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Submitted by Tyler Durden  on 03/26/2012 10:25 -0400
While much heart palpitations are generated every month based on how much of a seasonal adjustment factor is used to fudge US employment, many forget that a much more serious long term issue for the US (assuming anyone cares what happens in the long run) is a far more ominous secular shift in US population – namely the fact that everyone is getting fatter fast, aka America’s “obesity epidemic.” And according to a just released analysis by BNY ConvergEx’ Nicholas Colas, things are about to get much worse, because as the OECD predicts, by 2020 75% of US the population will be obese. What this implies for the tens of trillions in underfunded healthcare “benefits” in the future is all too clear. In the meantime, thanks to today’s economic “news”, fat people everywhere can get even fatter courtesy of ever freer money from the Chairman, about to be paradropped once more to keep nominal prices high and devalue the dollar even more in the great “race to debase”. Our advices – just pretend you are going to college and take out a $100,000 loan, spending it all on Taco Bells. But don’t forget to save enough for the latest iPad, and the next latest to be released in a few weeks, ad inf.
Summary: It’s a shocking anomaly that a highly developed country with the world’s largest GDP also has the world’s most obvious obesity endemic. Nearly 34% of United States citizens are obese, which is triple the rate of most of its peer countries. Notably, Americans both drink and smoke less than much of the industrialized world, making this problem all the more puzzling. The causes appear to be largely cultural, with low food costs playing a supporting role. Obesity in the U.S. is more prevalent along certain groups, but by some estimates an astounding 3 out of 4 Americans will be obese or overweight by 2020. The obvious comparison here is to smoking, a public health challenge that has declined in popularity for decades due to higher taxes and public awareness of the risks involved. The answers to the obesity problem will be much tougher, however. And with widespread use of government money for Food Stamps (+20% of all households) and school lunches (+30% of all children), the Federal government is squarely in the middle of the debate.
Consider some wacky “all-American” dining options. Burger King’s Manhattan Whopper Bar offers an aptly-named “Pizza Burger”– a ginormous cheeseburger accentuated by pepperoni and chopped into 6 slices. Denny’s spices up the classic but boring grilled cheese by driving 4 mozzarella sticks into the already gooey cheddar goodness (Fried Cheese Melt). And IHOP delivers fluffy pancakes stuffed with hunks of cheesecake drowning in whipped cream and splashed with powdered sugar (New York Cheesecake Pancakes). Not to mention they’re only 4 bucks.
Not to be outdone, Las Vegas is home to another appropriately named (and self-proclaimed) producer of “nutritional pornography” – the Heart Attack Grill. Menu options include a “Quadruple Bypass Burger,” “ButterFat Shake” and all-you-can-eat “Flatliner Fries.” If you’re over 350 pounds you eat for free, and shots are served in 4 ounce pours. The restaurant made headlines last month when a 40-something man suffered a heart attack (what else?) while chowing down in its dining room. Go ahead, you can chuckle – he’s alive and kicking somewhere out West. At the time of his heart attack he’d been eating the 6,000 calorie “Triple Bypass Burger” featuring 3 half-pound patties, half a fried onion, cheese, and 15 slices of bacon.
So is it really any surprise that 1 in 3 Americans are obese? The United States has a bigger obesity problem than any other industrialized country in the world, with a 33.8% obesity rate, according to the Organization for Economic Co-operation and Development (OECD). Note that obesity is defined according to a body mass index (BMI), which calculates human body fat based on weight and height. BMI readings of 30 or greater signify obesity, while a score between 25 and 30 indicates “overweightness.”
A typical man of 5’10” should weigh, for example, about 170 pounds. The U.S.’s next closest “competitor” is Mexico with a 30% obesity rate, while Canada and the U.K. have rates of 24% and 23%, respectively. Other highly developed countries such as Germany, Italy and France have rates below 15%, and Japan is all the way down at 3.9%. India’s citizens are the trimmest, with a 2.1% obesity rate. The average for the 34 OECD member countries is 16.9% – exactly half that of the United States.
Obesity is one obvious culprit for the exorbitant amount of money that Americans spend on health care. Health expenditures (including capital investment in health care infrastructure) are just shy of $8,000 a year per person, which is almost 50% more than in any other country, and represents nearly one-fifth of total GDP. Expenditures in Norway and Switzerland, numbers 2 and 3 on the list, represent a little more than $5,000 per person. The Brits spend about $3,500 a person, while the Japanese spend just $2,900 per person. Indonesia brings up the rear with only $99 spent per capita, although that comparison is obviously skewed by its emerging economy status.
Despite access to high-quality health care services, facilities and infrastructure, Americans live 78.2 years on average, or more than a year less than the OECD member nation average of 79.5 years. Our neighbors to the north and nearly all of our European counterparts live somewhere between 80 and 82 years, while the Japanese live longer than anyone else (83 years).
Just to quickly check off a couple of obvious other behavioral/health boxes, we know our lives generally aren’t cut short by smoking or excessive alcohol consumption. Sixteen percent of Americans are daily smokers, compared with the OECD average of 22.1%. In France, for example, more than 1 in 4 people are regular smokers, while a whopping 40% of Greeks fess up to having at least one daily smoke. Comparatively we don’t drink that much either. On average for ages 15 and up, Americans consume 8.8 liters (298 ounces) of alcohol annually. The OECD average is 9.1 liters, and the French top the chart (surprise, surprise) at 12.3 liters.
