Yonsei News

Health Behavior and Health Economics

It is not so strange to think of health as a good or an asset. Especially since there is a general improvement in the standard of living, there is a growing desire for a healthy life. Accordingly, we show the tendency to spend considerable time and money to maintain a healthy life. As the net investment in health increases, there is a natural consideration of the outputs derived, and this is where the interface between economics and health is formed. Health economics is an area of applied economics that focuses on the production and supply of health-related services and goods, the demand and utilization of healthcare services, and the factors and performance of individuals' investments in health-related assets.

Investment in health assets is manifested through various health-related behaviors of individuals. Individual health behaviors are affected not only by personal factors but also by the socio-economic factors encountered they are exposed to. An individual's health behavior not only has a direct impact on the individual's health but also on multiple other areas. Therefore, an individual's health behaviors generate social costs and benefits. As such, understanding the determinants of individual health behaviors and their consequences has emerged as an area of significance in economics that is concerned with the efficient allocation of resources.


Necessity of Health-Economic Research on Obesity

Since the 1980s, the continued rise in obesity prevalence in recent decades has emerged as a global phenomenon, not only in developed countries such as the United States, Canada, the United Kingdom, and Australia, but also in developing countries such as Eastern Europe and Central Asia, and China. In South Korea's case, the prevalence of obesity has also shown a sharp spike from an average of 29.2 percent in 2001 to an average of 33.2 percent in 2015. Obesity has been identified as the cause of various health conditions and diseases such as early death, type 2 diabetes, heart disease, high blood pressure, gallstones, osteoporosis, insomnia, asthma, breathing disorders, cancer, high blood cholesterol, pregnancy complications, stress, polyuria, and depression.

However, the effects of obesity are not limited to individual health problems. Obesity incurs a considerably high social cost, given the direct costs of treatment caused by various health problems caused by obesity, loss of income from premature death, and overhead costs of total time lost from hospitalization or through outpatient services.

Thus, identifying the prevalence of obesity, determining the cause of the increase in obesity prevalence, and analyzing the effects of obesity on areas apart from one's health can contribute to the overall efforts invested in reducing the associated individual and social costs generated by obesity.

Increased Prevalence of Obesity: Personal and Environmental Factors?

In the past, genetic factors or personal factors such as lifestyle habits have been identified as the underlying cause of an increase in obesity prevalence, with approaches to control obesity thus limited to a personal level like individual education on obesity considered as a mainstream solution.

Genetic factors can be considered factors of priority behind an individual's obesity level. However, genetic factors alone have limitations in explaining the recent trend of the rapid increase in obesity prevalence within the population. Although genetic factors indeed affect an individual's obesity level to a certain degree, it is difficult to assume that genetic variation has occurred drastically within a given population in such a short period.

With the growing awareness that personal approaches alone have limits in explaining the rapid rise in obesity prevalence and drawing effective preventive measures, there has been an increasing number of convergence studies in recent years that attempt to include the socio-economic perspective of inducing changes in individuals' behavior by changing the socio-economic factors surrounding them.

The socio-economic factors that correlate with the changing trend in obesity include changes in food prices, increase in accessibility and fall in prices of food products that are high in calories but low in nutrients like fast foods, and increased advertising of certain unhealthy food products in the media. Additionally, many types of research based on an average household's food consumption pattern and household consumption have commonly pointed out a concerning trend of a sharp increase in the percentage of energy consumption through eating out.

The economic model assumes that each individual, as a reasonable and rational consumer, chooses to carry out relevant actions to maximize their utility under the limited budget given. The model also assumes that the individual's food intake or energy intake and exercise patterns are determined by the factors such as the individual's income, the price of the related goods, and personal tastes. In contrast, the price of the associated goods is determined by the opportunity cost in areas such as currency prices and interests in physical accessibility. In other words, instead of taking a personal approach through education, it may be more effective to induce changes in the behavior of individuals through environmental factors surrounding them, such as price policies for fresh and unhealthy foods, agricultural policies that affect food prices, etc., or through public policies that induce transformation in the physical environment, such as changes in meals provided in school, provision of calorie information in restaurants, adjustment of food and beverage prices, etc.


Non-health Effects of Obesity

Obesity is pointed out as a cause of various diseases mentioned above, but it is also known to hurt individual performance in non-health sectors such as marriage, education, wages, and employment. For instance, obesity has also been reported to negatively impact overall aspects pertaining to employment, with obese adults having reported receiving lower wages than non-obese adults. Obese teenagers are also reported to have lower average grades than those not obese.

Various hypotheses on the reason behind obesity's negative influence on an individual's performance in academics and the labor market. Numerous researchers have studied the causes of obesity's negative effects on labor market performance that are expressed in forms such as social discrimination, obesity socially viewed as a sign of health or self-management problems, avoiding employment, or exclusion of obese people from tasks involving a high level of external activities in consideration of social prejudice against obesity. For example, the impact of obesity on an individual's labor market performance depends on gender, age, and the type of interpersonal relationship required for each occupation, and a stronger negative correlation was shown between body mass index and labor market performance in jobs, such as sales jobs, where the inter-personal communication is demanded at a greater.

Another hypothesis raised from a personal point of view is the present preference. Individuals with a high priority for the present have a lesser likelihood of making future-oriented choices because they place greater value on current utility than on utility realized in the future. While various unhealthy but tasty food intake and a comfortable, sedentary lifestyle might provide immediate satisfaction, the practice of healthy living that requires patience and abstinence is considered an investment for the future. This is similar to the concept where there is an immediate satisfaction derived from playing games and watching television in one's free time while making efforts to study areas such as investment is considered a "deposit" for results that can be derived in the future. In other words, investments in health and investments that enhance the value of one's human assets are both difficult decisions for those who show a strong preference for the present. As such, the tendency to avoid future-oriented choices would result in obese people showing low labor market performance. However, this hypothesis requires caution in interpretation as it places individuals accountable for their health behaviors and the resulting consequences.

Policy Approach for Effective Control on Obesity

The most discussed policy approach to effective control of obesity is the imposition of special excise taxes on unhealthy foods, including sugary drinks, or the provision of subsidies for healthy foods. Taxes and subsidies are considered potential policy measures to help consumers improve food and beverage consumption patterns and related health outcomes. Existing studies, which estimate changes in consumption of various kinds of food and beverage prices, reported that consumers, on average, cut consumption of sugary drinks, dining out, fruits and vegetables by 7.9%, 8.1%, 7.0%, and 5.8% respectively when prices rise by 10%. This high price elasticity suggests that consumption taxes on unhealthy foods can have at least a certain effect on reducing consumption. Special excise taxes on sugary drinks are currently being levied in several parts of the United States as well as in around 40 countries globally, and more countries are also expected to follow in the future.

South Korea has yet to legislate such an "obesity tax," but it is gaining significant social attention, with related bills being introduced in recency. Whether it is to change individuals' behavior by providing economic incentives or to change the surrounding socio-economic environment, introducing effective prevention programs to curb the rise in obesity prevalence requires continued research in the future to reduce the burden of individuals and social diseases.

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Professor Euna Han conducts research analyzing the determinants of health behavior, such as individual obesity, and the consequences of health behaviors on various areas, including labor market performance, from a health-economics perspective.