A case for an Obesity Tax

In an article published in the New England Journal of Medicine of July 26,2007, titled The Spread of Obesity in a Large Social Network over 32 Years, Professor Nicholas Christakis and James Fowler from the Harvard Medical School and the University of California, San Diego, have found that obesity has a striking dependence on social ties. The article has already generated its fair share of internet debates.

The researchers studied a densely interconnected social network of 12,067 people assessed repeatedly from 1971 to 2003, and observed a total of 38,611 social and family ties in this sample. They also looked closely at the influence of gender, smoking, socio-economic status, and geographic distance.

Their conclusions are very interesting. If an individual's close friend becomes obese, that person’s chances of becoming obese increases by 57 percent. Similarly, it the individual's sibling is obese, his chances of being obese increases by 40 percent. Further, if the spouse is obese, the chances of the partner being obese increases by 37 percent. Therefore, when any individual gains weight and becomes obese, he or she dramatically increases the chance of their friends, siblings and spouses gaining weight. The study goes further and concludes that, more closer the social network or the relationship, greater the weight increase effect! As if to reinforce the importance of social networking on obesity, the study also found that the person’s neighbor, if not a part of his or her social network, has no effect!

Interestingly, the statistics show that friendship is an even more powerful influence than marital and familial relationship. In fact, in comparison to others, marital influence seems to have the least effect on obesity. The sibling influence would seem to indicate some evidence of biological influence, though the social influence of friendship seems much more deeper. This again confirms that contrary to received wisdom, we are not just driven by our genes, no matter how "selfish" our DNA might be. Our relationships with others, particularly non-genetically-related friends, can count for more.The research also shows that the impact on obesity is not lessened if the friends live near or far from each other.

To quote Christakis, "What we see here is that one person's obesity can influence numerous others to whom he or she is connected both directly and indirectly. In other words, it's not that obese or non-obese people simply find other similar people to hang out with. Rather, there is a direct, causal relationship. Most likely, the interpersonal, social network effects we observe arise not because friends and siblings adopt each other's lifestyles. It's more subtle that that. What appears to be happening is that a person becoming obese most likely causes a change of norms about what counts as an appropriate body size. People come to think that it is OK to be bigger since those around them are bigger, and this sensibility spreads."

The study reveals that gender also plays an important role in obesity. In same-sex friendships, individuals experienced a 71% increased risk if a friend of theirs became obese. However, for different sex friendships, there was no significant association. Among friends of the same sex, a man had a 100% increase in the chance of becoming obese if his male friend became obese, whereas the female-to-female spread of obesity increased by only 38%. This pattern was also observed in siblings. Here, if a man's brother became obese, his chances of becoming obese increased by 44%. Among sisters, the risk was 67%. Friends and siblings of opposite genders showed no increased risk. It however found that smoking behavior is not instrumental to the spread of obesity.

The authors rightly claim that obesity is no longer a clinical problem, but a major public health and social concern. Over the last 25 years, the incidence of obesity among U.S. adults has more than doubled, shooting from 15 to 32 percent. In addition, roughly 66 percent of U.S. adults are considered overweight. It has already severely dented health improvements in developed world, and is threatening to do the same in the developing world.

We therefore have an interesting situation, where obese individuals have a perverse effect on their friends and relations. In other words, obese individuals provokes a negative externality. Further more, these obese individuals generating the cost, does not pay for the huge social and economic costs inflicted by him on the external environment and society. Have we not seen the same elsewhere with pollution, parking, over fishing etc?

Economic theory would argue about the need to internalize all external social costs, so as to reduce a negative externality. Such internalizing of external social costs is done through imposition of a Pigouvian tax. So how about an "Obesity Tax" on obese individuals? Unlike other taxes, this is unlikely to have much distortions, given its evident ease of targetting and checking evasion.

But there are difficulties. It has been well documented and acknowledged that obesity could have genetic causes, which are outside the control of the obese individual. Further, making obsese individuals pay for the social costs of their obesity would be tantamount to asking those affected with health problems due to a polluting factory, to pay the external cost of the factory's pollution. So, who should pay for the social costs of obesity? It can be argued that the junk food and other obesity promoting foodtuff vendors are making their huge profits at the cost of the consumer's health as well as at great social cost. We have a typical problem of free-riding. Should they not be paying the Obesity Tax, which could then be used to fund research and health care on obesity related problems?

Update 1
Recent research by Harvard economists, Edward L Glaeser et al, points towards cheap prices for high-calories as the reason for America's obesity problem. This seems to empirically validate the need for an Obesity tax that would raise prices and cut down the over consumption!

Update 2
New York state plans to fight obesity by taxing sugary soft drinks such as Coca-Cola and other soda, the consumption of which has been directly linked to childhood obesity.

Update 3
Janet Currie, Stefano DellaVigna, Enrico Moretti, and Vikram Pathania have an NBER working paper where they write, "Our results imply that policies restricting access to fast food near schools could have significant effects on obesity among school children, but similar policies restricting the availability of fast food in residential areas are unlikely to have large effects on adults".