Legal Commentary

By Gary Becker

The Growth in Obesity-Becker
The weight of the average male and female began to grow sharply around 1980 not only in the United States but also in all other developed countries. When average weight grows, the rate of obesity-usually defined by a biomass index (BMI) of over 30- grows at a much faster rate. As Posner indicates, two of the important causes of the increase in weight and obesity are the rapid decline in the price of fast and fatty foods that began about 30 years ago, and the growth in sedentary activities, mainly driven by the expansion of television, and the development and spread of personal computers and the Internet.
Posner believes that consumer ignorance of the health consequences of their eating and sedentary activities also contributed significantly-particularly since lower educated persons have the highest incidence of obesity. I am doubtful, however, if ignorance of these effects has been important. Poor information is a last resort crutch that economists are increasingly relying on to explain consumer behavior that they fail to explain in other ways. For example, "behavioral economists" are arguing that many consumers run up large credit card debts in good part because these consumers are not aware of the level of interest payments, and that poorer borrowers took out mortgages during the housing boom years of a few years ago because they could not calculate the difficulty of meeting monthly payments. In both these cases, virtually no evidence is presented to support this thesis. In the eating case, most reasonably well-executed studies find quite small effects on eating patterns of providing nutritional and other information about foods.
Continuing with an emphasis on the relation between obesity and low education, Posner argues that heavy discounting of future consequences induced many less educated teenagers and adults to overeat relative to the adverse consequences on their future health once cheap fast foods became available. Perhaps insufficient attention to future health consequences has been important; although many other possible explanations are available for why more educated persons eat smaller quantities of fast foods and get more exercise.
Another change, however, also emerged around 30 years ago that provides a fully rational forward-looking incentive to pay less attention to the future health consequences of overeating and weight gain. I am referring to the beginning of the age of blockbuster drugs that help control blood pressure, cholesterol, and erectile dysfunction, help treat if not cure various cancers, and provide other protections against some serious health consequences of being overweight. The expectation of even further progress in the future, such as in treating the worst aspects of diabetes, would rationally reduce present concern about weight gain and the future consequences of heavy eating of rich foods and low levels of exercise.
This argument does not presuppose that persons with less education and even the more educated are keenly aware of these developments in drug therapy, or that they could articulate this as a reason for their eating patterns. All that is required is that most people have a loose awareness of the growth of drug therapy for many diseases, and that such awareness helps relax their concerns about gaining weight. To me that is a reasonable presumption that would producen rationally heavy "discounting" of the future health consequences of becoming obese.
Another argument made for public policy to discourage obesity is that obese individuals make demands on the health care system that raise the cost of this system to others. This argument is not persuasive to the extent that it relates to private health insurance. If obesity makes as large demands on medical care as claimed by the Centers for Disease Control and Prevention study cited by Posner, it would be in the self interest of insurance companies to charge significantly higher premiums to overweight persons since that would better align their revenues to the cost of treating obese persons. Moreover, it is easy to use weight as a determinant of insurance premiums since weight is easily measured in any physical exam required to get insurance. That private insurance companies do not use weight as a premium determinant means either that they do not consider the effects of obesity on their cost to be that large, or that they are afraid they will be accused of discrimination if they do use weight as a criterion. Perhaps the health bill in Congress would make it easier for insurance companies to punish overweight persons relative to thin ones.
Since taxpayers finance Medicare and Medicaid, these organizations do not have the same incentives as private insurance companies to penalize overweight persons for their excess weight. The cost imposed by overweight persons on public expenditures has been one of the justifications for taxes on fast foods and soft drinks since these are important inputs into weight gain. However, such a tax would be inefficient, perhaps highly inefficient, because it targets all persons who eat fast foods and drink sodas, yet most of these persons do not become obese. It is akin to taxing the sale of wines and liquor to reduce drunk driving, even though most drinkers do not drive drunk and cause accidents. This distinction between taxing inputs into drunk driving and taxing drunk driving explains the tendency to heavily punish people who are drunk, especially when they cause accidents.
The corresponding approach with regard to weight would be for Medicare to institute surcharges for very overweight persons (or discounts for thinner persons) and for Medicaid to impose various costs on obese persons who use their services, such as requiring them to spend time at educational classes on the control of weight, or to pay a fee for any Medicaid services they receive. Such charges and fees probably would run into strong political opposition, but they point the way to more appropriate ways to discourage obesity that causes medical problems that utilize public funds.

Full post as published by Becker-Posner Blog on August 02, 2009 (boomark / email).