The Economics of Obesity and Related Policy

The global obesity epidemic reflects increases in caloric consumption from food and reduced energy expenditure at work. Many factors have contributed to the epidemic, including changes in technology (e.g., innovations on farms and in food processing and products), lifestyles, and women's wages and employment. Public health insurance externalities might justify government intervention, but the policy record is mixed, with no great success stories to date. Well-directed taxes on calories, sugar, or fat might be economically efficient ways of reducing obesity, as might regulation of television advertising, food labeling policies, or other nutrition education programs. Policies that induce the food industry to redesign foods may be more effective than policies that rely on inducing response by consumers. Farm subsidies and nutrition policies are largely irrelevant to the issue and modifying agricultural R&D policy is not an economical way to curb obesity. However, preventive approaches directed at children show some promise.