Obesity and economic research: a “prehistoric” challenge

Obesity and economic research: a “prehistoric” challenge
a University of Wyoming, Department of Economics and Finance

 

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Diet and health policy can be improved by integrating economics into the core of the biomedical and public health disciplines. This insistent statement is less audacious than it seems, if one accepts the ordinary idea that human behavior underpins public policy toward diet and health. People affect the world within, just as the world within affects them. Understanding the driving factors which affect the decisions on what to eat, when to exercise, how much medical care to demand is crucial; and frequently the relative costs and benefits have something to say about these choices (Mazzocchi, Traill and Shogren, 2009). Integration of private choices with public decisions requires information on the interaction of economic circumstances and biomedical science, knowledge about idiosyncratic private skill to adapt to risks, relative prices of the food and services related to health, and some ideas about how to identify rational choice versus contextual choice.

Trade and biology in the past

Adam Smith said in The Wealth of Nations that ‘‘[e]very man endeavours to supply by his own industry his own occasional wants as they occur. When he is hungry, he goes to the forest to hunt; when his coat is worn out, he clothes himself with the skin of the first large animal he kills: and when his hut begins to go to ruin, he repairs it, as well as he can, with the trees and the turf that are nearest it.’’ What was true then is true now. People use natural resources for their own benefit, sometimes at their own expense, sometimes at the expense of others. The goal of economics of food and nutrition is to address these human needs and natural resources limits to define the constraints, to confront them, and to design rules to increase the efficient use of land, forests, and resources. With that in mind, let’s go way back to a time of paleoeconomics.
After about 260,000 years of eking out an existence in glacial Eurasia, the Neanderthal (Homo neanderthalensis) suddenly became extinct around 30,000 / 40,000 B.P. Early modern humans (Homo sapiens), arriving on the Eurasian scene shortly before, are suspected to have been the perpetrator, but exactly how they caused the Neanderthal extinction is unknown. Mellars (2004) summarizes the current state of the Neanderthal extinction debate and suggests that the replacement of Neanderthals by early modern humans is probably a result of competitive exclusion that is, the more efficient population out-competes and ultimately replaces the less efficient population. Horan et al. (2005) developed a paleoeconomic model that supports Mellars’ assessment that behavioral differences could have played an important role in Neanderthal extinction. Their basic story is that in the initial year, Neanderthals are in equilibrium with a population of megafauna their dominant prey base. Humans enter Neanderthal territory, and competition for base resources commences. Fertility is linked to caloric intake, and behavioral exclusion occurs if per capita meat consumption of humans consistently exceeds Neanderthal consumption, or visa versa. Assuming that skilled and unskilled hunters exist in both populations, humans had invented the ‘‘institution’’ of trade. Facilitated by their ability to talk and use symbolic communication, trade provides incentives for specialization and division of labor, and enables ‘‘skilled’’ hunters to focus on the job they do best. Horan et al.’s model suggests the following pattern. Skilled human hunters are scarce at the beginning, but over time they become less so. Natural selection increases the proportion of skilled human hunters to a level that allows for a complete division of labor. Humans retain this division of labor until Neanderthals become extinct over the next few centuries. Even with a higher proportion of skilled hunters, Neanderthals cannot compete against the humans’ economic system.
Basic economic forces of scarcity and relative costs and benefits have played integral roles in shaping societies throughout recorded human history.

