Introduction “Excess body weight is one of the most challenging public health problems of our time, affecting nearly one in every three people.”1, said Dr Ashkan Afshin, one of the lead authors of the Global Burden of Disease Study in 2015. Obesity, or more precisely the pervasiveness thereof, has repeatedly been the subject of studies and its causes and possible remedies are commonly discussed in the media. From TV shows like “The biggest loser” and “Supersize vs. Superskinny”, obesity-related innovations such as bypass surgerys or aeroplane benches instead of seats to accommodate bigger people to debates on outright laws such as the New York trans-fat ban. It is almost impossible to close one’s eyes to the fact that obesity is a real and worldwide issue. But first things first, before we dive into the analysis of obesity: What exactly is obesity and how can it be measured? The World Health Organisation defines obesity as a medical condition, whereby individuals have an excess amount of body fat2. The organization characterizes an adult to be obese if his or her BMI, which is the ratio of body weight in kg divided by the square of a person’s height in meters, is greater or equal to 30.2 Looking at data of the past century, one can observe a significant increase in weight and thus obesity worldwide, particularly but not limited to developed countries. The article “Why have Americans become more obese?” by Cutler, Glaeser and Shapiro explains most of the observed rise in weight as a positive development because it has happened as weight levels were below the recommended levels for optimal health. However, it is also mentioned that, that there’s clear evidence, for example by Fogel (1994), demonstrating that even after weight levels exceeded their recommended optimum when an increase of the BMI was significantly less beneficial to health, the average weight kept on rising. The rate by which obesity rises may have receded in the past decade but the overall trend is still positive. In fact, according to the Global Burden of Disease Study (2015), which examined data on 68.5 million people in over 70 countries between 1980-2015, the worldwide levels of obesity have increased significantly in the past decades. The study indicates that the level of obesity in the countries examined is twice as high as it used to be in 1980. To put “twice as high” into perspective: According to the research of Public Health England, 14.9% of people were considered obese in 1993, that is roughly fifteen out of every onehundred people. In contrast, nowadays (as of 2015), a staggering amount of 24% of the population in the UK are classified as obese and 3% are even classified as morbidly obese.3 With all this evidence on the development of obesity – one question remains: How can this significant rise in obesity be explained? In the following term paper, I am going to explain the factors that are seen to contribute to the rise in obesity, examine who bears the cost of obesity and finally evaluate if certain forms of public intervention are justified to tackle obesity. Explaining the rise in obesity To deal with obesity and its consequences it is essential to understand which factors led to obesity or more precisely the rise thereof. There have been several theories on this by several different researchers or institutions. To examine the rise in obesity it is necessary to look at the two factors that are seen to alter an individual’s weight. A person’s weight is said to be a function of the calorie intake and calorie expenditure, the former positively influences the weight and the latter has an adverse effect on a person’s weight. Factors used to explain a change in weight must, therefore, operate on at least one of these two levers. One possible theory on the rise in obesity is based on genetics. Obesity is seen to be influenced by people’s DNA. However, various pieces of research, such as Philipson& Posner’s working paper (1999) and the research report of Rashad& Grossmann (2004), agree on the fact that the change in DNA happens very slowly – to be precise: too slow to explain the very fast and radical change in obesity levels in the past decades. The article “Why have Americans become more obese” by David M. Cutler, Edward L. Glaeser and Jesse M. Shapiro proposes some additional factors as a possible explanation. Firstly, one of the possible factors mentioned in the article is the technological change regarding food preparation. For centuries, food preparation used to be a decentralized matter, which people dealt with on an individual level. Most of the food was cultivated, prepared and eaten within a family. Technological innovations such as the possibilities of food preservation have facilitated a more centralized food production and enabled innovations such as pre-cooked meals. These technological improvements have a significant impact on the time spent on food preparation. Nowadays, people no longer need to prepare food themselves and even if they do kitchen appliances greatly facilitate cooking thus: they spent less and less time on the preparation of food. This decrease in time spent on food preparation has two effects. The first one can be explained with the standard economic intuition on the law of demand. The law of demand states that a decrease in the price of a good – here: the decrease in time – translates to an increase in the demand for that good. As mentioned previously, an increase in calorie intake positively influences an individual’s