The Joy of Economics:  Making Sense out of Life
 Robert J. Stonebraker, Winthrop University
 

Too Fat: The Economics of Eating

            I have flabby thighs, but fortunately my stomach covers them.
                                                           .....Comedienne Joan Rivers

My pants are tight, too tight.  Especially after eating dinner, especially a large dinner. Especially one followed by a bowl of ice cream, especially a large bowl.  Especially one topped with chocolate sauce, with potato chips for crunch.

Larger pants would help, but I prefer to ignore the problem.  Surely that flesh oozing over my belt is a fleeting phenomenon that will vanish next month.  So I tell myself.  Is there self-deception afoot?  Of course.  Purchasing larger pants would explode my preferred self-image.  Larger pants are a blatant admission of one's true girth. Purchasing that next size signals resignation.  It signals defeat.  It lends a sense of finality to it all.  Delusion is more fun.

Why did this happen?  While some might plead genetic misfortune, I cannot.  I checked the family photo album.  My ancestors bear no blame.  I did it to myself.  Why?  It's economics.  It's costs and benefits, supply and demand.

Growing obesity

            Obesity is growing, and not just around my personal belt.  The percent of American adults considered officially obese now tops 30 percent, compared to 15 percent in the late 1970's.  More than 20 percent of U.S. men and 30 percent of U.S. women are actively trying to lose weight.  And, according to recent surveys, "losing weight" perennially leads the parade of New Year's resolutions. 

            Other countries suffer similar trends, but the U.S. clearly leads in excess poundage.  Americans now rate obesity as the country's second most important health problem -- behind only cancer.  Medical and disability costs related to obesity already top $100 billion per year and continue to grow.¹

Why?  The biology is straightforward, a simple matter of calories consumed versus calories burned.  We who consume more calories than we burn end up with tight pants.  America's collective belly has bulged because we eat more and we exercise less.  And that is the result of basic economic principles.²

Calories Coming In

            Quick.  What has happened to the price of food over time?  That's right.  Technology has lowered the cost of production and increased the supply of food (see graph below).  Technology drives food prices down. With better equipment, better seed, better fertilizer, and better techniques, farmers continue to produce more with less.  Since World War II farm productivity has soared at almost twice the rate in the rest of the U.S. economy.  Even though we eat out more often, the relative cost of food continues to fall.  Americans now spend only 10 percent of disposable income on food, down from almost 25 percent in 1929.  In short, food is cheap and getting cheaper.  The lower price means more quantity demanded.  American caloric consumption has risen between 10 and 15 percent over the last 30 years.³

            Interestingly, calories consumed at meals have shown no significant trend in recent decades.  We do seem to be packing away more calories at breakfast and lunch, but these have been offset by a drop in the number of calories gobbled during dinners.  Restaurant portions may have inflated, but our swollen bellies cannot be blamed on swollen dinner offerings.  In other words, the problem is not what we consume during meals; the increased calories come almost entirely from a single source: snacks.

            This makes good economic sense.  The improved technologies for growing food have been dwarfed by improved technologies for preparing foods.  Innovations in mass production, cooking, packaging and food preservation have rapidly lowered the prices of prepared foods relative to the price of raw foods, and flavor-enhancing chemicals have increased their sensory appeal. 

            Two major changes result.  First, we snack more often.  Prepared foods and microwave ovens have slashed the time and energy needed to snack.  Popcorn that once required long and vigorous shaking, singed fingers and an ugly clean-up, now can be cheaply and cleanly microwaved in three minutes.  No mess, no fuss.  Cookies that once took hours to bake now can be purchased for a few pennies.  No mess, no fuss.  Second, we snack differently.  We substitute the relatively cheap prepared snacks for raw fruits and vegetables.  Instead of an apple from the fridge, we grab a pack of crunchy cheese doodles from the vending machine.

            How about another example?  Consider the ubiquitous French fry.  Despite our pleas, my mother refused to serve them when I was young. They simply were too difficult and too time consuming to prepare.  Peel the potatoes.  Slice the potatoes.  Heat the oil.  Cook the potatoes.  Clean up the mess.  To my mother, preparing French fries was about as much fun as scrubbing and disinfecting our bathrooms (and was far less essential).  No longer.  Mass produced fries are flash frozen and shipped quickly to stores hundreds of miles away.  From there they are purchased and microzapped in mere minutes.  No mess, no fuss.  Once a rare extravagance, French fries now are America’s most-consumed vegetable.

           Government policies bear part of the blame as well.  Heavy federal subsidies to grain, dairy, and meat products have lowered the price of these foods relative to unsubsidized (and healthier) fruits and vegetables. Because U.S. subsidies to corn growers lowers the cost of corn syrup (a major ingredient in soft drinks and many processed snacks), at least one researcher claims they have accentuated the unhealthy shift in American eating habits.⁴

Calories Going Out

Increased eating could be offset by increased exercise.  Even a bag of crunchy cheese doodles could be counterbalanced by appropriate penance on a treadmill.  But don't bet the ranch on it happening.  Food may be cheaper, but exercise is more expensive.  Our great-grandparents had no need of treadmills or lap pools or rowing machines.  Work was work and everyday activities afforded ample exertion to keep their tummies tucked.  Exercise was not something one consumed at the health spa after work; it was part of work.  Sweat was not a recreational expense; it was how people earned a living. Would you be surprised to learn that when prices rise, quantities demanded fall?  Is it any wonder that we exercise less?

