It might surprise some of you that economics contributes to
obesity and its accompanying diseases – cardiovascular
disease, diabetes and hypertension. Aside from the fact
that costs of treating these chronic conditions exceed $500
billion annually (surely, that's macro-economic, right?),
there is a different, micro-economic problem taking place
in your wallet.
Economists typically, and wrongly, assume that consumers
are rational. Most of you know that this is not the case.
If we were, a lot of companies (cough) TrimSpa would be out
of business. Especially when it comes to our bodies, we are
filled with insecurities and deceit. We want to believe
certain things, and we do. Somehow, many of us spend
hundreds on diet plans and then turn around and eat a Big
Mac. So…the question becomes…are we psychologically
irrational but rational spenders?
Certainly, you're getting more bang for your buck with a
Big Mac. At the end of the day, from a financial
perspective, consumers should shoot for maximum satiation
for minimum cash, or the lowest cents per calorie for every
bite of enjoyable food (whether or not it's enjoyable is
based on your own utility curve).
A plate full of broccoli and a spoonful of peanut butter
would both roughly be about 200 calories - if I could show
you a graphical representation, the point would really hit
home. Clearly, you have a choice to make. Maximize the
dietary economics or maximize your waistline. 99 cent menus
are the best example of how far we've come.Could it be that
consumers are maximizing their utility and naturally
gravitating toward getting the best bang for their buck
while forgetting or perhaps not knowing that these
decisions will probably result in thousands of dollars in
treatment costs five, 10, maybe 25 years down the road? In
the long run, it's almost always a bad economic decision.
But consumers do not think in the long run, especially in
the U.S. That's why we have one of the lowest savings rates
in the industrialized world while sporting the highest
obesity rate.Obesity has been attributed to many things,
and is a very complex issue – if we make it one.
Multi-variate analysis is tricky. It messes with our minds.
It's hard to separate the noise from what's real. On the
bond trading floor, I'd see the bond prices move all over
the place all day long. 0.01% down, 0.05% up, 0.8% down,
back and forth all day long. What was moving them? What was
the cause? Nothing. Noise. A bunch of irrational traders
reacting to the latest headline on CNBC. Some of my
colleagues would speculate over the small movements; it
happened because of this, it happened because of that.
Great, if I look hard enough, I guarantee that I can find
symptoms of cancer (we all can) - but that doesn't mean
that I have it.
So when I see a 2% move in the price of those bonds, I know
there is a real cause and I don't feel like an idiot for
looking for it because I know that the probability of a 2%
move being attributed to noise is extremely low – is has
significance. In the same way, there are tons of things we
could attribute to causing a rise in obesity in America.
Among them:
Ubran sprawl
Demographics (aging population)
Globalization
Sociological factors
Genetics
Psychology
Longer work hours
Increased stress
Even the higher price of gas
But none of them, in my mind, have enough significance to
explain the shift. They're noise. Things pundits and
politicians point to when trying to make a case for
earmarked funds or research projects.
I think it comes down to this:
The cost of a calorie has declined significantly while the
cost of exercise (as in opportunity cost at the expense of
work or other wage earning activities) has dramatically
risen, making consumers gravitate toward eating crap foods
while remaining more sedentary.
Is it harder for you to go to the gym these days because
you feel like you're missing out on important work? I know
it is for me. That is the heart of the matter – my time,
our time, is more expensive. Thus, working out, or any
physical activity for that matter, may be more expensive.
Unless, of course, your name is David Beckham.
----------------------------------------------------
Luke Arthur is a Founder and Managing Director of Fit Fuel,
http://www.FitFuel.com , the web's fastest growing
natural/organic foods site. Luke is a proponent of the
strenuous but balanced lifestyle and does not advocate
evaluating economic theory when ordering off the menu at
restaurants.