weight and thus might be a factor which contributes to the rise in obesity. Having said that, the article also considers another, a second, effect: the importance of the effect of self-control issues. The behavioural explanation of calorie consumption might differ from the rational, economic one. The article illustrates the cognitive dissonance between people’s intentions and their conflicting actions on a model of hyperbolic discounting. The model indicates that people don’t always behave in a rational health-maximizing way and attach the true decision weight to the future benefits of eating healthy today. On the contrary, people lack self-discipline and overvalue the immediate gratification they get from the consumption of unhealthy food, one example being fast-food. Technological improvements that shorten the time needed for food production increase the decision weight of immediate gratification because they lower the barrier of temptation for the individual. Ultimately, this leads to an overconsumption of food. Let’s recall: Overconsumption of calories leads to an increase in weight. Yet, Cutler et. al argue that the effect has its limits. They explain that an increased calorie intake due to the mass preparation of food is too small to be the only source of the rise in weight. Furthermore, another factor that is used to explain the rise of obesity has been depicted in the article “Economics of obesity” by Inas Rashad and Michael Grossmann: the pervasiveness of restaurants. The two argue that an increase in female labour force participation leads to a considerable decrease in time available for food preparation. Hence, people choose to eat outside their homes more regularly. Why does that have an impact on people’s weight? Because, food served in restaurants, particularly in fast-food establishments, is likely to have a higher caloric density than homemade meals. Consequently, people are more likely to consume more than they burn which ultimately leads to weight gain. The article even goes as far as to argue that this factor explains two-thirds of the increase in weight since 1980 and therefore, should be seen as the most important explanation. Secondly, Rashad and Grossmann propose another – more unexpected – factor as a possible catalyst for the rise in obesity: increasing taxes on cigarettes. One might wonder how smoking, or more precisely a mark-up on cigarette prices, would affect people’s weight but the intuition is actually rather simple. If taxes on cigarettes rise, companies must demand higher prices for the cigarettes they sell. If the prices of cigarettes sold rise, the economic intuition for people is to quit smoking or at least consume fewer cigarettes. What Rashad and Grossmann have found is that people compensate the cigarettes they forgo with food. A study by the two has reinforced their argument by proving the causality between the two factors. They have found, that the levels of obesity increase by 2% for every increase of cigarette prices by 10%. Furthermore, they propose that the increase in cigarette prices could account for one-fifth of the total increase of obesity levels. Costs of Obesity The stigma around obesity can have a strong psychological impact on obese people and greatly affect their self-esteem. Having a higher BMI can be something people feel ashamed of. Some might even go as far as completely avoiding specific day-today activities, liking going swimming or going to the gym, to avoid public ridicule. But Obesity isn’t just about appearance and vanity. It has been closely linked to a variety of negative health impacts. According to the World Health Organisation, not only the risk of cardiovascular diseases and diabetes but also the risk of getting various types of cancers is significantly higher for people with a high BMI.2 So far – so bad. The more likely people are to get sick and the higher their expected medical expenditures. This is where it’s crucial to distinguish between private and public costs. If people pay for the cost of their obesity-induced health care expenditures themselves, we can speak of private costs. However, most of today’s developed countries have public health insurance programs such as Medicare in the US or the NHS in the UK. If people are pooled together in a public insurance pool, the costs of an individuals’ health care expenses are at least partly borne by the public. Another issue in this regard is the decrease in lifetime expectancy that is caused by obesity. Jay Bhattacharya and Neeraj Sood have investigated this topic in their report” Who pays for obesity?” and their result is perfectly intuitive, but also surprisingly different for different social groups. Overall, the negative effect of obesity on lifetime decreases with age, because older people statistically have “less to lose”. More unexpectedly, one can find differences among different genders or even ethnicities. For instance, women experience a smaller decrease in the expected lifetime given an equal increase in weight. This difference is particularly interesting for public health intervention. If people are indeed affected differently, it would make sense to consider this in the process of public policymaking. From an economic point of view, it is crucial to distinguish between private and public costs. This distinction will be of importance when we analyse the possibilities of public health intervention, of which more later. In facts, the NHS (as of 2015) suggests that the costs of obesity, borne by the public health insurance, amount to 6.1 billion pounds, which is more than the UK’s governmental expenditures on their judicial system, fire service and police department combined. From a much wider point of view, the estimated total of obesity-related costs borne by the public is said to be even higher and exceed that amount by 4 times, and counting. 