Current students think work is sitting in a computer lab doing a web-search for a research paper. At the same age their grandfathers were swinging a pickaxe at a coal seam 500 yards underground.  The caloric expenditures differ.  New technologies even impact play. Years ago, our parents flocked to the playgrounds and ball fields for recreation; our own offspring sit mesmerized by Nintendo games. 

Rolling down hills and splashing through creeks chasing tadpoles can be fun, but are more likely to be chosen when no affordable alternatives are available.  In the distant past, that often was the case.  Now, television, video games, and the Internet create seductive options.  The opportunity costs of outdoor adventures rise when we must sacrifice an hour with Big Bird or SpongeBob SquarePants to enjoy them. A friend recently chided his nine-year-old son for playing computer games instead of exercising outside.  The son, holding his game controller aloft, replied with a smile, "Don't worry Dad, my thumb's in great shape." 

European waistlines are less expansive than ours.  A colleague in another department chalks this up as additional evidence of Europe's cultural superiority.  I chalk it up to economics.  Europeans do walk more than Americans.  Given their greater population density and higher gas prices, this makes good economic sense.  And Europe seems less infested with couch potatoes.  But, this too has economic roots.  Sofa spuds specialize in television viewing.  While the costs of such leisure activity are low both here and abroad, the benefits differ widely.  Have you ever surfed channels in Europe?  There's nothing to surf.  With competition and content long-stifled by government bureaucrats, European broadcasts are no match for either the quality or quantity of U.S. offerings.

In other words, America's battle with the bulge does not stem from some recent depravity.  Our collective weight gain does not signal some senseless lack of self-control.  Rather, it is a rational economic response to the changing prices of foods and exercise.  Stick that on your plate and eat it.

Interestingly, medical researchers find similar results -- obesity is a natural biological response to abundant food.  The Economist recently reported on a series of experiments led by Luciano Rossetti from the Albert Einstein College of Medicine.⁵  Working with rats, Rossetti found that appetite patterns adjusted quickly to environmental changes.  Rats allowed to feast freely for three days actually pursued additional eats more aggressively than those on restricted diet. 

Rossetti's explanation comes from evolutionary biology -- and economics.  When food is abundant, animals are programmed to eat as much as possible and to store excess fat for potential famines to come.  The bodies of those rat coming off a three-day caloric coma were apparently screaming, "food is abundant, forage and eat while you can."  However, poorly fed rats hear very different biological signals.  Expecting little food, they turn off their appetites.  Why expend scarce energy to forage if no food is to be found?  In other words, when "nutrients are available, a sensible animal will hoard them.  If they are not, it will get on with other things."

The same economic forces that create collective corpulence determine how we fight it as well.  Have you ever tried to slim down?  Go ahead; raise your hand.  Mine is already in the air.  Now, think about battle plans.  Did you rely primarily on diet or on exercise?  If you said "diet," join the crowd.  That's the dominant approach.  Why?  Could it be because exercise costs us scarce time and dollars while dieting saves them?  Could it be more economics?

Hope on the horizon?

            Are we doomed?  Will our bellies balloon indefinitely?  Not necessarily.  Philipson and Posner claim that as incomes continue to rise, demands for healthier foods and exercise rise as well. Obesity is not concentrated at the top of the income distribution.  Indeed, it is less prevalent among the well to do.  Health foods and health clubs require fat wallets.  Wealthy CEO's can afford personal trainers and spinach salads at the local spa; Joe Six-Pack cannot.  Joe settles for bowling, burgers, and beer.  More wealth could mean more health.

Better education can help battle bloat, but U.S. schools have less than impressive track records.  We continue to push activity courses out of the curriculum in favor of more academic, and more sedentary, substitutes.  More importantly, colleges and universities lure students to campus with increasingly well-stocked, all-you-can-eat cafeterias.  In effect, we drive up the price of exercise and drive down the price of food.  I recently asked a group of economics majors, "what do you get when you are offered unlimited food at no extra cost?"  Their response?  "Stuffed."

Perhaps colleges will someday begin to subsidize exercise instead of overeating.  Perhaps someday increased wealth will save the day.  Perhaps someday the Chicago Cubs will win the World Series.  Should I hold my breath?   Until then…..burp.

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Notes:

1.         See "Fighting Obesity in the Public Schools," by Ron Haskins, Christina Paxson and Elisabeth Donahue, Brookings Policy Brief, Spring 2006.

2.         See The Long-Run Growth in Obesity as a Function of Technological Change by Tomas Philipson and Richard Posner, Working Paper W7423, National Bureau of Economic Research.  Much of the following discussion is based on this work.

2.         “Why Have Americans Become more Obese?” by David M. Cutler, Edward L. Glaeser and Jesse M. Shapiro (Journal of Economic Perspectives, Summer 2003, pp. 93-118) contains detailed data on caloric consumption patterns.

3.         See Gerena, Charles, "The Fattening of America," Region Focus, Federal Reserve Bank of Richmond, Fall 2004, page 23.

4.         Economist, July 31, 1999.

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Testing Yourself

To test your understanding of the major concepts in this reading, try answering the following:

1.         Explain the economic logic of why we eat more food, especially more prepared foods, than we did in the past; give examples.

2.         Explain the economic logic of why we burn fewer calories than in the past; give examples.

3.         Explain why we tend to rely on diet rather than exercise to lose weight.

4.         According to Philipson and Posner, what impact will increased economic growth have on obesity?  Why?

5.         Explain how college meal plans impact obesity.

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