The Economics of Obesity
Americans got fat because of marketplace innovations—but they can help us slim down too.
By Tomas J. Philipson
June 28, 2022 6:16 pm ET
PHOTO: GETTY IMAGES/ISTOCKPHOTO
There’s an economic explanation for America’s obesity problem. High-calorie foods are cheaper than ever, and changes in the way we work have created a sedentary nation. Happily, the market is generating a solution: medical innovations that can reduce obesity. But insurers and the government are limiting coverage for these treatments because of shortsighted business calculations.
Obesity afflicts 42% of the U.S. population. Many attribute America’s weight problem to genetics, addiction or culture, but the analysis Richard Posner and I began in 1999 demonstrates that the problem is an economic one driven by technological change. Agricultural innovations have increased output and cut the price of food dramatically. Historically, it wasn’t feasible to produce all the food necessary for an obese population this large, but today we can do it easily and cheaply.
At the same time, innovations that increased productivity in other areas of the economy, such as automation and computers, have made work sedentary. When more Americans worked in manual labor, they exercised for much of the workweek and got paid to do it. Now many Americans sit as they work and have to pay for exercise in gym fees and lost leisure time. Total calories spent a year has fallen nationally as more people have shifted to white-collar jobs. Even someone who is diligent about going to the gym only gets a few hours of vigorous exercise a week, while a manual laborer rarely stops moving.
These changes have overall been hugely beneficial for the U.S. and the world, but the side effects on weight gain are regrettable and hard to combat through behavioral modification. Aggregate food consumption has fallen even during some periods of obesity growth in the U.S., such as during the postwar period. It isn’t only a U.S. issue. Many economies where food is cheap and work isn’t physically taxing are dealing with the same problem. The World Health Organization estimates that about 650 million people world-wide were obese in 2016 and the World Obesity Federation predicts that almost a billion will be in 2025.
It isn’t hard to see how obesity could become so widespread. There are strong incentives pushing Americans to gain weight. But this also means there is now a large global market for obesity treatments, which has inspired innovation.
Two drug companies have recently marketed drugs for obesity and diabetes that regulate hormones to reduce appetite. The Food and Drug Administration approved Novo Nordisk’s Wegovy in June 2021. It has been associated with an average of 15% weight loss. Eli Lilly’s Tirzepatide was approved last month to treat diabetes, but trial data show a weight loss of 22.5% after a little over 16 months. Those results beat those of many behavioral interventions, which tend to produce only short-lived effects, as the same economic incentives persist after the pounds come off.
But Medicare and many private insurers are stalling on coverage of these new innovations. Wegovy launched with a monthly out-of-pocket price of $1,627, and roughly 140 million Americans could benefit from it. Doctors and insurers tend to view obesity as a preventable disease and treatments as lifestyle drugs. But using medications to fight diseases that are technically preventable isn’t unusual. That’s how we deal with many diseases, from HIV to Covid.
Focusing on an increase in drug spending is shortsighted. Insurers and the government could see their overall costs fall if these drugs can make a dent in the obesity epidemic. The cost of treating diabetes was $327 billion in 2017, according to the American Diabetes Association. Two-thirds of that was covered by the government through Medicare, Medicaid and military medical benefits, programs that have a large impact on the national debt. Add the costs of other obesity-related health problems—heart attacks, high blood pressure, strokes and some cancers—and the cost-benefit analysis is clear.
Wary insurers should consider the hepatitis C cure Sovaldi, which entered the market in 2013. The spread of hepatitis C can be prevented through behavioral change, but in practice it doesn’t happen. Hepatitis C was and still is a common chronic infection in the U.S. When Sovaldi came on the market, insurers threw a fit. A 12-week course of treatment cost $84,000. But once they began picking it up, modeling showed that their overall costs would fall. By covering Sovaldi, insurers helped patients avoid costlier treatments such as liver transplants.
These new antiobesity medications are worth it too. Extending coverage to Wegovy, Tirzepatide and future obesity-fighting drugs will help insurers, the national debt and the country’s health.
Mr. Philipson is an economist at the University of Chicago. He was a member of the president’s Council of Economic Advisers, 2017-20, and its acting chairman, 2019-20.
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I love articles like this. All you have to do is point to countries like Japan, which is also capitalist, and also has lots of people working office jobs where they're sedentary basically all day. Yet their obesity rates are way, way, way lower. And you can't really pin it on genetics - they clearly eat far fewer calories in aggregate than Americans.
The biggest difference is cultural, since in Japan they'll openly mock fat people, but here in the US doing so is verboten.
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yet westoids keep denying that bullying works smh
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Now if only the weebs could larp their way into being attractive by following this example
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