Obesity and Economic Theory by ibe68982

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									                                                                                                                                                       School of Economic Sciences
                                                                                                                                                        School of Economic Sciences
                                                 School of Economic Sciences


                                                                                                               Obesity and Economic Theory
                                                                                                 Can obesity be viewed as an economic phenomenon?
                                                                                                 • Yes. People purchase food in the marketplace, as well as health club
                                                                                                     memberships, running shoes, and a host of other obesity-related products.
                     Obesity & Economics                                                         •   This view yields predictions about the sensitivity of obesity to price. Obesity
                                                                                                     rates should rise in the population when:
                                                                                                        The price of calories falls
                                                                                                       • Price of foodstuffs
                                                                                                       • Ease of access (e.g., density of fast food restaurants)
                                                                                                       • Anti-smoking campaign
                                                                                                       The cost of exercise increases
                    Trenton G. Smith, Ph.D.                                                            •   From workplace to gym?
                                                                                                       •   Urban infrastructure
                      Assistant Professor                                                              •   Traffic congestion
                WSU School of Economic Sciences                                                        •   Air pollution
                       December 7, 2007                                                          •   But… Though predictions (mostly) verified, they explain only small part of
                                                                                                     trend (14% obese in U.S. in 1978; 32% by 2002).
                                                                                                 •   A richer story emerges when role of information and psychology considered.
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                                                      School of Economic Sciences                                                                      School of Economic Sciences
                                                       School of Economic Sciences                                                                      School of Economic Sciences



              Economic Psychology and Obesity                                                                   Health Effects and Food Demand
Two “psychological” phenomena may be key to understanding what drives the economic
  decisions that lead to weight gain: “stress” and dietary habit formation.
• Stress: Non-specific psychological “stress” long known to affect dietary intake                    Q: What would be the effect on the demand for agricultural
     A specific form of economic distress causes weight gain: economic insecurity                     commodities if consumers shift to a healthier diet?
     Dramatic changes in household-level economic insecurity in past three decades:
       • 401(k) shifts pension risk to individuals;                                                    Answering this question requires basic knowledge of modern
       • health insurance enrollment down;
       • involuntary/indiscriminate unemployment events (layoffs) more common                          nutrition science. [book recommendation: Eat, Drink, and Be Healthy
      Does this explain obesity trend? Hard to measure, but changes in health insurance                by Walter Willett]
      markets alone can explain 9% of increase in incidence of obesity (Smith, Stodddard,
      and Barnes 2007).                                                                                The importance (to producers of agricultural products) of
•   Habits: But don’t consumers just eat what “tastes good”?
      Yes, but…dietary habits are habits.                                                              consumer concern for health can be seen in the recent impact
      Dietary habits determined largely in childhood                                                   of low-carbohydrate diets (Atkins, South Beach…) on the
      Determinants are well-known: imitation/social exposure, chemical cues (five basic
      tastes), postingestive experiences (nausea, satiety, etc.)                                       demand for beef, potatoes, grain crops, etc.
      In particular, these determinants are well known to the fast food and snack food
      industries (Smith 2004).                                                                         Diet fads come and go, but nutrition science increasingly
      Trend? Again, hard to measure, but evidence is suggestive.                                       points to the critical impact of food processing technologies
      If quality (not just quantity) of calories consumed is important for body weight (and
      health), it makes sense to consider implications of shift to healthier dietary habits. 3         on health outcomes.                                                             4




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                                                         School of Economic Sciences                                                       School of Economic Sciences
                                                          School of Economic Sciences                                                       School of Economic Sciences




       Carbohydrates and Health: Milling Technology                                             Carbohydrates and Health: Glycemic Index
    For thousands of years, the goal of the miller has been to isolate the endosperm
    from the germ and the bran. Milling technologies have become increasingly                   All Carbs Are Not Created Equal. There are many ways of
    efficient at accomplishing this task:                                                       classifying carbohydrates in the diet: simple vs. complex, added
      23,000 BC:      Mortars                                                                   (sugars) vs. naturally occurring (sugars), processed vs.
      8,000 BC:       Various Non-Rotary Millstones
      5,000 BC:       Papyrus Sieves
                                                                                                unprocessed, fructose-rich vs. glucose-rich, and so on.
      800 BC:         Quern Stones
      1100 AD:        Windmill
                                                                                                The dimension most relevant to health (and weight) outcomes,
      1769 AD:        Steam Engine                                                              however, appears to be the glycemic response induced by a given
      1808 AD:        Screw Conveyors and Bucket Elevators                                      food.
      1878 AD:        Roller Mills
      1900 AD:        Middlings Purifiers                                                        “glycemic response” refers to the increase in blood sugar
      1960 AD:        Air Classifiers
    Unfortunately, the germ contains most of the vitamins, protein, and fatty acids,
                                                                                                following ingestion of a carbohydrate-rich meal. Foods vary in
    while the bran contains all the fiber. Today’s (endosperm-rich) white flours are            their ability to induce hyperglycemia, and a glycemic index (GI)
    tasty and slow to spoil, but are not as healthy to eat as simple stone-ground               can be estimated for a given food by comparing the strength of the
    flour.                                                                           5          glycemic response to that induced by pure glucose (GI=100).       6




                                                         School of Economic Sciences                                                       School of Economic Sciences
                                                          School of Economic Sciences                                                       School of Economic Sciences



                                                    Carbohydrates and Health:
Glycemic and Insulinemic Responses
  After Ingestion of Carbohydrates                 The Metabolic Roller Coaster
                                                                                                   Carbohydrates and Health: Determinants of GI
                                              Low GI: After eating a low-GI carbohydrate
                                              meal, blood sugar increases, then decreases
                                              gradually (as the pancreas responds by                                                       Factors that influence glycemic
                                              secreting insulin into the bloodstream).                                                     response:

                                              High GI: After eating a high-GI carbohydrate                                                    Fiber content
                                              meal, blood sugar increases dramatically, then                                                  Cooking time
                                              decreases dramatically (as the pancreas
                                              responds in kind…), causing low blood sugar,                                                    Chewing speed & duration
                                              which induces another set of counter-balancing                                                  Individual sensitivity
                                              physiological responses, including feelings of
                                              hunger and/or cravings for sugar.                                                               Other foods included in meal
                                                                                                                                              Particle size (of processed food)

     Ludwig, D. S. JAMA 2002;287:2414-2423.                                                 7                                                                                 8
                                                                                                  Ludwig, D. S. JAMA 2002;287:2414-2423.




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                                                   School of Economic Sciences
                                                    School of Economic Sciences




   Carbohydrates and Health: Commodity Demand
Q: What would be the effect on the demand for agricultural commodities if consumers
 shift to a healthier diet?
General theme emerging from modern nutrition science:
               more processed=less healthy
 Consumers who choose a “healthier” diet would likely
    Consume fewer calories
    Spend more on food
    Eat less highly (or at least differently) processed foods: low-GI, no trans-fats, more
   Omega-3 Fatty Acids(?), less HFCS(?).
    Buy local?
    Could mean bigger share of food dollar going to the farmer.
 Effect on commodity demand?: Depends on
    Processing technologies (wheat: less; potatoes, corn: more; beef: fatty acid
   composition)
    Government policy response (education? labeling? junk food taxes? marketing
   subsidies/restrictions?).                                                                 9




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