The Impact of Obesity on the American Economy

Obesity has slowly grown into a global epidemic over the past decades. More than two-thirds of adults in the United States (US) are overweight with a third obese. The purpose of this study will be to lay out an overview of the effect of obesity on the US economy at the national level. I will be explaining three categories of economic impact that are associated with the obesity problem in the United States: transportation costs, medical costs and productivity costs. I will examine each in turn and explore the possibilities of what research is needed to close the gap of the worsening effects of obesity on the US economy. Research has identified substantial economic impacts of obesity on the economy in all the areas I identified although a more comprehensive cost analysis is still to be ascertained. The impending doom to the US economy as a result of obesity is something that has to be seriously considered and serious policy engagements have to be considered. Ongoing research has to continue until a solution is arrived at.

Introduction

Obesity has slowly become a global epidemic. Nearly 600 million people were overweight worldwide in 2008. The rate of obesity has doubled in the United States since the 1970s to over 30%, with more than two-thirds of Americans now obese. This staggering revelation cannot be pinned to a common cause but rather a plethora of factors is responsible. This paper will provide a review of research on the likely impact of obesity on the American economy. I searched through Davenport University’s online library for articles that addressed the economic impact of obesity and identified three broad areas: transportation costs, medical costs and productivity costs. I looked at each aspect closely and determine areas for future research.

Productivity costs
The effects of obesity on productivity are huge. Quite a bit has been written with a general consensus that the costs are substantial. Absenteeism due to obesity-related health issues is very common (Parhizi et al, 2012). Even when employees who are obese are present, they do not function at an optimum (Hammond & Levine, 2010). The productivity loss due to absenteeism is enormous and due to the relative ease with which it is measured, many studies have been carried out in this area. Notable, were analysis of the aggregate productivity loss due to obesity as well as estimates for several distinct sub-categories of productivity costs. Other areas that have been analyzed are; premature mortality, higher rates of disability benefit payments and welfare loss in the health insurance market (Hammond & Levine, 2010). Many studies have found a strong correlation between obesity and higher rates of absenteeism.

The measures used to identify obesity differ but the most common one used by most studies is the measurement of Body Mass Index (BMI) which is the weight in kilograms divided by height in meters squared. The results obtained from the various studies showed positive and statistically significant correlation between obesity and absenteeism. Another effect of obesity is loss of productivity as a result of obese individuals being less productive at the workplace. This sometimes is as a result of physical and mental health problems that quite common amongst obese individuals and these negatively affect productivity. One study found that obese workers had more total lost productive time than non-obese workers. Studies have shown a direct increase in disability payments and disability insurance premiums as a result of obesity. An increase in disability rolls represents higher fiscal costs to the federal government.

Direct medical costs:
Direct medical spending is the most cited economic impact of obesity. Obesity is directly tied to many health conditions such as hypertension, type 2 diabetes, hypercholesterolemia, coronary heart disease (CHD), stroke, asthma, and arthritis. Rising obesity levels as has been the case in the past couple of years therefore means an increase in diagnosis and treatment of these diseases which translate to an increase in direct medical spending. The most common ways of looking at obesity are the use of body mass index (BMI), which is weight in kilograms divided by height in meters squared. In adults, a BMI of 30.0 or greater is generally regarded as obesity, with 25.0–29.9 categorized as overweight (Wormald, 2006). Many studies have used different methodologies to estimate these costs.

They include cohort studies, case studies, dynamic models, nationwide representative surveys, regression analyses, and simulation forecasting (Parhizi et al, 2012). The general consensus from these studies is that the medical cost associated with diagnosing and treating these ailments is substantial. Many such studies used dynamic models to estimate medical care costs associated with overweight and obesity over substantial time periods. Using a dynamic multi-stage model of the relationship between BMI and risk for five diseases strongly linked to weight status, (Thompson et al) generated associated medical care costs for each stage of the model. They found overweight (BMI 27.5) to increase expected lifetime medical care costs for the five diseases studied by almost 20% compared to the healthy-weight group (BMI 22.5). Obesity increases lifetime medical care costs for these diseases by 50% above baseline, and severe obesity can almost double them.

Transportation costs:
Obesity has a direct effect on transportation costs in the US. Substantially more fuel would be used to drive the larger vehicles that are now needed to transport the overweight commuters they transported years before. This will definitely result in greater spending on fuel and greater use of fuel means greater emission of greenhouse gases. A study by (Dannenburg et al, 2004) provided the estimate for fuel used by airline companies from 1999 t0 2000. This reflected the increase in fuel used as a result of obesity in the US. Using US Department of Transportation figures for the fuel needed to transport a given weight of cargo by air, and data on the number of passenger-miles flown, they calculated that weight gain during the 1990s required approximately 350 million extra gallons of jet fuel in the year 2000. At a prevailing price of $0.79/gal, they calculated the extra airline fuel cost due to higher obesity to be approximately $275 million in the year 2000 alone.

The impact of obesity on the economy as discussed above covers a broad range of potential costs. Because different methodologies and data sources were used, comparison between the different studies is somewhat difficult. Although the points discussed do not address policy choices for reducing obesity, a couple of broad conclusions do emerge from the review. Medical costs directly tied to obesity are huge. Medical spending in relationship to obesity maybe as much as 100% higher than for healthy non-obese individuals (Hammond &Levine, 2010). According to Centers for Disease Control and Prevention, medical costs associated with obesity were estimated at $147 billion annually for adults and $14.3 billion annually for children. The costs are on an upward trajectory as the rate of obesity continues to go high. Significant losses in productivity are linked to obesity and addressing these as outlined above is a matter of immediate policy consideration. And lastly, additional economic impacts of obesity are found in transportation costs. Studies have shown that these effects are significant; however, further work is needed to evaluate the full extent and address them accordingly.

References

CDC, (n.d) U.S Obesity trends. Retrieved on January 26, 2013 from http://www.cdc.gov/obesity/data/trends.HTML

Dannenberg A, Burton D, Jackson R. Economic and environmental costs of obesity: the impact on airlines. Am J Prevent Med. 2004; 27(3):264.

Hammond, A Ross & Levine, Ruth (2010). The economic impact of obesity in the United States. Retrieved January 26, 2012 from http://www.brookings.edu/~/media/research/files/articles/2010/9/14%20obesity%20cost%20hammond%20levine/0914_obesity_cost_hammond_levine.pdf

Prhizi, S, Pasupathy, K, Steege, Linsey M. (2012). Obesity in the Workplace: Development of a conceptual framework. Retrieved January 26, 2012 from http://search.proquest.com.proxy.davenport.edu/docview/1151086809/13BAC84445E738ED47A/4?accountid=40195#