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The Marginal External Cost of Obesity in the United States

Author

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  • Parks, Joanna C.
  • Alston, Julian M.
  • Okrent, Abigail M.

Abstract

Over the past five decades in the United States both total medical expenditures and the proportion of medical expenditures financed with public funds have increased significantly. A substantial increase in the prevalence of obesity has contributed to this growth. In this study we measure the external cost of obesity, in the form of publicly funded health-care expenditures, and how this cost changes when the distribution of obesity in the population changes. We use a continuous measure of obesity, BMI, rather than discrete weight categories to represent the distribution of obesity and changes in it. We predict that a 1-unit increase in BMI for every adult in the United States would increase annual public medical expenditures by $38.7 billion. This estimated public cost equates to an average marginal cost of $175 per year per adult for a one unit change in BMI for each adult in the U.S. population. Separately, we estimate that if every U.S. adult who is now obese (BMI >=30) had a BMI of 25 instead, annual public medical expenditures would decline by $173.7 billion (in constant 2008$), or 17.2% of annual public medical expenditures in 2008. Assuming a socially optimal BMI of no more than 25, we estimate that the prevalence of obesity in 2008 resulted in a deadweight loss of $216.7 billion in 2008.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:mondwp:162519
    DOI: 10.22004/ag.econ.162519
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    Cited by:

    1. Stefan Meyer, 2016. "Obesity and Health-Care Costs in Switzerland: Dealing with Endogeneity in Non-Linear Regression Models," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(3), pages 243-286, July.
    2. Zhen Miao & John C. Beghin & Helen H. Jensen, 2013. "Accounting For Product Substitution In The Analysis Of Food Taxes Targeting Obesity," Health Economics, John Wiley & Sons, Ltd., vol. 22(11), pages 1318-1343, November.
    3. Alston, Julian M. & Okrent, Abigail M. & Parks, Joanna, "undated". "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs- Revised," Working Papers 162530, Robert Mondavi Institute Center for Wine Economics.
    4. repec:lic:licosd:41519 is not listed on IDEAS
    5. Mathieu-Bolh, Nathalie & Wendner, Ronald, 2020. "We are what we eat: Obesity, income, and social comparisons," European Economic Review, Elsevier, vol. 128(C).
    6. Alston, Julian M. & Pardey, Philip G., "undated". "Agricultural R&D, Food Prices, Poverty and Malnutrition Redux," Staff Papers 162413, University of Minnesota, Department of Applied Economics.
    7. Nathalie Mathieu‐Bolh, 2022. "The elusive link between income and obesity," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 935-968, September.
    8. Stefan J Meyer, 2016. "Obesity and Health-Care Costs in Switzerland: Dealing with Endogeneity in Non-Linear Regression Models," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 152(III), pages 243-286, September.
    9. Julian M. Alston & Joanna P. MacEwan & Abigail M. Okrent, 2016. "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(3), pages 492-520.

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