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Who Pays for Obesity?

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Author Info

  • Jay Bhattacharya
  • Neeraj Sood

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.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.1.139
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 25 (2011)
Issue (Month): 1 (Winter)
Pages: 139-58

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Handle: RePEc:aea:jecper:v:25:y:2011:i:1:p:139-58

Note: DOI: 10.1257/jep.25.1.139
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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
  2. Trogdon, Justin G. & Nonnemaker, James & Pais, Joanne, 2008. "Peer effects in adolescent overweight," Journal of Health Economics, Elsevier, vol. 27(5), pages 1388-1399, September.
  3. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  4. B. Douglas Bernheim & Antonio Rangel, 2005. "Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers," NBER Working Papers 11518, National Bureau of Economic Research, Inc.
  5. Jay Bhattacharya & Neeraj Sood, 2005. "Health Insurance and the Obesity Externality," NBER Working Papers 11529, National Bureau of Economic Research, Inc.
  6. Jay Bhattacharya & M. Kate Bundorf & Noemi Pace & Neeraj Sood, 2011. "Does Health Insurance Make You Fat?," NBER Chapters, in: Economic Aspects of Obesity, pages 35-64 National Bureau of Economic Research, Inc.
  7. Jay Bhattacharya & Mikko Packalen, 2008. "Is Medicine an Ivory Tower? Induced Innovation, Technological Opportunity, and For-Profit vs. Non-Profit Innovation," NBER Working Papers 13862, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Parks, Joanna C. & Alston, Julian M. & Okrent, Abigail M., 2012. "The Marginal External Cost of Obesity in the United States," Working Papers 162519, Robert Mondavi Institute Center for Wine Economics.
  2. Lusk, Jayson L., 2013. "Lunch with Pigou: Externalities and the “Hidden†Cost of Food," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(3), December.
  3. Ferda Halicioglu, 2013. "Dynamics of obesity in Finland," Journal of Economic Studies, Emerald Group Publishing, vol. 40(5), pages 644 - 657, September.
  4. Schroeter, Christiane & Anders, Sven M., 2013. "Nutrition Label Usage, Diet Health Behavior, and Information Uncertainty," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151214, Agricultural and Applied Economics Association.
  5. Roy, Manan & Millimet, Daniel L. & Tchernis, Rusty, 2010. "Federal Nutrition Programs and Childhood Obesity: Inside the Black Box," IZA Discussion Papers 5316, Institute for the Study of Labor (IZA).
  6. Millimet, Daniel L. & McDonough, Ian K., 2013. "Dynamic Panel Data Models with Irregular Spacing: With Applications to Early Childhood Development," IZA Discussion Papers 7359, Institute for the Study of Labor (IZA).
  7. Papoutsi, Georgia & Drichoutis, Andreas & Nayga, Rodolfo, 2011. "The causes of childhood obesity: A survey," MPRA Paper 30992, University Library of Munich, Germany.
  8. Boris Augurzky & Thomas K. Bauer & Arndt R. Reichert & Christoph M. Schmidt & Harald Tauchmann, 2012. "Does Money Burn Fat? – Evidence from a Randomized Experiment," Ruhr Economic Papers 0368, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  9. Franz Hackl & Martin Halla & Michael Hummer & Gerald J. Pruckner, 2012. "The Effectiveness of Health Screening," NRN working papers 2012-01, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  10. Colin Baker & Ralph Bradley, 2013. "The Simultaneous Effects of Obesity, Insurance Choice, and Medical Visit Choice on Healthcare Costs," NBER Chapters, in: Measuring and Modeling Health Care Costs National Bureau of Economic Research, Inc.
  11. Parks, Joanna C. & Alston, Julian M. & Okrent, Abigail M., 2013. "The External Health-Care Cost of Obesity in the United States," Working Papers 162526, Robert Mondavi Institute Center for Wine Economics.
  12. Finkelstein, Eric A. & Zhen, Chen & Bilger, Marcel & Nonnemaker, James & Farooqui, Assad M. & Todd, Jessica E., 2013. "Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered," Journal of Health Economics, Elsevier, vol. 32(1), pages 219-239.
  13. Ian Irvine & William Sims, 2012. "A Taxing Dilemma: Assessing the Impact of Tax and Price Changes on the Tobacco Market," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 350, May.
  14. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
  15. Bailey, James, 2013. "Who pays for obesity? Evidence from health insurance benefit mandates," Economics Letters, Elsevier, vol. 121(2), pages 287-289.
  16. Alfredo R. Paloyo & Arndt Rüdiger Reichert & Holger Reinermann & Harald Tauchmann, 2011. "The Causal Link Between Financial Incentives and Weight Loss – An Evidence-based Survey of the Literature," Ruhr Economic Papers 0290, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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