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The Value of Medican and Pharmaceutical Interventions for Reducing Obesity

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

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.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 1109.

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Date of creation: 2011
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Handle: RePEc:lvl:lacicr:1109
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  1. 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.
  2. Michaud, Pierre-Carl & van Soest, Arthur, 2004. "Health and Wealth of Elderly Couples: Causality Tests Using Dynamic Panel Data Models," IZA Discussion Papers 1312, Institute for the Study of Labor (IZA).
  3. 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.
  4. 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.
  5. Shapiro, Jesse & Glaeser, Edward & Cutler, David, 2003. "Why Have Americans Become More Obese," Scholarly Articles 2640583, Harvard University Department of Economics.
  6. 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, vol. 63(2), pages 307-30, June.
  7. Emmanuel Saez & Joel B. Slemrod & Seth H. Giertz, 2009. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," NBER Working Papers 15012, National Bureau of Economic Research, Inc.
  8. Lakdawalla, Darius & Philipson, Tomas, 2009. "The growth of obesity and technological change," Economics & Human Biology, Elsevier, vol. 7(3), pages 283-293, December.
  9. repec:ner:tilbur:urn:nbn:nl:ui:12-3133117 is not listed on IDEAS
  10. Martin S. Feldstein, 2008. "Effects of Taxes on Economic Behavior," NBER Working Papers 13745, National Bureau of Economic Research, Inc.
  11. Feldstein, Martin, 2008. "Effects of Taxes on Economic Behavior," Scholarly Articles 2943922, Harvard University Department of Economics.
  12. Feldstein, Martin, 2008. "Effects of Taxes on Economic Behavior," National Tax Journal, National Tax Association, vol. 61(1), pages 131-39, March.
  13. repec:reg:rpubli:282 is not listed on IDEAS
  14. Christopher J. Ruhm, 2007. "Current and Future Prevalence of Obesity and Severe Obesity in the United States," NBER Working Papers 13181, National Bureau of Economic Research, Inc.
  15. Giertz, Seth, 2004. "Recent Literature on Taxable-Income Elasticities," MPRA Paper 16159, University Library of Munich, Germany.
  16. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.
  17. 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).
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