Gabrielle Kohlmeier

Forward Engagement Paper 3

February 13, 2005

Obesity: A Weighty Future Contingency of Interest

Every time period is shaped by a number of certain forces or major events. The effects of these influencers may remain confined to one field, have ripple effects that lead to changes in other areas, or be forces of such substantial mass and importance that they immediately affect society as a whole through their impact on economics, security, governance, or science and technology as a whole. The most significant of these eventualities, those that appear poised to attain sufficient mass to affect the future, can be termed future contingencies of interest (FCIs).

One of the major contingencies of interest in the realm of economics, both for the United States and the rest of the world, will be the rising cost of health care in the next 15-20 years. Health care costs will balloon as a result of various expectations, including increased average life span of individuals, particularly Americans, availability of new, expensive medical procedures and drugs, and possible epidemics of communicable diseases, such as HIV/AIDS, SARS, or other similar diseases. All of these factors could, and likely will, have serious economic effects, particularly in terms of health care costs. Obesity differs from these, however. With regard to obesity, the question is not whether or not it will have serious economic repercussions—it indubitably will. The question is rather one of what the magnitude this health problem will be with respect to the economy in the next 20 years and beyond. This paper will present the current and projected prevalence of obesity, the array of health problems that spring from this disease, and its economic costs. Finally, the paper will explain why obesity is almost certain to be a major economic factor for the indefinite future.

Obesity rates began dangerously rising in the United States in the 1980s, and continue to grow precipitously both in the United States and around the globe. Approximately one third of Americans are now considered obese[1], a number which more than doubled between 1980 and 2000.[2] The upsurge in childhood obesity is perhaps even more worrisome: since 1988, obesity of children between the ages of 6 and 19 has increased by more than 40 percent (See table 2). The United States is, in fact, the most obese country in the world (the country with the highest rates of obesity among its population), but it is by no means the only country affected. Contrary to many expectations, the problem is not even limited to highly developed countries. According to the World Health Organization, obesity threatens more people in the developing world than undernourishment.[3] Countries such as Mexico, Togo, and emerging economic heavyweights such as China and Brazil already suffer from higher rates of obesity than malnourishment, and obesity rates are still rising. According to obesity experts, where obesity was mainly a disease of poor people in rich countries, the burden of obesity in the 21^st century is shifting to include poor countries. Projections into the future estimate that obesity will continue to rise, reaching record proportions by 2025. In the United States, more than 50 percent of the population is projected to be obese twenty years from now (See graph 2).

The importance of these obesity prevalence trends and projections is made clear by looking at the effects of the disease. What makes obesity important enough to be deemed a future contingency of interest is not its global prevalence, especially in the United States, but that it also causes more than 30 other costly diseases, from cardiovascular disease and an array of cancers, to clinical disorders and exceptional complications of injuries and infections following wounds.[4] In fact, obesity has been shown to cause more health problems than smoking or drinking, with obese individuals 30-50 percent more likely to have chronic medical problems than those who smoke or drink heavily. The effects of obesity are similar to twenty years of aging, and obesity alone has been shown to cut up to 13 years off a person’s expected lifespan.[5] As for childhood obesity, more American children are now killed by obesity than gun violence.[6] Altogether, obesity now kills approximately 400,000 Americans of all ages each year.[7]

Economic factors actually seem to be among the strongest— though by no mean the only—factors contributing to the tremendous rise in obesity over the last 25 years. Thus economic factors are of particular relevance, not only for this paper, but also to understand the factors that aided the rise in obesity rates. This examination can provide indications to whether the surges are likely to continue in the future, or if the economic factors were temporary forces that will disappear, making it less likely that obesity will rise to the projected levels in the future. There have been two major economically-related forces that researchers have attributed with the rising obesity rates. Technological advances have contributed significantly to the obesity upsurge. Yet obesity was not merely a result of less activity required of humans as machines have continually replaced what used to require human physical exertion. Even more important has been the fact that technological advances have made food production, particularly of high calorie, processed foods dramatically less expensive. Economies of scale actually promote greater production to further decrease costs to companies. Technological advances have also led to higher incomes that have enabled individuals to consume greater amounts of food.[8] The second major obesity driving force has been the decrease in the cost of high calorie (high fat, sugar, processed) foods relative to the cost of other foods and increased popularity of margin cost pricing, more commonly known as super-sizing.

