Is Obesity a Problem?

There is much evidence that has shown that over time for most developed countries, people have been getting fatter. Obesity rates are especially high in the U.S., but a trend towards increased obesity is similar in most developed countries. Are obesity rates “too high?”

In a recent NBER working paper, Philipson and Posner argue that obesity rates may be too high if one’s goal is to maximize health. However, the authors wisely note that:

“From an economic standpoint, the proper maximand is of course not health but utility, in which good health is only one argument. Rational persons constantly trade off health for competing goods, such as pleasure, income, time, and alternative consumption possibilities. Intervention that considers such tradeoffs unworthy of consideration is paternalistic. This is recognized in such areas as highway safety—no one proposes to shut down highways in order to reduce traffic deaths, or to force automobile manufacturers to equip their cars with engines that limit top speed to 25 miles per hour—but the principle that legitimizes trade-offs involving life and health is equally applicable to obesity.”

One argument in favor of trying to reduce obesity is that obese individuals have higher annual medical expenses. With the public–through Medicare and Medicaid–footing much of this bill, maybe the government should enact policies to reduce these “insurance externalities.” Philipson and Posner respond by stating that these insurance externalities

“…are an argument for experience-rating health insurance, so that groups with above-average expected medical expenses pay higher insurance premiums…There is no reason to single out obesity as a basis for higher insurance costs, since there are other, equally or more, risky “life style” choices that increase expected medical costs.”

• Thomas Philipson and Richard Posner (2008) “Is the Obesity Epidemic a Public Health Problem? A Decade of Research on the Economics of Obesity” NBER WP #14010.