Integrating economics & biology

Why didn’t Neanderthals ever regain the lost ground even if they did learn to trade? With positive feedbacks between trade, nutrition, and productivity, humans could have kept their competitive advantage. Efficient trade leads to better nutrition, and as a consequence, greater productivity. Hunting megafauna relies on strength and endurance and therefore on good health and nutrition. Caloric intake is associated with increases in maximum oxygen intake, and therefore with fitness. Neanderthals never catch up to the humans who just get more productive. Moreover, Neanderthals die out quicker once productivity effects are included, and humans can withstand even greater biological efficiency differences that favor Neanderthals. In a trading equilibrium, human per capita meat production is more than Neanderthal per capita meat production. In consequence, each human consumes as much if not more meat than a skilled Neanderthal hunter, with less-skilled Neanderthals consuming even less meat. Greater meat consumption by human hunters implies greater nutrition and hence greater productivity in the following period. In contrast, Neanderthal fertility and nutrition are diminished in following periods as the combination of human and Neanderthal harvests reduce the wildlife stock and hence Neanderthal harvests. The relatively greater nourishment and productivity of humans in these following periods, combined with the lack of nourishment and productivity of Neanderthals, effectively increases the relative biological efficiency of humans. Positive feedbacks exist between productivity and consumption which add to the humans’ comparative advantage created by their trade-induced superior economic efficiency.
The lesson behind studying the past is that we see how economics works with biological factors to create better or worse nutrition. Biology affects scarcity, which affects trade, which affects scarcity, which affects trade, and so on. Trade can diminish rate of natural selection when one assumes utility and fertility a function of meat consumption. And while traditionally viewed as efficiency-increasing, trade can also reduce efficiency in an evolutionary sense by reducing average skill levels. The open question today is whether and how the economic factors at work now differ from or are the same as our paleoeconomic story. Biology is not destiny, neither is economics; it is the combination captures the actions and reactions between the two systems that matters.
If one accepts the idea that neither biology nor economics is providence, the present research challenge is to find mechanisms and institutions that can better integrate economics with epidemiology/medical sciences. The risks we confront from our choices of diet are endogenous. Health policy is designed to reduce risks to human morbidity and mortality. The goal is to invest scarce resources to reduce risks to life and limb for people confronting threats from exposure to unhealthy food. Risk is defined by the combination of two elements: the probabilities (or chances) that good or bad event occurs, and the outcomes or consequences realized when the event actually does occur. Scarce resources create opportunity costs, which renders the idea of a zero-risk society a noble but unattainable goal. Rather our private and collective choices on how to produce food and what food to consume generate risk to ourselves, e.g., we eat salty foods feared to cause high blood pressure. People create their own health lotteries: the gambles people take to increase well-being. Health policy is about changing the probabilities and outcomes such that people and nature face a different lottery, hopefully one with reduced risk.
The idea is private actions dominate food and nutrition choices. When confronting risks from pathogens, people can self-protect by washing their hands, storing food, and cooking food well. People buy bottled water if they suspect their drinking water is polluted. People substitute private protection for the care supplied by collective safety programs. Each person’s value for any collectively supplied risk reduction program is then conditional on his private preparation and forearming efforts. The endogenous risk perspective is especially relevant to health problems because markets are incomplete, preventing the creation of complete set of claims that allow risk to be perfectly diversified until only the exogenous remain.
Fogel (1994), for instance, argues how health improvements over the last century were due to better nutrition and to an enhanced ability of consumers to transform nutrition information into desired health states. Since this ability depends on relative prices and wealth, he called for the joint use of biomedical and economics to examine more deeply the consequences of better nutrition for human well-being. Fogel’s plea, however, has rarely been heeded, either in the biomedicine or in the health economics literature. Chen et al. (2002) stress how the biomedical studies works within a mind-body dualism which treats mental and biochemical processes as separable. This view holds that biochemistry and biophysics can explain nutrition choices and human health.
Much of the economics of health-nutrition has maintained the mind-body dualism. Nutrition studies which show how health inputs are manifestations of people’s choices are limited in number and appear to reside exclusively in the economics literature (Behrman & Deolalikar, 1988). Those few attempts in biomedicine to introduce behavioral considerations do not formally model how individuals’ decisions about what they eat depend on prices and income. The estimated health response to a price-induced change in any one nutrient will be an amalgam of the health responses to changes in consumption of all health inputs induced by the original price change. Recommended changes in one nutrient may induce people to alter their consumption of other health inputs as well. The extent to which they choose to do so depends on factors such as preferences, wages, prices, and income. The everyday health consequences of following the recommendation may differ from the laboratory result.
And although conflicts exist between social and health sciences, economics and the biological and medical sciences have many similarities. Both are disciplines of limits how to deal with scarcity. Whether it is a human reaction to a limited budget and unlimited wants or a physiological response to the quantity and quality of food, humans and their bodies must deal with their limits. The limiting factors in both disciplines drive their research efforts. Yet failure to account for joint influences upon these limits in economic systems and biological systems can cause inaccurate perceptions of how each system works and provide misleading policy recommendations.