Obesity rate increases may have thrived due to economic factors, but the US economy on balance is not mutually benefited. While a few, select industries, such as the diet/weight-loss industry, plus-size clothing manufacturers, and of course providers of high-calorie foods and beverages will likely benefit as obesity rises, the economic implications for the rest of the United States will become quite dire. According to the US Surgeon General, the direct and indirect costs of obesity in 2000 already totaled a whopping $117 billion. Direct medical costs may include preventive, diagnostic, and treatment services related to obesity. Indirect costs relate to morbidity and mortality costs. Morbidity costs are defined as the value of income lost from decreased productivity, restricted activity, absenteeism, and bed days. Mortality costs are the value of future income lost by premature death.[9]

The direct costs of obesity are only partly incurred by obese individuals themselves. A recent Mayo Clinic study found that obese men spend roughly $80 per month on prescription drugs, 3.5 times the amount spent by their normal weight counterparts.[10] Two other recent national studies both found that medical costs incurred by obese adults between the ages of 18-65 are 36 percent higher than their normal-weight counterparts.

The largest amount of economic costs stemming from obesity, however, is borne by the general public, both through taxes and higher health insurance costs. Two economic papers utilizing econometric approaches to assess costs of obesity found that the government pays for roughly half the total annual medical costs attributable to obesity. Medicare covers many obese individuals, and Medicaid recipients have a 50 percent higher prevalence of obesity. The average cost tax payers pay to cover obesity-related medical expenditure under these two programs was calculated at $175 per year.[11] Individuals also pay for obesity-related medical expenses in other ways, such as higher health-insurance premiums.

Businesses also bear costs due to increased health insurance premiums, but that is not the only obesity-related cost businesses incur. A number of different studies show that obese individuals are between 1.61-1.74 times more likely to have a moderate or high number of absences from work due to illness than their normal weight coworkers. The cost of absenteeism was estimated at approximately $2.4 billion in 1998. In addition, obese individuals, particularly women are most likely to work in low-paying occupations and are largely excluded from managerial or professional positions. Women who were obese also earn lower wages than their counterparts, though the same has not been found for men. Another study of baby boomers found that the net worth of obese individuals was roughly half that of normal weight counterparts.[12] The loss of productivity and earning potential affects not only individual people and business, but also the economy as a whole. As obesity rates rise, there will be a greater loss of potential, both in terms of net worth and lost worker productivity.

The implications of obese individuals making up fifty percent or more of the US population in the next 15-20 years will have staggering implications for the United States economy. It is particularly important to note that the number of extremely or morbidly obese Americans is increasing at an even greater rate than obesity in general. Morbid obesity carries even greater medical and morbidity costs. Medical expenditure, which already makes up XX amount of GDP, will rise even more as newer, more costly drugs and procedures are developed to help those who can afford them. Yet the poor Americans, who are also more likely to become obese, and then as obese individuals more likely to earn less than their non-obese counterparts, will be hard pressed to afford many of the obesity drugs and medical procedures. Thus it seems likely that obesity will further fuel further economic inequality between the lower and upper-middle class in the US. The very poor may be able to receive government aid to treat their diabetes or other obesity-induced diseases, which will put increasing pressure on government health spending. According to experts, the medical costs alone will “strain the health care system and economy in the years to come.”[13] The loss of productivity may also cause economic problems, as low-income, manual labor workers are in precisely the economic class that will have the highest increase in obesity rates. Immigrants, which provide much of the low-wage labor that the United States thrives on, will also be affected, as recent studies have shown that the longer immigrants remain the US, the more they closer they come to matching US rates of obesity.[14] Thus, the morbidity costs will increase as obesity increases. Mortality costs may not be as costly, as the lifespan of obese individuals may be extended to equal that of their normal weight counterparts. As a result, however, the drugs and other medical costs that will allow them to avoid premature death will be another cost contributing to increasing health care costs for the government and health insurance premium payers.