3 This evidence clearly shows that obesity imposes a negative externality. Not only on the people who are part of an insurance pool but even more so on society as a whole. Just like other negative externalities such as antibiotic resistance the private cost of obesity far undercuts the social cost, which leads to an “oversupply” of obesity. Public Health Intervention The margin between the social costs of obesity and the private costs is exactly where the justification of public health intervention comes into place. If obesity were a strictly personal matter and obese people would bear all the costs caused by their obesity, there would be no need for public intervention from an economic point of view. However, as previously shown, the cost of obesity not only has effects on the individual’s vanity, health and finances but also generates negative externalities for others. One possible way for the government to intervene would be by an imposition of taxes. The government could elevate the taxes on food to align the social cost with the private cost. By doing this, they would curb consumption and solve the negative externality. However, low food prices are generally positive for society. Raising food prices would have an adverse effect on society’s welfare – particularly for the poorer population because they rely on low-cost food to get their nutrition. That said, evidence of what’s working better – reward or punishment- is mixed, but weight is quite a sensitive and personal topic. So instead of elevating taxes and punishing people’s unhealthy behaviours, encouraging individuals to make healthpromoting choices might be a more sensible approach. For instance, the government could reward people by offering subsidies for these health-promoting activities. Another Issue brought to light by research is that people have inadequate information about the effects of their lifestyle on their health. Even if nothing were to stand in the way of people’s good intentions, it’s very hard if not impossible for people to correctly value how much their actions positively or negatively affect their health in the long run. To solve this problem, the government could make sure that more information is provided to the consumer. For instance, they could pass laws which force restaurants and food companies to disclose nutritional information, or they could run advertising programs or information events that inform their citizens of the health choices available to them. But still, there’s a major drawback to the effectiveness of that policy. Even if people were able to correctly allocate the number of calories to specific food items, there’s very little research on the influence of nutritional values on overall long-term health. A key thing to take from this analysis is that interventions are not strictly welfareincreasing but might entail negative side-effects on otherwise positive developments. And vice versa: Increasing levels of obesity are sometimes just a side effects of otherwise positive developments. The intervention on the issue of obesity, just like policies on many other economic issues, has to be seen as a trade-off between the benefits and costs thereof. Everything comes with a price: The increase in labour force participation by women might have led to an increase in obesity, but it is generally a positive development, which entails important welfareenhancing effects for the society as a whole. Higher tax levels on cigarettes might increase obesity levels but at the same time, they curb consumption of healthdamaging cigarettes. Higher taxes on food operate against the lower food prices which are good for society, especially for the poorer population. And so on and so forth. What we need to take from this is that public health interventions ought to be carefully considered with a benefit-cost-analysis and should only be implemented if the benefits of such interventions significantly outweigh the costs. Summary All things considered, researchers have yet to agree on a common understanding of the cause and consequences of obesity. In this paper, we have looked at a variety of different studies which mention different factors as the culprit for the rise in obesity and the evidence on the effect of these factors is mixed. The same can be said for the public health interventions. Obesity imposes a negative externality and thus public health intervention is justifiable. However, there isn’t a clear-cut solution to obesity to be found. Partly, because it’s simply not possible to eliminate obesity issues without making an impact on some other issue. And secondly, because some policies simply prove to be inefficient. People don’t per se react the way it’s intended by policy-makers and their decisions rely on a variety of personal circumstances. Further research would be necessary to combat the extensive issue of obesity. Above all, if anything should be taken from this analysis, it should be the fact that obesity is a very complex and very prevalent issue which has an impact on all of us. The issue of obesity can certainly not be expected to disappear off the radar anytime soon.