Economic rationality and actual behaviors

Bad diet and health choices dominate the current policy debate in many developed nations. Rather than too little food, which has been the fear since before Neanderthal time, nowadays too much food of too poor quality is the concern. For instance, seven of ten people in the United States are classified as overweight or obese. And according to Finkelstein et al. (2004), such obesity and smoking problems account for nearly 10% of all health expenditures in the US.
The research challenge for the future is to define and control these seemingly deficient private choices. For economists interested in diet and health, this agenda requires more research into how far people actions deviate from the rational Homo economicus presumed in traditional health economic models (see e.g., Mancino & Kinsey, 2004). Relying on rational choice theory to guide diet and health policy makes more sense if people make, or act as if they make, consistent and systematic choices toward certain and risky events. But nagging questions persist: are diet and health problems a question of market failure, technological advancement, or behavioral failure or some combination? How rational should we assume people are when making health policy? Does the context matter? Do incentives matter ...really? What role do emotions play in economic behavior toward diet and heath? How complicated is a person’s utility function? How do institutions affect the nature of this utility function?
The lesson for addressing future challenges in the economics of diet and health is to tackle the question of rationality and its breakdown head on. Separating the conditions under which rationality is close enough as a necessary fiction to guide policy from the circumstances when it is not will be major area of research. A fundamental difference exists in debate about what rationality means in a behavioral context. At issue is whether one chooses to believe that rational choice is a property of the individual alone or within the social and economic context within which it is embedded. Neither polar view fully captures the richness of behavior that can arise in a health policy context. People make choices both in non-market settings and socialized market settings. The sensitivity of behavioral failures to the institutional context illustrates how behavior depends on whether a decision is made in isolate, in an active market, or both. Addressing the question of whether rationality is a reliable guide or confused relic will require more information and research based on experiments that control the context of choice and the institutions that exist to alter choices over diet and health.
The deep-rooted message is that economists should continue to challenge themselves to step beyond their usual bounds to work more with biologists, medical scientists, anthropologists, epidemiologists, and behavioral scientists. By integrating economics into the core of these other disciplines, the predictions of behavior, rational or otherwise, can be more precise with a better accounting of private actions and reactions to public health policy, especially for matter so fundamental as diet and health.

References

  • Behrman, J. R., & Deolalikar, A. B. (1988). Health and nutrition. In H. Chenery & T. N. Srimivasan (Eds.), Handbook of development economics, Vol. 1. (pp. 631771). Amsterdam: North-Holland.
  • Chen, S-N., Shogren, J., Orazem, P., & Crocker, T. (2002). Prices and health: Identifying the effects of nutrition, exercise and medication choices on blood pressure. American Journal of Agricultural Economics, 84, 9901002.
  • Finkelstein, E., Fiebelkorn, I., & Wang, G. (2004). State-level estimates of annual medical expenditures attributable to obesity. Obesity Research, 12,1824.
  • Fogel, R. W. (1994). Economic growth, population theory, and physiology: The bearing of long-term processes on the making of economic policy. American Economic Review, 84, 369395.
  • Horan, R., Bulte, E., & Shogren, J. (2005). How trade saved humanity from biological exclusion: An economic theory of Neanderthal extinction. Journal of Economic Behavior and Organization , 58,129.
  • Mancino, L., & Kinsey, J. (2004). Diet quality And calories consumed: The impact of being hungrier, busier and eating out. Working Paper 04-02, The Food Industry Center, University of Minnesota.
  • Mazzocchi, M., Traill, W.B., Shogren, J.S. (2009). Fat Economics: Nutrition, health and economic policy. Oxford: Oxford University Press.
  • Mellars, P. (2004). Neanderthals and the modern human colonization of Europe. Nature , 432, 461465.
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