Friday, March 31, 2006

The Economics of Obesity

The new NBER Digest is out, covering these topics:

(1) Economic Explanations of Increased Obesity
(2) Medicare and Its Impact
(3) Is There a Housing Bubble?
(4) What Undermines Aid's Impact on Growth?
(5) The Effects of Communism on Popular Preferences

Here is the skinny on obesity:

The authors...note that technological change has reduced the amount of physical effort that people expend in their jobs, and that "the ready availability of inexpensive restaurants has not only caused people to consume more, but has made them less active - less likely to prepare food at home or travel further distances to obtain a healthy meal." The cigarette tax and smoking prohibition laws are included to account for the possibility that the increase in U.S. BMI may be related to the success of public health efforts to decrease smoking. When people quit smoking they often gain weight.

Two lessons:
1. People respond to incentives. When gaining weight is cheaper, people gain more weight.
2. Government policies can have unintended consequences.

Question for ec 10 students: What do you think about a "fat tax" to encourage healthier eating? Feel free to post your opinion in the comments section.