 143,579 • Chronic lower respiratory diseases:130,933 • Accidents (unintentional injuries): 117,809 • Diabetes: 75,119 • Alzheimer's disease: 71,599 • Influenza/Pneumonia: 63,001 • Nephritis, nephrotic syndrome, and nephrosis (kidney disease): 43,901 • Septicemia (blood poisoning): 34,136

19. Number of Deaths from Obesity • Allison et al. 1999 • 280,000-325,000 • Mokdad et al. 2004 • 400,000 • Flegal et al. 2005 • 112,000

20. Paradoxical Effect of Overweight • Historical evolutionary advantages to efficiently storing fat. It is a buffer against disease and famine

21. Economic Costs • Around 10% of medical spending in US • More than cigarette smoking 147 billion in 2008 • Americans spend 33 Billion on weight reduction products

22. Economic Costs • Direct • are costs where money is actually exchanged • Indirect • are most often costs that measure productivity loss and represent the value of time

23. Direct • Average increase in annual medical expenditures is $732 per person • A total of 5.3% to 5.7% of total annual medical expenditures in the • United States when combining per person costs and prevalence • Government finances roughly half the costs attributable to obesity

24. Direct • Perhaps only 4.3% of lifetime costs (in the United States) when accounting for increased annual costs and premature mortalitySource: (2005). Annu Rev Public Health, 26, 239-57. • 147 Billion per year Finkelstein et. al. 2009 (similar to smoking) • 33 billion in weight loss aids. Rashad and Grossman 2004

25. Direct • “Across all payers, obese people had medical spending that was $1,429 greater than spending for normal-weight people in 2006.” • Finkelstein 2009 • The costs attributable to obesity are almost entirely a result of costs generated from treating the diseases that obesity promotes.

26. Lifetime Medical Costs of Obesity: Prevention No Cure for Increasing Health Expenditure • Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.

27. Indirect • How can we calculate indirect? • What are examples?

28. Indirect • Absenteeism • Presenteeism • Disability • Premature mortality • Workers’ compensation • Indirect costs ranged from $448.29 million ($204 per obese person) in Switzerland to $65.67 billion ($1627 per obese person) in the United States (33).

29. Basic model of Weight Gain • Calories In=Calories Out • Women: BMR = 655 + ( 4.35 x weight in pounds ) + ( 4.7 x height in inches ) - ( 4.7 x age in years ) • Men: BMR = 66 + ( 6.23 x weight in pounds ) + ( 12.7 x height in inches ) - ( 6.8 x age in year ) • Dynamic Equations (150 calories = 10 pounds in 233 days) • 3,500 calories = one pound

30. Calorie Expenditures

32. Calorie Consumption

34. Food Technology • Price of food has fallen • Time cost of food prep has fallen more

35. Fattening of America • Since 1983 prices of “healthy foods” • Fresh fruits: 190% increase • Fresh vegetables: 144% increase • Fish: 100% increase • Dairy: 82% increase • And not so healthy foods… • Fats and oils: 70% increase • Sugars and sweets: 66% increase • Carbonated beverages: 32% increase

44. Non-Economic Reasons • Women Working • Medications • Changes to Cigarette Prices • Climate Control • Pollution • Sleeping Less

45. Behavioral Aspects of Eating

46. Obesity and Food Out • Supersize Me. • Anderson, M. L., & Matsa, D. A. Are Restaurants Really Supersizing America?

47. Obesity and Income • White women pay a 9% wage penalty for being obese. • Maternal employment and childhood obesity • Working mothers lead to obese children.

48. Economic Costs of Obesity and Health Insurance • The problems with not pricing insurance for weight risk. • This leads to non-optimal weights.

49. Government intervention and regulation in food • South LA • Transfats • Ag subsidies. • Import quotas on sugar.