Obesity Regulation?

Why don't we find more private contracts as strategies for self-control?  Imagine a plan in which employees or students encouraged their employer or law school to make the following kind of offer: “We know that many of your days are sedentary, and we take an interest in your long-term health. We also know that most of you are eager to be fit. We invite you voluntarily to subscribe to our health partnership for three years. As a subscriber you will pay $2,000 per year into the plan. At the end of each month if you have met the plan’s goals with respect to weight and perhaps exercise (if it can be monitored, as might visitds to particualr gyms) for the month, you receive $200, so that someone who always makes the goals earns $400 on the $2,000 investment in the course of the year. Someone who misses the goals in two of the months breaks even. If you never meet the monthly goal, you will lose the $2,000 subscription – and you will have signed on to try again with another $2,000 the next year, because the plan runs in three-year cycles. Weight loss and maintenance is, after all, a long term endeavor.” 

My guess is that some of us would indeed do better with such an economic incentive, though to guarantee solvency and to make the offer more attractive, the organizer might do well to provide matching funds.  Perhaps the government would be modestly involved, and would improve the economic incentives necesarry to overcome self-control problems, by making receipts tax exempt.  By and large, even employers (and co-workers) and insurers do not find this worthwhile because they do not expect to be long term insurers; a good part of the added health costs associated with obesity can be expected to materialize many years in the future.  Another strategy for government involvement might therefore be to tinker with tax law in order to encourage long-term health coverage so that insurers would have a socially useful time horizon.

In any event, the idea is that many of us know we have self-control problems; we know something is good for us or bad for us (economically or otherwise) but we have trouble doing what we later know we will wish we had done; added economic incentives can help us do what we now know we "should" do.  Self-control is not the same as paternalism.  I might promise my kids prizes if they read good books, but that (parentalism) is not the same as my wishing cigarette taxes to be very high in order to reduce the chances that I will take up smoking.

My larger claim is that as a positive matter we regularly find government intervening in ways that can best be described as intermediation on behalf of self control.  But there is also an important public choice component. Many citizens want to stop smoking, many think they would not save enough for retirement without "extra" incentives, many would not go to college even though they read of that sound investment, many would not buy cars with airbags, and so forth.  In many cases where self control (between the present and future self) is an issue, where monitoring and contractual enforcement is feasible, and where interest groups line up in a way that makes self-control-through-government attractive (to some organized interest groups), we find government involvement.  When the weight of interest group power is opposed to such self-control, it is less likely for the government to get involved, and this may be why we should not expect much in the way of obesity regulation.  But more on interest groups in another posting.

Comments

[Isaac]

Some health care plans already do something somewhat similar; they offer rebates for those who visit the gym frequently enough.

See, for example, point #4 here.

[brentbrent]

While this proposal has some interesting aspects to it, I doubt that it is workable in real life. First, I have to assume that any forfeited money goes back into the employer health plan to cover increased costs due to obesity rather than to the profit of the company. Assuming this is the case, I read about an interesting study which I believe took place at day care centers in Finland or Sweden. Parents were habitually late in picking up their children. We may liken this to people habitually eating too much. In order to remedy the situation, the day care and the researches imposed fines on parents for picking up the children late according to a set formula, setting a financial incentive not unlike this proposed structure. However, much to everyone's surprise, the rate of parents who picked their children up late increased when a fine had to be paid. It seems that once the issue was reduced to cash, the parents felt like they could simply buy more child care for the cost of the fine rather than bring their behavior into compliance with the established norm. Similarly, we might expect people in this proposed system to reason that they have paid for their obesity so there is no remaining reason to comply with the established norm.

[Ted]

I think the problem is one of matching and culture. I've tried to enter into such contracts to improve my incentives to lose weight, usually through arrangements by which the second party and I agree to pay each other X dollars for every pound lost in a certain set amount of time, but it's hard to find someone who (1) is similarly overweight and has similar utility curves for both money and weight such that a deal can be negotiated; (2) understands the economics behind the principle well enough to overcome the general social unacceptableness of such contracts and disclosure of precise weight; and (3) is trustworthy enough to overcome verifiability problems.

[Arnold Schwarzenegger]

Clearly you do not own a gym. Gyms make their money not on the people who regularly come and use the facilities, but rather upon the legions of people who sign up with the psychological intent to lose weight but who subsequently, no matter what the economic cost, fail to show up regularly or at all. As I understand your theory, it is yet another example of law and economics gone awry. By reducing people to mere functions in a society, instead of taking the novel approach that a society should often conform to the individual, such a plan would have the overall effect of bilking the majority of those who sign up in good faith out of $2000. Some people are fat, and indeed obesity is a health risk, but some people drive cars, and driving is a health risk as well. Such is life.
Economics is not called the "dismal science" for nothing. What's so particularly wrong about paternalism? In this case, outlawing fast food and mandating gastric bypass surgery, as long as one has the option of "opting out", would be far more effective than your economic proposal.

