Economic Insecurity and Obesity

There is no doubt that the social costs (private cost + external cost) associated with food consumption have been well documented. Rising obesity rates especially in those affluent developed nations have caused authorities to consider the reasons behind this issue. It transpires that economic insecurity plays a significant role in explaining trends in obesity for many affluent countries.

What is Economic Insecurity?

In July 2010 the Economic Security Index (ESI) was developed by Yale Professor Jacob Hacker. It is designed to provide a meaningful, succinct measure of Americans economic security. The three key determinants of economic security it focuses on are:
1 Large losses in household income
2 Large spikes in house-hold medical spending
3 The adequacy of household financial wealth to buffer these losses and spikes.

Efficiency Obesity trade-off

Although last twenty years has seen countries move to a more market based economic system but since the global financial crisis (GFC) there has been a U turn in some countries. Research has shown that the population of those countries that have adopted a more free market approach to running their economies, have experienced personal economic insecurity (unemployment etc.) which has given rise to weight gain. The table below shows that the countries through to be free market have higher obesity rates than those that are more planned in nature. Countries with free market policies have 4% higher obesity rates on average.

Obesity economies

Source: T. Smith (2012), Does economic liberalisation cause obesity? EcoNZ@Otago – Issue 29 – September 2012


The above is a brief extract from an article published in this month’s econoMAX – click below to subscribe to econoMAX the online magazine of Tutor2u. Each month there are 8 articles of around 600 words on current economic issues.


Leave a Reply

Your email address will not be published. Required fields are marked *