Flubbery economics of blubber

I’ve just seen this on obesity economics by Bruce Hollingsworth and Katharina Hauck (HH) at Monash University’s Centre for Heath Economics. There is not much research on this issue in Australia, despite the fact that Australia is unique among countries in having a National Obesity Task Force. Unfortunately the HH study, while a start, does not offer much that is new.

HH see obesity as an important public health concern not well served by rational choice theory. They make some very preliminary observations on Victorian experience. To sumnmarise: 16% of Victorians are obese while 48% are overweight. The extent of obesity is educated-related with 21% of those with only primary education being obese but only 14% of those with tertiary education being so. There is also a relation with income: 18% of those with incomes of less than $20,000 per year are obese compared to 14% of those earning more than $60,000. All this is well-known.

HH also point out that obesity has health costs, psychological costs in terms of poor body image and productivity costs. Again well-known – it has, for example, been estimated to contribute to 12% of the massive US health care budget.

Rational choice models – economic models that suggest people do the best they can for themselves – must suggest that people are becoming obese because they want to – this might be because food prices have fallen and that activity levels overall (those in workplace plus through exercise) have fallen due to technological innovation in the workplace. But HH reject these models claiming that it is socio-economic constraints and market failures that foster obesity.

To support their analysis they consider the Victorian Population Health Survey with a sample of 7,500 households. Why do their regression results show? Not a lot that is interesting or new in my view and nothing that contradicts rational choice explanations. There are relations between obesity and age, marital status, country of origin etc but no links between interesting economic or social policy instrument variables and obesity.

HH then go on to consider the issue of policy interventions with various forms of market failure such as asymmetric information. The only real market failure they come up with is information provision failures on such things as labeling the nutritional contents of foods or suggesting desired exercise programs. You can apply this sort of public goods reason for intervention to any economic issue. They again repeat what we all know that health markets generally do not operate efficiently and so make a standard case for additional information provision and - even - taxing harmful foods. They even reiterate old clichés about ‘prevention being better than cure’. This is all true but because it is well-known, not very helpful.

In my judgment, high quality research into the economics of obesity in Australia remains to be done.