The Marginal External Cost of Obesity in the United States
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Over the past five decades in the United States both total medical expenditures and
the proportion of medical expenditures financed with public funds have increased significantly. A substantial increase in the prevalence of obesity has contributed to this growth. In this study we measure the external cost of obesity, in the form of publicly funded health-care expenditures, and how this cost changes when the distribution of
obesity in the population changes. We use a continuous measure of obesity, BMI, rather
than discrete weight categories to represent the distribution of obesity and changes in
it. We predict that a 1-unit increase in BMI for every adult in the United States would
increase annual public medical expenditures by $38.7 billion. This estimated public cost
equates to an average marginal cost of $175 per year per adult for a one unit change in
BMI for each adult in the U.S. population. Separately, we estimate that if every U.S.
adult who is now obese (BMI >=30) had a BMI of 25 instead, annual public medical expenditures would decline by $173.7 billion (in constant 2008$), or 17.2% of annual public medical expenditures in 2008. Assuming a socially optimal BMI of no more than 25, we estimate that the prevalence of obesity in 2008 resulted in a deadweight loss of
$216.7 billion in 2008.