Clearly, the effects of the rising obesity rates in the United States will require significant spending, public, corporate or private, to deal with the tremendous medical costs. In addition, the morbidity costs and loss of potential wealth and productivity that are lost as obese individuals are relegated to non-managerial and professional jobs may rival those onerous health care costs. It may not be as clear that the US actually will be saddled with the burdens of obesity costs. A number of developments may seem likely to mitigate, if not prevent obesity from actually developing into a massive effect on the economy. Technological developments may develop cures for a number of the diseases caused by obesity, or they may increase productivity and make up for the loss of productivity resulting from obesity increases. Scientific advances—nanotechnology, genetic developments, or pharmaceutical discoveries— may be able to prevent obesity itself or help obese individuals lose excess weight. Even without scientific or technological developments, the US may recognize the costs it will face if obesity rates continue to rise, and move decisively and actively to prevent obesity from becoming an overwhelming economic burden.

Though these or other developments could intervene, the possibility of such developments making significant impact to prevent obesity from having significant economic effects is quite slim. First, in terms of scientific advances, it is unlikely that these advances, even if they are successfully developed will be inexpensive enough to be available to the segment of the US population that will need them the most—the poor population that is most likely to become obese, and is least likely to have adequate health care to cover costly drugs or medical procedures. As for technology replacing workers, that very technology has actually contributed to the recent increases in obesity, and thus may further exacerbate the problem.

Second, the likelihood of the US acting to prevent obesity through any compulsory measures also seems slim in the near term. Obesity is largely viewed as a personal responsibility, not a public issue.

Third, there are strong economic forces that are pushing Americans to continue to consume, if not increase consumption, of high calorie (highly-sugary, fatty, and/or processed) foods. In light of recent legislative moves that seem to exonerate these companies from any culpability or future litigation, it seems that the political will does not exist to intervene in the market to try to bridle those forces.

Finally, and most importantly, obesity is a future contingency of interest because even if the projections regarding American obesity not become reality, the obesity rate does not rise at all, or the obesity rate drops, current obesity rates will have long term economic effects. The tremendous rise in childhood obesity virtually seals the certainty of future economic effects as a result of the disease. Though many obese children are already suffering from obesity-induced diseases such as type-2 diabetes, the majority of obese children will not suffer severe effects until they become older and their immune systems become less resilient and resistant to obesity-caused diseases. Adults who are becoming increasingly obese are suffering greater health problems that costs a great deal in terms of health care costs that will persist into the future, and in terms of the lost potential previously discussed.

The rising obesity rates over the past 25 years have created a problem that will not disappear over the next 20 or 25 years. In fact, many obese individuals, or even those who were formerly obese, may only have begun fully suffering the effects of obesity in 2025. Based on the both the size of the problem and the many resulting economic ramifications, obesity itself must be seen as a future contingency of interest.

Sources

Centers for Disease Control Web site

US Surgeon General Web site

Clinical Guidelines on the Identification, Evaluation, and Treatment of Overweight and Obesity in Adults, NHLBI, 1998.

“Economic Growth is Boosting Women’s Obesity in Poorer Nations,” Women’s Health Weekly, Jun 24, 2004, p. 110.

Ruhm, Christopher, Eric A. Finkelstein, and Katherine M. Kosa.“Economic Causes and Consequences of Obesity,” Annual Review of Public Health, forthcoming Vol. 26, 2005 (Available as Review in Advance as of Nov 1, 2004), 19pp.

