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The Value of Medican and Pharmaceutical Interventions for Reducing Obesity

Author

Listed:
  • Pierre-Carl Michaud
  • Dana Goldman
  • Darius Lakdawalla
  • Yuhui Zhen
  • Adam H. Gailey

Abstract

This paper attempts to quantify the private and public economic value of reducing obesity through pharmaceutical and medical interventions. We find that the economic value of such treatments, in particular bariatric surgery, is large for treated patients, with incremental cost-effectiveness ratios typically under $20,000 per life-year saved. Our approach accounts for competing risks to life expectancy, health care cost savings, and other non-medical fiscal consequences. Most of the therapeutic value is generated by longer healthy life expectancy, with modest contributions from health spending, taxes and other spending. Obesity treatment generates substantial per-period savings in medical costs, but it also raises lifetime medical and annuity costs by extending life. On balance, treatment generates substantial private economic value and lowers the prevalence of obesity, but the aggregate fiscal effects on the public-sector are small.

Suggested Citation

  • Pierre-Carl Michaud & Dana Goldman & Darius Lakdawalla & Yuhui Zhen & Adam H. Gailey, 2011. "The Value of Medican and Pharmaceutical Interventions for Reducing Obesity," Cahiers de recherche 1109, CIRPEE.
  • Handle: RePEc:lvl:lacicr:1109
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2011/CIRPEE11-09.pdf
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    References listed on IDEAS

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    1. Feldstein, Martin, 2008. "Effects of Taxes on Economic Behavior," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(1), pages 131-139, March.
    2. Lakdawalla, Darius & Philipson, Tomas, 2009. "The growth of obesity and technological change," Economics & Human Biology, Elsevier, vol. 7(3), pages 283-293, December.
    3. Michaud, Pierre-Carl & van Soest, Arthur, 2008. "Health and wealth of elderly couples: Causality tests using dynamic panel data models," Journal of Health Economics, Elsevier, vol. 27(5), pages 1312-1325, September.
    4. Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
    5. David M. Cutler & Edward L. Glaeser & Jesse M. Shapiro, 2003. "Why Have Americans Become More Obese?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 93-118, Summer.
    6. Martin S. Feldstein, 2008. "Effects of Taxes on Economic Behavior," NBER Working Papers 13745, National Bureau of Economic Research, Inc.
    7. James P. Smith, 2007. "The Impact of Socioeconomic Status on Health over the Life-Course," Journal of Human Resources, University of Wisconsin Press, vol. 42(4).
    8. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    9. Feldstein, Martin, 2008. "Effects of Taxes on Economic Behavior," Scholarly Articles 2943922, Harvard University Department of Economics.
    10. Peter Adams & Michael D. Hurd & Daniel L. McFadden & Angela Merrill & Tiago Ribeiro, 2004. "Healthy, Wealthy, and Wise? Tests for Direct Causal Paths between Health and Socioeconomic Status," NBER Chapters,in: Perspectives on the Economics of Aging, pages 415-526 National Bureau of Economic Research, Inc.
    11. Ruhm Christopher J, 2007. "Current and Future Prevalence of Obesity and Severe Obesity in the United States," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-28, September.
    12. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
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    14. Goldman, Dana & Michaud, Pierre-Carl & Lakdawalla, Darius & Zheng, Yuhui & Gailey, Adam & Vaynman, Igor, 2010. "The Fiscal Consequences of Trends in Population Health," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(2), pages 307-330, June.
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    Cited by:

    1. Cawley, John, 2015. "An economy of scales: A selective review of obesity's economic causes, consequences, and solutions," Journal of Health Economics, Elsevier, vol. 43(C), pages 244-268.

    More about this item

    Keywords

    Obesity; health spending; ageing; microsimulation;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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