Economic policies to decrease obesity (would they be effective?)

Question

According to the Center for Disease Control and Prevention, approximately 35% of adults in the United States are obese. I have done much research on the topic of economic policies to reduce obesity (I did a fat tax simulation for my undergraduate capstone thesis). I have run into three proposals:

1) Fat Tax: A fat tax is a tax on fatty foods or on fats themselves. Various papers I read on the topic simulated a tax on certain fatty foods. However, one paper proposed an ad valorem tax on saturated fats which seems like the most effective way to target fats. The biggest problem found with fat taxes is that fatty foods are very inelastic. This means that a tax won't change consumption much, so this doesn't seem like an effective option.

2) Thin Subsidy: A thin subsidy is pretty much the opposite of a fat tax. It subsidizes foods that are considered healthy. In the literature, this option by itself doesn't change behavior much, but a thin subsidy can also be paired with a fat tax. Basically, the government would use all of the revenues from the fat tax to subsidize healthy foods. When paired together, they are more effective than they are separately, but they still are not very effective in reducing calorie intake.

3) Gym Membership Tax Credit: This is a tax credit you can receive if you have a gym membership. I have not seen as much literature on this topic. Intuitively, if the tax credit is equal to or close to being equal to the cost of the membership, then people may have more incentive to get a gym membership. However, if the credit isn't very close to the cost of the membership, it may not cause people to go get memberships. Another problem with this method is that someone may get a membership and simply not go to the gym. I know most gyms have scanners now, so one remedy could be that the tax credit amount could depend on how many days you scan in.

Other than these three policies, are there any other policies being discussed to slow the trend of obesity? How effective can a policy be in reducing obesity rates?

Answer 1

Yes, sugar tax!

This is probably as controversial as tobacco tax was back in the days. If you walk through a supermarket, you will find that half of the food section is food full of sugar. Sugar is what makes you fat, not fat itself. It has been known for a while, at least since the professional sports were invented. Yet the lobby of the enormous sugar industry keeps regulators from labeling it as hazardous and taxing its use. If you are doing a research into obesity I highly recommend devoting two hours to watch That Sugar Film (2014).

I would also recommend taking a multidisciplinary approach and bringing some arguments from biochemical and nutrition fields.

Answer 2

Pierre Dubois, Rachel Griffith, and Aviv Nevo have a nice and well-executed AER paper where they argue that differences in obesity rates across countries can be due to differences in food consumption patterns. For instance, obesity rates are the highest in the United States at 30.0% (as you mentioned), compared to 14.5% in France and 23.6% in the United Kingdom.

Cutler, Glaeser, and Shapiro (2003) suggest that the decrease in the price of calories has increased caloric intake and contributed to the increase in obesity. So a policy that implies a change in price of calories may reduce obesity.

However, Pierre Dubois, Rachel Griffith, and Aviv Nevo find that

differences in prices and characteristics are important and can explain some difference (e.g., United States–France difference in caloric intake) but generally cannot explain many of the compositional patterns by themselves. Instead, it seems an interaction between the economic environment and differences in preferences is needed to explain cross-country differences.

So, this result complicates the implementation of simple and one-dimensional policies. However, their model and methods can be used to evaluate various policies. For example, imposing a tax on sugar or on fat. It's worth a try.

Answer 3

In any discussion of obesity-related policy, it helps to call out a couple of assumptions:

Assumption: A healthy lifestyle will reduce a person's weight.

Everyone and their brother "knows" this to be true, but the science behind it is sketchy, at best. As several others have pointed out, obesity is not well-understood, medically, and it is entirely possible this assumption is wrong.

Assumption: Reducing weight is desirable as an end unto itself.

Again, people tend to consider health, happiness, and thinness to be the same thing. But the science behind this is even weaker than that of the first assumption; in fact, there are actually studies that correlate mild obesity with lower overall mortality.

In light of these assumptions, the real question becomes: What are you actually trying to accomplish here?

If you simply want to reduce obesity rates, the most straightforward approach would be to subsidize bariatric surgery, which studies indicate reduces weight more than non-surgical alternatives. On the other hand, if your real goal is to reduce, say, heart disease, it is entirely possible that a tax on fat would be helpful, even if it doesn't lead to an appreciable reduction in average weight.

