The economics of ending obesity

According to the World Health Organization, roughly one in every eight people are obese. The number of people with a weight problem rises to 43% of the world’s adult population when the definition is broadened to those who are either overweight or obese. Obesity has grown in scale as standards of living have improved; and it threatens to create significant health problems as a person ages. Obesity also contributes to the global sustainability crisis; it is a specific form of food waste (as unnecessary calories are being consumed). It is also an economic cost to a country, hurting labor force participation and productivity, and diverting medical and research resources toward dealing with otherwise preventable illnesses such as heart disease, stroke, and Type 2 diabetes.

Recently, new drugs have been introduced that directly tackle obesity. The GLP-1 treatments are currently taken as an injection, and work by suppressing the patient’s appetite for food and (it appears) alcohol. Critically, the drugs need to be taken on an ongoing basis. If the patient stops treatment, they are likely to regain the weight they have lost.

The human impact of using GLP-1 drugs to fight obesity has the potential to have both positive and negative impacts. The dividing line between these two outcomes is determined by access to the medication.

There are three obvious benefits for someone receiving an effective treatment for obesity: better health; improved workforce productivity; and reduced social prejudice. The foremost is that treatments should reduce the risks of future health problems, which should improve the individual’s quality of life over time.

As health problems are reduced, someone receiving effective treatment for obesity should be able to work more productively. Fewer health problems should mean fewer absences from work, which creates a direct benefit to the person’s income and general employability. Moreover, with less time absent due to illness, a person can build skills and improve their productivity. Thus, hours worked and output produced increase (a benefit for both employer and employee).

Alongside the direct health benefits and what they imply for employment, there is an indirect benefit as well. Studies show that there is a prejudice against obese (and some overweight) people in the workplace. This varies by culture, gender, and sector of the economy. Like all forms of prejudice, this discrimination is irrational. Judging a person’s ability to do a job based on their physical appearance may not be logical. For instance, there may be a cultural association between laziness and a person’s weight. Women are often subjected to this form of prejudice more than men—a double standard in a patriarchal society. Service sector roles (where someone interacts with the public) often discriminate against obese workers.

Obviously, the best outcome would be to overturn this irrational prejudice. However, if the cause of the prejudice can be removed, it should improve the opportunities available to a formerly obese individual. By focusing on the talents of the individual and not their physical appearance, the economy receives a productivity boost—right person, right job, right time is the mantra for economic success.

Treating obesity with medication is not cheap. In the United States, a single month’s treatment costs roughly USD 1,300. US pharmaceutical prices are high, but even in Germany the cost is over USD 300 per month. This high price point can create a potential division in society.

It is likely that only higher income individuals will be able to treat obesity with medication if required to pay personally. In the United States it is estimated that only one in five adults has insurance that covers anti-obesity medication. In the UK GLP-1 injections are provided by the National Health Service but only when prescribed by specialist clinics. The German public health insurance does not cover GLP-1 drugs when prescribed for weight loss alone (though may pay for treatments if there are additional health conditions). The income barrier to accessing medication means that obesity could become a double stigma. Cultural prejudice still applies to someone who is obese but unable to afford medication. The price barrier adds a risk that being obese may become a physical signal of being lower income. Someone who cannot afford medication may struggle with extra medical problems and fail to achieve their full earning potential amid either ill health or prejudice against their appearance, which places additional barriers to social mobility. Those barriers can prevent someone from achieving their full economic potential.

More egalitarian societies will, one hopes, provide medication according to need. In that case obesity may not be a problem associated with specific income groups; lowering the risk of barriers to mobility. This may be too optimistic a scenario, however.

Alongside the treatment for obesity, there is the possibility that GLP-1 drugs could be taken “recreationally” (for want of a better term). People who are not obese, but who would like to lose some weight can achieve this through medication—if they can afford the price. As with obesity, the risk is that there is a stigma attached to people who are overweight and who are unable to afford medication. Again, this raises barriers to social mobility and economic performance. Those barriers are likely to be heightened given the importance of appearance on social media.

Improving people’s health is a positive economic and humanitarian development. GLP-1 drugs have the potential to tackle the global increase in obesity, and through that reduce the associated health risks. Restricting the potential health improvements to only a subsection of society, chosen by income and not medical need, is an economic and social negative. The higher prevalence of obesity among lower-income groups means that those most in need may be least able to afford treatment, weakening the benefits to the economy. The social stigma attached to obesity could be compounded if it also signals low-income status. The “recreational” use of GLP-1 drugs, where use is driven by aesthetics more than medical necessity, may further amplify both the economic and social negatives.

For further information, please visit www.ubs.com/institute-disclaimer