Saturday, August 11, 2018

The costs of obesity

This economic burden hits low-income and otherwise disadvantaged populations the hardest, exacerbating income and wealth inequality. With insulin now costing up to $900 a month, a diagnosis of diabetes can mean financial ruin for a low-wage worker, especially if it results in uncompensated sick days or underemployment. And as disposable income declines, so too does the ability to afford a nutritious diet, creating a vicious cycle of poverty and diet-related disease.
 The total impact of obesity and its related complications on the United States’ economic output has been estimated at between 4 and 8 percent of gross domestic product. Even on the lower end, that’s comparable to the 2018 defense budget ($643 billion) and Medicare ($588 billion).


  1. A nutritious diet is a significant concern, especially for our seniors. I have the privilege of working for an organization that provides meals to our seniors. We provide services to State Area Agency on Aging organizations and their Providers who receive funding through the Older Americans Act (Title III meals) to provide these meals. The Non-Profit and For-Profit partnership is an ongoing discussion. Providing the service through a For-Profit company drives efficiency (lower cost) and thus more meals, however is also focused on bottom line results. Non-profits struggle with For-Profits earning profit this is segment, yet lack the expertise to provide the meals at a lower cost. Additionally, the lack of a nutritious meal results in a highly cyclical pattern with a significant burden being placed on our healthcare system. If meals are not provided, which we fund, then we end up paying more through providing healthcare. The impact is real, but For-Profit organizations do provide a benefit that should not be ignored...resulting in more meals, better nutrition, and less trips/decreased stay in our healthcare system.

  2. This post grabbed my attention because it gets at one of my biggest questions about economics - whether it can solve complex problems or not.
    I see how we can apply various economic principals to aspects of this situation and prove the validity of the economic theories -
    Price elasticity - as the price for insulin goes up, demand remains mostly same
    Moving under valued assets to high value - charge more because people need it
    But I’m hoping for more from economics, like for economic theories to help solve this and other complex problems - ie the poor can’t afford healthcare and they can’t afford preventative care.
    Is there any insight that can be gained from economic theory in this situation where price and demand can’t agree on a transaction even when its a matter of life and death?
    I guess by Suzie’s grandpa losing his toes, then his eyesight, then his life that teaches Suzie a lesson not to eat sugar, and over time a lot of deaths may bring down demand.
    But that doesn’t seem too appealing. I want someone to pull a Henry Ford and start selling high quality insulin for pennies.

  3. This is also an excellent example of hidden costs. A $1 hamburger at McDonalds may be cheaper at the time of purchase but enough of those would lead to higher healthcare costs down the road whereas a $5 salad could ultimately end up being cheaper down the road. Perhaps there is a way the government could incentivize better food options (up to the levels projected to be dolled out in the form of higher healthcare costs). We talk a lot about how subsidies are inherently inefficient, but they can work for governments when there are externalities (like higher taxes on cigarettes so that smokers foot the bill of the secondhand smoke they are responsible for). The problem with subsidies is their unintended consequences are largely ignored or they inhibit the market making natural adjustments. However, they can be useful when there is a lack of education with those who are projected to use them. With financial subsidies and taxes, we can incentivize outcomes that are more advantageous for society as a whole; the trick to being judicious is to evaluate them as investments rather than strictly social justice.