Obesity: The role of economic incentives in individuals' bodyweight choice

This dissertation investigates the economics of obesity, in particular, the role of economic incentives in individuals' bodyweight choice. In the first essay, it is shown that obesity is negatively correlated with income and health insurance coinsurance rate, using data from the Health and Retirement Study (HRS). In the second essay, I develop and estimate a dynamic structural model of individuals' bodyweight choice. In this model, individuals invest in reducing bodyweight to increase productivity, reduce the probability of death and to reduce health care costs. The dynamics of bodyweight is captured by using the energy balance equation of human body, that is, the calculus of calorie intake, calorie expenditure and bodyweight change. The parameters of the model are estimated using nationally representative data sets (HRS, NHIS, NHANES, Build Study). The model can explain the observed heterogeneity in bodyweight and obesity across individuals and over individuals' lifetimes fairly well, based on the differences in opportunity costs of obesity. Individuals with higher income earning capability tend to be less obese because they have higher opportunity costs of sick days, disability and mortality. Similarly, individuals facing a higher price of health care (i.e. high coinsurance rate) are less likely to be obese. The estimates of the policy-invariant parameters of the model give us the opportunity of conducting some policy experiments. First, raising the coinsurance rate to 1 for all individuals reduces the male prevalence of obesity by 7 . However, raising the coinsurance rate to 1 only for the obese individuals (and keeping the coinsurance rate same as before for non-obese people) leads to a large decrease in the prevalence of obesity (40 ). In this case, individuals have an added incentive to reduce obesity, that is, to reduce the price per unit of health care use.

Body Mass Index

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