Obesity rates hurt economy

Obesity rates may be negatively impacting the economy

By Jackie Marchildon, Staff Writer

Rising obesity rates aren’t just weighing down our population — they are weighing down the economy too.

Courtesy of Tobyotter, Flickr

According to the latest obesity report from the Canadian Institute for Health Information (CIHI) and the Public Health Agency of Canada (PHAC), obesity costs the Canadian economy between $4.6 and $7.1 billion per year. Lisa Corscadden, a program consultant at CIHI involved in writing the report, explains that these costs are both directly and indirectly associated with obesity.

Direct costs are associated with obesity-related illnesses, while indirect costs are related to issues like short and long-term disability. Although Corscadden would not directly affirm that an obese person requires more medical attention, and therefore more funding, the report insinuates this to be true.

Cornell University Professor John Cawley argues exactly that. His primary field of study is on health economics, specializing in the economics of obesity.

“The fact is that people that are heavily overweight or obese have higher medical care costs, substantially higher. And those elevated costs aren’t just paid by the obese person himself – they are paid for by everybody in the same insurance plan or by you, the tax payers, to the extent that people are covered by public health,” Cawley explains.

This means that there are external costs of obesity and not just costs inflicted upon the obese person themselves. This, according to Cawley, is the economic rationale that should compel the U.S. government to step in and do something about obesity.

In developed countries like Canada and the United States, obesity rates are quickly rising. In Canada, the percentage of obese adults has doubled in the last 30 years. In children and youth the dominance of obesity has tripled.

While there are obvious negative effects of obesity on individuals themselves, such an increased risk of heart disease or diabetes, the effects of obesity on the economy are not as evident.

“In a situation like this, where people aren’t fully confronted with the consequences of their actions, it is the role of the government to step in and help people confront the full costs of their actions and avoid these kinds of cost spillovers to third parties,” says Cawley.

One reason why people underestimate the cost of obesity is because people never see the counter-factual. “You don’t ever see how much savings there would be if there wasn’t the kind of obesity that we see today.” Through his research, Cawley estimates that in the U.S. there is $190 billion spent every year on obesity related illness.

The Canadian government’s report illustrated an additional problem: there are socioeconomic issues that affect Canada’s obesity rates. Jeremy Veillard, vice-president of research and analysis at CIHI, was quoted by Globe and Mail public health reporter André Picard, saying that there are many “interconnected factors” that affect the population’s obesity rates.

Following Veillard’s comment Corscadden explained, “If rates of poverty and child poverty go up, it is likely to affect obesity, in people’s ability to afford healthy food among other things.”

Given that unhealthy is cheap while healthy food and activities are pricey, can it be argued that certain aspects of the economy benefit from rising obesity rates?

Cawley understands the argument but dismisses it. He says, “There are definitely transactions that occur only because people are obese… Increased coronary bypass surgery, increased sale of anti-snoring aids, but those aren’t really beneficial to the economy.”

He compares the belief of obesity as beneficial to the economy to the belief that war is good for the economy.