There’s no denying that the mortality rate phenomenon is at least somewhat of an obesity issue. In the U.S., Japan and select industrialized European countries, the correlation between obesity rates and life expectancy is greater than 80% (refer to this chart and several others following the text ). Obesity is a disease and while it isn’t often listed as a “Cause of Death” the outcomes are deadly. Since the cardiovascular system is the number one affected area when someone is overweight, it should come as no surprise that more people die from heart attacks in the U.S. than in most other countries. For every 100,000 Americans, 129 die from a heart attack. The OECD average is 117, while in the “fit” countries of Japan and Korea heart attack fatalities occur in fewer than 40 out of 100,000 people.
As far as root causes, it’s a basic economic principle that people consume more of things that are cheaper, and food in the U.S. is relatively cheap compared to the rest of the world. The food component represents 14% of the Consumer Price Index (CPI), meaning that on average 14% of our total expenditures is spent on food.However, the “Food at home” component of the CPI is a mere 8%, and since most Americans eat most of their meals at home, this is likely a more logical number to use. In China and India, on the other hand, food weightings in their respective inflation indexes are 31% and 27%. Yes, this is clearly the result of lower incomes and food prices set to a large degree by global trends; the correlation/causation to consumption is still valid, however. The Chinese and Indians rank in the bottom 3 in terms of obesity rates, at 2.9% and 2.1%, respectively. As for more economically comparable countries, Canada (17% of CPI), Australia (17%), Italy (16%) and the U.K. (11%) have more similar food component cost weightings to the U.S.’s, and their citizens are substantially slimmer. Either way (economic or cultural explanation), mass industrialization of farms and food processing in the States has resulted in a dramatic lower food prices and an unmistakable trend to overconsumption.
Perhaps Americans work so much that we simply don’t have time to be active. After all, we work more than anyone else in the world, right? Wrong. We take less time off, but in terms of hours worked per week, we have it pretty good. At an average of 33.6 hours per week, Americans actually work less than the French (37.6 hours per week), who have a reputation for more slack work habits. People in the U.S. also work less than those in Japan (40.7 hours per week) and Turkey (49.7 hours per week), but the Japanese and Turkish have much lower obesity rates, as do the French.
However, while we work just as much as (if not more than) most other people, Americans take fewer vacation days. Including paid public holidays and voluntary vacation time, workers in the U.S. have an average of 25 days off per year. This compares with 40 in France, 36 in the U.K. and 31 in Italy, for example. Brazilians take the most time off (41 days), while Canadians take the least (19 days). Vacation time doesn’t appear to be correlated to obesity, but helps to validate the notion that Americans are among the hardest-working people in the world, even if hours worked are in line with other countries.
We’re left with a rather unspecific, and somewhat unsatisfying, conclusion that the obesity endemic in America is caused by broad cultural factors and personal responsibility issues. High-risk groups include African-American and Mexican-American women, who have respective obesity rates of 46% and 35%, and those in lower income groups. Women with lower levels of educational achievement are 1.3 times more likely to be obese, though virtually no disparity exists among men of varying education levels. And Southerners and Midwesterners carry more weight than their Northern and Western counterparts.
Nonetheless, 75% of Americans will be obese or overweight by 2020, according to OECD projections. We’ll have to see how the ongoing national health care debate plays out, but this undoubtedly means more government spending in terms of both preventative care and educational programs. In its food stamp program, the government has already begun educating recipients on nutrition, yet soft drinks, candy, cookies and ice cream are eligible items for purchase with food stamp benefits. I would expect this to change considering we’re on track to be 40% obese in the next decade, and likely even more government intervention will be necessary to curb some culturally-ingrained bad habits.
In an admittedly altruistic way, the U.S. government is a major enabler to the obesity problem. While we’re not debating the necessity of food stamps, they do provide incremental spending power, and the fact that lower-income people are more likely to be obese means that the government has a profound responsibility to ramp up nutritional education and hone in on the obesity problem. With +20% of households using food stamps, keep in mind that any policy shift will be significant for a wide swath of companies from supermarkets to producers of food.
So far government efforts have been mostly ineffective “nudges.” Policies enacted in the past few years that mandate calorie labeling in fast-food and chain restaurants have thus far had no impact on calorie consumption, according to a recently-published study (link below). While relying on people to use nutritional information to make healthier meal choices wasn’t effective, giving customers at a fast-food restaurant the option of downsizing their dishes did in fact work. About a third of customers opted for the smaller portion (versus less than 1% who asked to downsize on their own) and subsequently ate less. And accepting the downsized option had no effect on the amount of food uneaten at the end of the meal, translating into even more calorie savings. People in the study generally didn’t have the self-control to make smarter nutritional choices on their own, but it seems that some sense of self-control was activated when they were pushed to make healthier decisions.
With proof that intervention can in fact work, the Federal government has a role to play, whether it likes it or not. When you’re handing over money for food to 1 in 5 households and when about a third of all children are in notoriously non-nutritious subsidized school lunch programs, there’s certainly a moral responsibility.
Obesity is essentially the “Smoking” of the 21st century. And just as smoking rates were lessened thanks to government intervention, the obesity problem will need governmental action as well. Yes, it’s been written about countless times and there aren’t any immediate investment implications, but this topic is worth having in the back of your mind. The answers here are not as obvious as cigarette smoking; no one is going to back higher food taxes to reduce consumption. But the problem is significant and costly to the U.S. economy.
Link to study on effectiveness of calorie-labeling: http://content.healthaffairs.org/content/31/2/399.abstract