And here's the thing about the Coase Therom - it's not unlike Newton's theory of Gravity. Sure, in a vacuum, a feather and a rock both accelerate to the ground at -9.8m/s2. But applied to the real world, the theory needs to be butressed by other theories if it will produce any practical results.
-An old friend

[Michael Amiet]

Arnold, there is a flaw in your analogy of Levmore's proposal to the gym. A gym membership is a sunk cost. Once you sign a membership contract because of your New Year's Resolution, the cash outlay produces no real incentive going forward (like Levmore, I don't own a gym, but I don't think they give money back to patrons who use the treadmills at least x times a week).

On the other hand, Levmore's proposal would establish a real incentive. A participant's behavior would directly effect whether he or she got more money or less all the way through the relevant period. This kind of ever-present financial incentive might be enough to produce an incremental effect that would justify the program.

Also, thanks for the lesson on the Coase Theorem.

[Thomas]

Nonsmokers might approve of higher cigarette taxes, to prevent them from smoking. But most smokers don't think (in my limited experience) that higher cigarette taxes to stop them from smoking are a great idea.

Now, with obesity, are most people like the nonsmoker, or like the smoker, or somewhere else?

[Susan R]

I think obesity has become one of the world fastest growing public health problems.

[Amber]

Susan

I disagree with you please read the artical again

[Andrew Spark]

The obesity epidemic is rapidly affecting the next "seven generations," according to recent reports--impacting life expectancy.

[Kathleen M. Mills]

First, I would like to say that every comment represents deep reflection and solid critical thinking with regard to the matter of obesity and self-control. Obesity is a terrible problem and I thank you all for raising my level of awareness about the problem and putting forward possible solutions. With this said, it is worth pointing-up a difficulty with plans to address obesity as a matter of "self-control".

Many, many, thousands of obese Americans do not eat to excess. They are not gluttons. Rather, they gain weight as a result of taking steroids such as prednisone and testosterone to control life-threatening illnesses such as SLE (Systemic Lupus Erythematoses), and failure of bone marrow to produce RBC's, among other things. The use of such medicines is very often indicated to control disease and most of the time, they cause significant weight gain. I feel sure that other medications cause similar problems.

My husband - formerly a trim person - is an incredibly disciplined man. He seems to handle self-imposed restraints almost without effort. But, he has gained almost 100 lbs. over the past 5 years as a result of taking - as a matter of medical necessity - prednisone and testosterone.

People may be obese for many reasons. Certainly poor self control and gluttonous behaviors should be discouraged and there are many people who gorge and become horribly obese as a result. But, please keep in mind that the obese man or woman in your neighborhood or workplace may well be heavy as a result of their battle with a horrible disease that is trying to take their very life. Don't assume the worst about them or automatically conclude that they have no self control.

Best to all.

Kathleen - Texas

[Chuck]

This is what happens when political correctness runs amuck. But how could something like this be enforced? When you create a law through the legislative branch, you have to give enforcement rights to the executive branch? Are cops going to be sending overweight people to jail?

"Stop and back away from the double bacon cheeseburger!"

[Dani]

Andrew brings up a good point about the many causes of obesity. This is definitely a factor that they would have to consider.

[Jeff]

It's all well and good knowing what you have to do to keep yourself in shape - it's another being able to do it - some of us can't!

[Lose Weight Fast]

It's amazing to think that obesity is now the number one risk factor, more even then smoking, drunk driving etc.! When did Americans become so hungry and lazy? Or is the quality of the food we eat garbage compared to the natural foods of our ancestors?

[Irwin Azman]

Is your company in operation? I am 20 lbs overweight and would love to build my body. I have tried everything. It worked for a couple months but nothing longstanding. Do you have more information on your "contract to loose weight"? Where do I sign up?

[Cornell Food Lab fan]

The role of self-control in weight management is overstated. Much of how we eat is affected by environmental cues, such as the unit bias. As restauranters know, people eat less when they are given smaller serving spoons, smaller plates, fewer types of food, and a la carte menus. Why not ban so-called value meals from menu boards at fast food restaurants? Why not market nutrition in a way that will make good decision-making easier? Why not subsidize Weight Watchers, like West Virgina did with Medicaid programs?

Encouraging self-control is a nice policital idea, but good marketing and supportive programs may be more successful.