Thatcher, Richard. “Political Economy of the ‘War On Fat’ “Canadian Dimension, May/June 2004, p. 30.

Figure 1: Age-Adjusted Prevalence of Obesity in Americans Ages 20-74 by Sex and Survey (NHES 1960-62; NHANES:, 1971-74, 1976-80, 1988-94 and 1999-2002)

Table 1

Increase in Prevalence (%) of Overweight (BMI > 25), Obesity (BMI > 30) and Severe Obesity (BMI > 40) Among U.S. Adults.
	Overweight (BMI > 25)	Obesity (BMI > 30)	Severe Obesity (BMI > 40)
1999 to 2000	64.5	30.5	4.7
1988 to 1994	56.0	23.0	2.9
1976 to 1980	46.0	14.4	No Data
Source: CDC, National Center for Health Statistics, National Health and Nutrition Examination Survey. Health, United States, 2002. Flegal et. al. JAMA. 2002;288:1723-7. NIH, National Heart, Lung, and Blood Institute, Clinical Guidelines on the Identification, Evaluation and Treatment of Overweight and Obesity in Adults, 1998.

Table 2: Increase in Childhood Obesity in the US, 1976-2000

Prevalence of Obese Children (Ages 6 to 11) at the 95th percentile of Body Mass Index (BMI) 1999 to 2000 15.3% 1988 to 1994 11% 1976 to 1980 7%

Prevalence of Obese Adolescents (Ages 12 to 19) at the 95th percentile of Body Mass Index (BMI) 1999 to 2000 15.5% 1988 to 1994 11% 1976 to 1980 5%

Source: American Obesity Association

Figure 2: Projected prevalence of obesity in adults by 2025

Source: International Obesity Task Force

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[1] Obesity is defined as a Body Mass Index greater than 30, or approximately more than 30 pounds overweight for a person 5’4” tall. See figure 1 and table 1 on the rising rate of obesity in the United States.

[2] National Health and Nutrition Examination Survey, National Center for Health Statistics, Centers for Disease Control and Prevention, 1999

[3] “Waist Not, Want Not,” Foreign Policy, September/October 2003, p. 14-15.

[4] Richard Thatcher, “Political Economy of the ‘War On Fat’,” Canadian Dimension, May/June 2004, p. 30. Other diseases obesity engenders include musculoskeletal conditions, heart disorders, impaired immune response, cancer of the esophagus, gastric cardia cancer, endometrial cancer, colorectal cancer, renal cell cancer, breast cancer, prostate cancer, poor female reproductive health, gall-bladder disease, gout, impaired respiratory function, liver disease, urinary stress incontinence, pancreatitis, sleep apnea, lower back pain, foot problems, and arthritis.

[5] Natasha McDowell, “Obesity’s Effect on Lifespan Calculated,” New Scientist, Jan 8, 2003.

[6] Surgeon General's Call to Action to Prevent and Decrease Overweight and Obesity, 2001.

[7] Centers for Disease Control and Prevention, 2004.

[8] Christopher Ruhm, Eric A. Finkelstein, and Katherine M. Kosa.“Economic Causes and Consequences of Obesity,” Annual Review of Public Health, forthcoming Vol. 26, 2005 (Available as Review in Advance as of Nov 1, 2004), p. 14.6-14.8.

[9] As defined by the Centers for Disease Control

[10] “Obesity Carries Extra Health-Care Costs,” National Health Information Center, US Department of Health & Human Services, Nov 7, 2004.

[11] Ruhm, Finkelstein, Kosa, p. 10.

[12] Jay L. Zagorsky. “Is Obesity as Dangerous to Your Wealth as to Your Health?” Research on Aging, January 2004, pp.130-152.

[13] Nanci Hellmilch, “Obesity Rate Could Reach Nearly 40% in Five Years,” USAToday, Feb 7, 2003.

[14] “Fat Chance for US Immigrants,” New Scientist, December 18, 2004.