Obesity is an unhealthy or excessive accumulation of fat that puts a person’s health at risk. Overweight is a key predisposing factor for deadly diseases like cancer, cardiovascular disease, and diabetes. According to the World Health Organisation, the number of obese people worldwide has nearly tripled since 1975. About 1.9 billion adults were overweight, with 650 million being obese (World Health Organization) (2017). Obesity prevalence in the United States was estimated to be about 36.5 percent of adults in 2011-2014, according to NHCS data. It went on to say that 40.2 percent of middle-aged adults were obese, while 37 percent of old adults were obese (Ogden, 2015). These statistics are rather disturbing a fact as the obesity prevalence rate in the US is currently higher than the 30.5 percent global adult Healthy People 2020 goal.
Huge costs are incurred in treating obesity and overweight caused diseases. The economic losses due to obesity are both direct (through direct patient payment for treatment) and indirect (through forgone resources due to the obesity-caused health conditions). Indirect causes include paying of high insurance premiums, low wage and salaries at work, and loss to the employers through sick leaves. Cawley & Chad using the VI model observed that obesity raises the annual cost of care in the United States by about the US $2,741. According to CDC statistics, about US $147 billion is spent annually on obesity-related treatment while resultant economic losses stand somewhere in the region of US $ 3.38-6.38 billion annually.
Healthy eating is a certain method for preventing obesity and reducing the prevalence of obesity-related diseases such as diabetes and heart diseases (Cawley & Meyerhoefer, 2012). High-energy foods, sugary foods and foods with high-fat contents such as However, healthy dietary patterns remain expensive thus posing a challenge in terms of affordability. About 12 percent of the population of the United States cannot afford healthy diets and as a result remains at risk of becoming obese and acquiring obesity-caused diseases. This piece illuminates the effectiveness of government efforts of taxation and subsidies in reducing obesity prevalence in the US (Finkelstein et al., 2014).
Discouraging Consumption of Unhealthy Food (Alternative Price-related Solution)
Obesity is a condition caused by the imbalance between the high energy dense foods and low energy dense foods(Finkelstein et al., 2014). To strike a balance in this energy imbalance, reducing the consumption of high-energy-dense foods is may be adopted. This may be achieved through the taxation of unhealthy foods is premised on the law of demand: holding other factors constant, an increase in the price of a commodity results in a decrease in the quantity demanded. The application of this argument suggests that increasing taxes on unhealthy goods would have the effect of increasing their prices and consequently lower their demand or consumption-this way reducing the prevalence of obesity and its related diseases (Cawley & Meyerhoefer, 2012). The policy encourages raising tax levies on high-energy foods such as sugar-sweetened drinks and fatty foods.
Taxation of unhealthy food to reduce its consumption and consequently lower the rate of obesity prevalence and overweight has been done in countries such as Hungary, Finland, and Denmark (Cornelsen et al., 2014). The usage of this taxation policy draws from the successful use of taxation on tobacco that led to the reduction of smoking by 50 percent. The effectiveness of taxing unhealthy food to reduce their consumption is limited by the inelasticity of demand for unhealthy foods. Sugar-sweetened beverages present a challenging case as it has several substitutes that may increase the risk to obesity.
Inelasticity of SSBs (Sugar-Sweetened Beverages) means that an increase in their prices causes a lesser proportionate change in their demand hence continued consumption despite increased prices and as a result little changes in obesity prevalence. In the case of tobacco, there were few substitutes and therefore elastic (Cornelsen et al., 2014). This implied that tobacco conformed to the law of demand driving away 50 percent of its consumers as a result of the increase in price due to tax. Availability of substitutes to SSBs makes it easy for consumers to easily switch from SSBs, when their prices increase, to other unhealthy foods; further making the taxation of the unhealthy foods ineffective method of addressing the obesity problem.
Encouraging Intake of Healthy Foods (Main/Best Solution)
The imbalance between high energy dense foods and low energy-dense foods may be achieved by increasing the intake of healthy foods. Studies have indicated that prices of healthy commodities are relatively higher than the prices of unhealthy SSBs (Thavorncharoensap, 2017). An example is the case of the price of vegetable (healthy food) and that of sweets and sugar-sweetened drinks (unhealthy foods). Adoption of subsidy as a way of reducing consumption of unhealthy foods is double-aged: aims to make the healthy foods affordable and also change the consumption habits or cultures of the people. Unlike the taxation policy that targeted the demand side, subsidies on healthy foods target the supply prices (Finkelstein et al., 2014).
Compared to other policy actions such as taxes, which are more regressive in their impacts, subsidies would be directed to the poor thus increasing consumption of healthy foods among the disadvantaged people in the society (Thavorncharoensap, 2017). The consequence is a reduced obesity and overweight reduction as well as a fall in the obesity-related diseases. Subsidies are also more effective than the tax method as a result of the elasticity (responsiveness of quantity demanded to price changes).
Implementation of Healthy Food Subsidy
Targeted subsidies implementation is a method used in attempting to restore the balance in high consumption of the unhealthy foods at the expense of the healthy foods. Implementing the policy entails the transfer of incentives given to high energy foods to the low energy foods (Thavorncharoensap, 2017). This will have an effect of lowering the production cost of low energy dense foods such as vegetables. Consequently, this measure would have an effect of reducing the production costs of healthy foods thereby making them affordable. As a result, the cost of healthy goods would become relatively cheap compared to the unhealthy goods; whose prices shall have risen as a result of the withdrawal of subsidy. Further transfer of Price discounts and cash vouchers from high energy dense foods to such foods as vegetables and fruits would increase their demand and consumption (Thavorncharoensap, 2017).
The rate of world obesity prevalence and the rate of obesity cases in the United States assumes a worrying. The trend in obesity is observed to assume an increasing course that threatens the world 2020 healthy people percentage goal. Increasing medical expenditure on treatments as well as employee absence losses is some of the economic losses resulting from obesity pandemics. Cost-related measures such taxation of unhealthy products and subsidizing healthy products to curb obesity and its associated diseases have proven less effective. In addition to the price-hinged approaches of controlling obesity, more integrative methods that aim at changing the behavior of the consumers would effectively change the United States populace taste for the unhealthy foods. Such measures include the provision of proper education on the need to reduce sugar-sweetened beverages, fatty foods such as chips, and reduce their predisposition to overweight and obesity.
Cawley, J., & Meyerhoefer, C. (2012). The medical care costs of obesity: an instrumental variables approach. Journal of health economics, 31(1), 219-230.
Cornelsen, L., Green, R., Dangour, A., & Smith, R. (2014). Why fat taxes won’t make us thin. Journal of public health, 37(1), 18-23.
Drewnowski, A., & Darmon, N. (2005). The economics of obesity: dietary energy density and energy cost. The American journal of clinical nutrition, 82(1), 265S-273S.
Finkelstein, E. A., Strombotne, K. L., Zhen, C., & Epstein, L. H. (2014). Food prices and obesity: a review. Advances in Nutrition: An International Review Journal, 5(6), 818-821.
Ogden, C. L., Carroll, M. D., Fryar, C. D., & Flegal, K. M. (2015). Prevalence of obesity among adults and youth: United States, 2011-2014 (pp. 1-8). US Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics.
Thavorncharoensap, M. (2017). Effectiveness of obesity prevention and control (No. 654). ADBI Working Paper Series.
World Health Organization (WHO. (2017). Obesity and Overweight factsheet from the WHO. Health.