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The Socio-Economic Impact of Obesity

A third of the population is overweight, and it's proving costly for the economy and society at large. Should the government step in? No! Individual freedom is more important.

Health organizations are sounding the alarm. Today 2.1 billion people, roughly 30 percent of the global population, are overweight. This problem, which was largely limited to industrialized countries in the past, is now becoming increasingly common in developing and emerging countries as well, as incomes rise and living conditions improve. If the trend continues, roughly half of the world's adult population will be obese in the year 2030.

Governments Consider Implementing Measures to Reduce Obesity

The result is substantial costs for the economy and society. Obesity and related health problems, such as diabetes and a heightened risk of heart attack and stroke, drive up healthcare costs and reduce worker productivity, ultimately making companies less competitive. It is therefore not surprising that some people favor government intervention. If appeals to reason and educational campaigns are unable to keep people from eating at fast-food restaurants and choosing unhealthy ready-made foods, then perhaps a tax on fattening foods will do the trick. Denmark was the first country to try that approach. In 2011, it made such foods as butter, meat, pizza and chocolate more expensive in an effort to promote healthier eating. However, Denmark's tax on high-fat and sugary foods was repealed after a single year, having achieved little success in changing people's behavior. Moreover, it led to a massive loss of purchasing power to foreign countries. Yet this has not prevented other nations from considering similar measures.

Taking Matters Into Your Own Hands

But does it really make sense to regulate individual lifestyle choices? Will this be effective in preventing ill health? How much value do individual freedom and responsibility have in a world of bans on the advertising and sale of certain products? Many see the welfare state as responsible for providing comprehensive care, and while such efforts are well intentioned, they lead to a vicious cycle of unhealthy outcomes. If the government dictates what people should eat and drink, it robs them of their role as responsible citizens who accept the consequences of their behavior. When people are not required to be responsible, the need for expensive preventive measures increases. And incentives for responsible behavior are indeed diminishing. Wasn't one of the main achievements of the Enlightenment that individuals emerged from their "self-incurred immaturity" – from an inability to use their own understanding without the guidance of another?

Making Unhealthy Eaters Pay

One might argue, of course, that unhealthy eating imposes costs on the healthcare system that society is required to pay, and that the resulting harm justifies limiting individual freedom. From an economic perspective, however, there is another approach that might prevent, or at least reduce, such social costs – based on the principle that the responsible party pays. Making sure that those responsible for social costs help to pay for the relevant damages is more likely to motivate responsible behavior; this is a more effective incentive than any educational campaign. It also expands the financial basis for repairing the resulting damage. The health insurance sector's system of deductibles and private cost sharing is based on this principle. This does not entirely eliminate the problem of moral hazard; to do that, we would have to ask responsible parties to bear an even larger share of the burden. Or perhaps bicycle riding should also be banned – after all, statistics show that it is very dangerous.