A growing share of healthcare expenditures is both directly and indirectly the consequence of unhealthy behaviour.
- Preventable conditions linked to lifestyle choices such as obesity, smoking and drink-related illnesses play an ever-increasing role in explaining healthcare use and expenditures.
- Obesity alone is estimated to account for 21% of US healthcare costs (Cowley and Meyerhoefer 2012).
This is so much the case that ‘prevention’ is now pinpointed as a key mechanism to decrease unnecessary, or avoidable, healthcare use.
Policies for healthier lifestyles
How can healthy lifestyles be incentivised? What is the role of policy? What are the limits of traditional policies such as taxing sins and subsidising virtuous, healthy behaviour?
Evidence increasingly suggests that health related lifestyles are only partially an individual's choice, and is in fact largely shaped by social incentives that ‘nudge’ people into certain behaviours (e.g. stigmatising unethical drug use or social stigmatisation of smoking). To understand the rationale behind certain behaviours we need to understand what qualifies as a ‘perceived benefit’ and ‘perceived cost’, which is in turn highly dependent on group-specific social norms (Costa and Gil 2004) about what is 'acceptable' and 'desirable'.
Certainly, genetic and physiological factors cannot account for the dramatically rapid growth In obesity rates over the last three decades, or the patterns of smoking or drinking behaviour. Norms guiding calories and units of alcohol expended socially and at home, guiding leisure (e.g. sleep) or physical activities (e.g. walking) are obvious determinants of the expansion of unhealthy lifestyles among a large share of the population. Textbook economics constraints to behaviour such as relative prices of those activities; and traditional leisure-work trade-offs can explain constraints on peoples time to cook; and more generally work stress, which in turn can explain the uptake of unhealthy lifestyles (Costa-Font and Mladovsky 2008). However, the question for policy economists is: do interventions on time and budget constraints suffice?
If we were to adhere to the old economic precept, ‘de gustibus non est disputandum’ – ‘in matters of taste, there can be no disputes’ – then economists should disregard social incentives, and more generally interventions that aim to shape social environments in trying to explain behaviour, even when they might influence tastes. However, doing so would condemn us to fail in our policy prediction when that the effectiveness of incentives influencing time and budget constrains tightly depends on its framing in a wider social environment. Only a few examples of include the obvious role of peer effects and self-image in shaping social incentives for individuals to stay fit (Costa-Font et al 2010; Costa-Font and Gil 2004).
Hence, economists who care about policy are compelled to think outside the box of traditional textbook incentives. Piling evidence suggests that, for instance, monetary incentives may have only modest effects (Cawley and Price 2009) or even be counterproductive if they crowd-out desirable behaviour (e.g. paying a child to eat vegetables might trigger the belief among children that vegetables are not eaten because of taste). Similarly, taxing addictive sins (e.g. tobacco or fast food) can exacerbate existing social inequalities when pre-tax consumption is associated with socioeconomic status (Costa-Font and Gil 2008).
This leaves us with education (Cawley et al. 2012) which we know has longer-term effects on health and regulation of unhealthy behaviors on the grounds of correcting possible externalities. However, regulation often operates within another sphere: given that regulation conveys the opinion of the majority, e.g. smoking bans stigmatise smoking, or, outlawing unethical drugs can signal social disapproval. However, policy can intervene in areas of life where role models within the media or cultural industries (e.g. film industries) are able to influence how ‘social bads’ are portrayed.
Obesity as an example
The growth of obesity rates has been linked to an ‘obesogenic environments’, or social norms that promote excessive caloric food intake and discourage physical activity. Yet the triggers of unhealthy environments are largely unknown. For instance, the evidence of traditionally targeted factors such as improving access to fruit and vegetables is far from conclusive. Kyureghian, Nayga, and Bhattacharya (2012) show that increasing access to fruit and vegetables does not necessarily influence healthy consumption of the poorest cohorts of the population. In contrast, it can make social inequalities and unhealthy lifestyles worse. Similarly, other commonly held views which blame fast food for rising obesity do not stand up to robust empirical evidence, as time constraints alone cannot explain changes in its consumption (Kalenkoski and Hamrick 2012).
One explanation for heterogeneity in tastes and action lies in the structure of social groups, and the way in which communities develop their own social norms and operate accordingly. Schroeter, Anders, and Carlson (2012) show that diet quality is also strongly interrelated with food culture. As such, educational interventions which create the right conditions for socially-persistent behavioural change can have significant effects (Gittelsohn and Lee 2012). Another way of influencing food choice is by changing the packaging. Chandon (2012) shows that packaging influences people’s taste and healthiness expectations, as well as their short-term consumption, by as much as 30%. However, the most striking results illustrating the limits of choice are reported in Chandon (2012) as:
- Labeling chocolates as ‘low-fat’ appears to increase actual consumer calorie intake by 46% among overweight people, but increased their perceived caloric intake by only 8%;
- People appear to underestimate up to 50% of the quantity of food consumed in large meals and packages.
Unhealthy lifestyles are only partially the result of people’s choices, and often only moderately modified with changes in monetary and time incentives. Rather wider social incentives appear to play a key role in signalling, nudging and regulating wider social constraints to behaviour.
Chandon, P (2013), “Understanding Healthy Lifestyles: The Role of Choice and the Environment”, Applied Economic Perspectives and Policy 35(1), 1-6.
Costa-Font, Joan and Gil, J (2008), “What lies behind socio-economic inequalities in obesity in Spain: a decomposition approach”, Food policy, 33(1), 61-73.
Costa-Font, Joan and Mladovsky, Philipa (2008), “Social capital and the social formation of health-related preferences and behaviours”, Health Economics, Policy and Law 3(04), 413-427.
Costa-Font, J and Gil Transfi, J (2004), “Social interactions and the contemporaneous determinants of individuals’ weight”, Applied Economics, 36(20), 2253-2263.
Cawley,J C Meyerhoefer (2012), The medical care costs of obesity: An instrumental variables approach, Journal of Health Economics 31(1), 219, DOI:10.1016/j.jhealeco.2011.10.003
Cawley, J, D E Frisvold, C D Meyerhoefer (2012), “Physical education requirements and childhood obesity", VoxEUorg, 26 September.
Cawley, J and Price, J (2009) “Outcomes in a Program that Offers Financial Rewards for Weight Loss”, NBER working paper 14987, May.
Gittelsohn, J and K Lee (2013), “Integrating Educational, Environmental, and Behavioral Economic Strategies May Improve the Effectiveness of Obesity Interventions”, Applied Economic Perspectives and Policy 35(1), 52-68.
Kalenkoski, C M and K S Hamrick (2013), “How Does Time Poverty Affect Behavior? A Look at Eating and Physical Activity”, Applied Economic Perspectives and Policy 35(1): 89-105.
Kyureghian, G R M, Nayga, Jr, and S Bhattacharya (2013), “The Effect of Food Store Access and Income on Household Purchases of Fruits and Vegetables: A Mixed Effects Analysis”, Applied Economic Perspectives and Policy 35(1), 69-88.
Schroeter, C, S Anders, and A Carlson (2013), “The Economics of Health and Vitamin Consumption”, Applied Economic Perspectives and Policy 35(1), 125-149.
Stewart-Brow, Sarah (2012), “Are fruit and vegetables good for your mental health as well as your physical health?”, VoxEU.org, 11 November.