Answer 4

In "Uncommon Sense", by Gary Becker and Richard Posner, Posner, going off of Becker's comment, suggests that while a fat tax would be regressive, poverty and obesity are correlated more because of a lack of salience about the causation between soft drinks and obesity.

To remedy this, he actually suggests a complete ban on the sale of soft drinks with sugar to children. They have no nutritional value and sugar is very related to obesity. In his own words:

They [sugar soft drinks] have good substitutes in the form of drinks sweetened artificially rather than by sugar. And while generally parents know better than government what is good for their children, many parents who permit their children to drink soft drinks do not. Banning the sale of soft drinks to children would not have a Giffen effect and would not be much more costly to enforce than the ban on the sale of cigarettes to children, and might well be a justifiable policy measure.

I think it'd be a little harder to enforce the sale of sugar drinks to children as Posner suggests (unless parents providing sugar drinks to children was somehow also stringently punished as for providing alcohol for minors), but otherwise, I think it's a very interesting alternative policy measure he suggests.

Answer 5

Obesity is not well understood. Causes likely include nutrition (sugar versus carbs in general versus different types of fat), as you write... but also non-nutrition lifestyle, like the amount (and type, and variety) of activity, along with metabolic, hormonal and other differences between people.

All of which are heavily confounded with genetics.

If your goal is to reduce obesity, it sounds a lot more useful to focus on the outcome, not the unclear predisposing factors. Tax people based on their body mass index, or their waist-to-hip ratio, or whatever. Let taxees figure out for themselves whether they need to change their diet or their lifestyle.

The best way of avoiding obesity could very well vary between people, depending on their genetics and their overall life. If I work long hours with a long commute, I might not have the time to do a lot of sports, so I should watch my diet. If I have a lot of free time, I might choose to indulge in "bad" food but do a lot of different sports.

No, I am not aware of any work in this direction. And of course, such a tax would likely be controversial, so there would be political aspects in addition to the economic ones. Vorac warns of corruption among GPs, but I'm honestly more wary of corruption among gym owners that a gym tax credit might engender - with the additional problem that a gym membership by itself does not magically reduce your BMI, so the connection to the outcome of interest is tenuous at best.

Answer 6

Is anyone aware of a study where health insurance rates would be dependent on body fat? It would, of course, be difficult to define when someone is overweight, but lets say being vastly overweight would increase the rates.

After a short search I found this: http://www.nber.org/chapters/c11825.pdf, but it studies the effect of insurance on body weight and not the other way around.

Answer 7

Let's first examine what makes someone fat. Barring some rare (and in most cases treatable) genetic factors, weight gain is dictated by a simple formula: Calories In - Calories Out. If the result is positive, your weight will go up. If it is negative, your weight will go down.

1) Fat Tax - The silliest of all proposals. Fat doesn't really beget fat. Calories consumed does. So to cut down on calories consumed, you'd want to promote high-satiety foods

2) Thin Subsidy: Pairing with my comments above, I feel like a "Sliding Satiety Tax/Subsidy" would be more effective. Subsidize foods that fill you up. Tax the ones that don't.

You mentioned that there is somewhat of an inverse correlation between income and obesity. I'd argue that the reason behind that is that it is more expensive to eat healthy. Taxing unhealthy products (fast food, chips, some forms of microwave dinner, etc) to subsidize healthy products (fresh produce, etc) would help offset that. There also needs to be some form of subsidy on healthy fast food. Someone who works two minimum-wage jobs to take care of their family isn't going to want to make dinner; they need something that is quick, cheap, and healthy.

Above is all about reducing the Calories In part of the formula.
Below is about reducing the Calories Out part.

3) Gym Membership Tax Credit: Anecdotal Evidence - University Gyms. Where I went, the gym was completely free. But people still wouldn't go if they weren't actively trying to get in better shape or actively dating.

To get people more active, I'd suggest a few more things

1. Increased public transit. You need to walk to get to the bus/train, do transfers, etc. With a car, you can go straight from your garage to work/school and back. Include a corporate outreach that gives tax breaks to companies which sponsor employees' bus passes. Many people won't spend their own money on one, but will use one if the company offers it.

2. Better pedestrian support in cities. Safer bike lanes for commuters, bike paths and hiking trails for recreation.