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.

1. Mark Johnston King’s College, Auckland October 2012
Economic Insecurity and Obesity
There is no doubt that the social costs Research
(private cost + external cost) associated Research by Trent Smith (2012) of the University of
with food consumption have been well Otago, New Zealand, tested the theory that economic
documented. Rising obesity rates especially insecurity is a reflection of weight gain. He focused
in those affluent developed nations have on those who are on low incomes or are unemployed
and research in 2009, with 2,500 working-age males
caused authorities to consider the reasons
over a 12 year period, found that a 1% increase in the
behind this issue. It transpires that economic probability of losing their job reflected a weight gain
insecurity plays a significant role in explaining of around 0.27kg. The same research found that for
trends in obesity for many affluent countries. every year that income decreased by 50% or more
the weight of participants increased by 2.27kg. Other
What is Economic Insecurity? research with women on low incomes found similar
In July 2010 the Economic Security Index (ESI) statistics in that:
was developed by Yale Professor Jacob Hacker. It is 41.1% who were food secure were overweight
designed to provide a meaningful, succinct measure
48.3% who were mildly food insecure were
of Americans economic security. The three key overweight
determinants of economic security it focuses on are:
51.5% who were moderately food insecure were
1 Large losses in household income overweight
2 Large spikes in house-hold medical spending
3 The adequacy of household financial wealth to On a more macro environment similar results were
buffer these losses and spikes. prevalent in that countries that are perceived as being

2. Mark Johnston King’s College, Auckland
less secure also had high levels of obesity. Again obesity worldwide. In the case of New Zealand and
research has shown that a one unit increase in an Iceland these economies have under gone significant
‘economic security index’ transfers to a 0.28% ideological change which included deregulation,
reduction in obesity rates. reduction in labour laws, lower progressive income
tax and a greater focus on inflation rather than full
Efficiency Obesity trade-off employment to name but a few.
Although last twenty years has seen countries move
to a more market based economic system but since Final thought
the global financial crisis (GFC) there has been a U Maybe people consume Big Macs or other fast foods
turn in some countries. Research has shown that the because they have seen others do so, and have
population of those countries that have adopted a copied their eating habits. This view might explain
more free market approach to running their economies, some cross-cultural differences in food preferences,
have experienced personal economic insecurity such as why Americans tend to turn to all naturally
(unemployment etc.) which has given rise to weight savoury foods into sweet desserts by adding
gain. The table below shows that the countries through supplements. Our fast–food cravings for fat, salt,
to be free market have higher obesity rates than sugar are inbred, developed choices. The theory
those that are more planned in nature. Countries with is that because these nutrients were so rare and
free market policies have 4% higher obesity rates valuable in prehistory, we inherited an uncontrollable
on average. Smith notes that countries that have desire for them that is now ineffective, making us fat
deregulated state-owned industries have encountered and sick.
significant increases in obesity rates. Therefore the
free market might improve efficiency but there is a References:
cost – obesity. T. Smith (2012), Does economic liberalisation cause
obesity? EcoNZ@Otago – Issue 29 – September
The table also shows that the USA has the highest 2012
obesity rate in the developed world. Other countries
like New Zealand and Iceland have experienced G. Miller (2012), Spent. Sex, Evolution, and Consumer
Behaviour. Penguin
significant increases whilst Japan and Switzerland
have been comparatively unchanged by the growing
Obesity Rate of Change -
Rate % % per year
Market-Liberal Economies 1990 2005
Australia 2005 10.9 20.0 0.61
Canada 2007 15.1 18.6 0.32
New Zealand 2007 13.5 25.8 0.82
UK 2006 13.8 22.7 0.59
USA 2006 20.0 32.6 0.84
Social-Liberal Economies
Austria 2006 10.0 14.8 0.34
Denmark 2005 8.0 14.2 0.41
Finland 2007 10.3 17.3 0.47
Japan 2006 2.2 3.8 0.11
Netherlands 2007 7.1 12.7 0.37
Sweden 2007 7.2 13.2 0.40
Switzerland 2007 6.7 9.9 0.25
Source: Smith 2012