EVENTS

Date:	Thursday, March 3, 2005
Time:	2:00 PM -- 4:00 PM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

March 2005

Who Is to Blame for Obesity?

Since the mid-1980s, Americans have gotten fatter. Numerous policy initiatives have failed to reverse the upward trend in body weight, and the Centers for Disease Control and Prevention labels obesity as an “epidemic” generating enormous health costs. Plaintiffs’ lawyers and public health organizations are devising litigation to address this problem with the argument that false advertising contributes to or causes many weight problems. At a March 3 AEI conference, a panel of scholars discussed their empirical research into the causes of U.S. obesity, which include declining food prices and a decrease in on-the-job physical activity. A second panel examined the legal basis for obesity suits and the merits of regulating and legislating in this area.

Todd Zywicki
Georgetown University Law Center

Until the 1990s malnutrition was a problem in the United States; now there is an undeniable trend towards obesity. It also happens to be a worldwide problem, as the data show. The data also show that parents started getting fatter faster and sooner than their kids, which suggests that advertising to children is not so much the problem. It looks as if children eat what their parents eat, rather than the reverse.

Tomas Philipson
University of Chicago

I want to discuss three time-series: height-adjusted weight (BMI), calorie consumption, and food prices. The historical data for the past 120 years show a gradual increasing trend in the BMI. The mean has shifted upwards, and the variance has increased. In the past twenty years there has been a rapid increase, but the increase was even greater after World War II. During that shift calorie consumption decreased, which indicates that physical activity has to be taken into account. Also there is a long-term decreasing trend in food prices.

Economists, generally, think technological change on both the demand and supply side is a natural interpretation of these trends. On the supply side, there has been an enormous productivity gain in agricultural production. Also, there has been a specialization in food provision, particularly fast-food consumed predominantly by people who are strapped for time. On the demand side, productivity increases make work more sedentary. Today you pay to exercise, mostly in leisure, rather than get paid for it. So given falling prices, demand expansion alone cannot explain obesity; there has been an offsetting expansion in supply.

Food quality awareness has increased over the same time obesity has risen. More likely, the incentives are more important. It is not clear that the public sector has an advantage here. There are private mechanisms for committing yourself to behaviors which avoid addictive ones, such as stomach surgery. There are many offsetting factors to the fiscal effects of medical insurance externalities and many ways in which obese people save you money. For example, they die younger, consuming less Social Security.

Jonathan Klick
Florida State University and AEI

My research with Thomas Stratman looks for a price theory explanation of obesity. What if different foods have different effects on the nutritional composition of an individual’s diet? A rational individual is going to look at the relative prices of food. As the price of healthful food goes up relative to unhealthful food, an individual is going to purchase more unhealthful food; as the relative price decreases, an individual will purchase more healthful food. The data confirm this.

A secondary question is: is this effect uniform across all groups? Specifically, we looked at whether white individuals and black individuals have the same sensitivities to relative price. We found that the effect of an increase in the relative prices of healthful to unhealthful foods is much greater for black individuals than for white ones. We do not have a good explanation for this, but one possible reason is that the controls for income and equity do not capture that variation entirely, meaning the race variable may be picking up variations in income and wealth. The public health literature suggests differential health literacy across groups. Also, there might be a difference in discount rates--for instance if you think you are going to die sooner--causing individuals to rationally ignore some of these health effects.

There might be room for taxes and subsidies on particular foods. It turns out that the price sensitivity is larger for black individuals than for white, but the effect of prices of healthful foods prices is not statistically significant for black individuals. So if you primarily want to target black individuals, you might want to focus on taxing unhealthy foods rather than subsidizing healthy ones.

Thomas Haynes
Coca-Cola Bottlers’ Association

There is an obesity crisis. I think the statistics are clear--although I have not seen a lot of recent data, perhaps the situation has been mitigated recently. Food and beverages do contribute to weight management challenges, but they are also related to activity. I think that because eating is essential to human life, it is different from other activities subject to litigation: breast implants or smoking, for example. With respect to any individual, you can identify “but for” factors: had I done this rather than that. There are a series of laws which regulate false advertising and unfair trade practices, and violations of those principles do occur. However, the obesity problem is multifactoral, the product of calories in and calories out. It is difficult to isolate merely the calories in.

Alison Rein
National Consumers League

I do believe this is a public health issue when so large a population is affected. Our fast-paced environment makes high-calorie, low-nutrition food more attractive because it is so readily available. We have to consider the marketing which stimulates demand for these products, especially when directed toward children. Consumers have relatively little access to unfiltered, unbiased food and nutrition information. The education portion of the Nutrition Labeling and Education Act has never been funded. Some private-sector retailers are making menu modifications, and some manufacturers are interested in reformulating products or have already done so. Banning lawsuits does nothing to address the root problem. I think education can really work, but often there is no carrot and the stick is sometimes wrong or too blunt.

Ted Frank
O’Melveny & Myers LLP

Class-action litigation is a procedural device to aggregate claims where common issues predominate, and as we can see, obesity is a highly individualized issue. The danger is that some judges will use the class-action mechanism as a means to do justice and let causation disappear from the case entirely. “But for” causation never enters the picture in “lifestyle litigation” such as this. There are judges who would like to do something about the problem but do not want to be the first. Some judges, however, do not mind leading the way, and once you reach that tipping point, the hesitant judges will follow along. The mislabeling suits get lumped in with obesity lawsuits, but those are really run-of-the-mill suits. Also, there are suits where school districts are sued to remove candy and soda machines. The third type of suit is the class-action case like Pelman v. McDonald’s--your products caused me to get fat because I believed your advertising. For now, the big cases have failed, but the plaintiffs in that case are allowed to conduct discovery. Corporations are scared and are practicing the equivalent of defensive medicine. There may be regulatory and tax solutions out there, but litigation will not solve the problem.

Richard Daynard
Northeastern University and Public Health Advocacy Institute

Public health is about the health of populations, and increases in obesity have had drastic health effects. I think most people do care even if they feel it does not affect them. The basic litigation question is whether a potential defendant has done anything to contribute to the obesity epidemic. These cases tend to center around the state consumer protection laws, laws that can be enforced by state attorneys general as well as private attorneys in every state besides Iowa. They also permit the cases to go forward as class actions. Particularly appealing cases are ones involving advertising to kids. Advertising high-calorie-density, low-nutrition food to kids is an unfair and deceptive practice. It is also deceptive to market food to adults advertised as healthier which, in fact, is not. My guess is that when you get into the files of these companies you will find they did focus groups, and they knew the practices were deceptive.

AEI research assistant Michael Petrino prepared this summary.