Obesity, Business and Public Policy

Obesity, Business and Public Policy

Edited by Zoltán J. Ács and Alan Lyles

The effects of obesity have become practically ubiquitous in the US. This book aims to provide an alternative framework through which to explore the important and controversial obesity debate that has spilled over from the medical community. This book is not about obesity as a medical condition, nor does it offer a wide-ranging discussion on the health effects of obesity or the role of the ‘right’ diet.

Chapter 5: The Labor Market Impact of Obesity

John Cawley

Subjects: business and management, organisational behaviour, public management, economics and finance, behavioural and experimental economics, welfare economics, politics and public policy, public administration and management, public policy


John H. Cawley1 The prevalence of obesity in the USA has risen dramatically in the last several decades. Obesity, defined as when a person has a body mass index (BMI) of 30 or higher, rose from 15 percent of the population during 1976–80 to 30.4 percent during the period 1999–2002 (Flegal et al., 2002; Hedley et al., 2004). This trend has generated tremendous interest in better understanding the consequences of obesity: medical, social and economic. This chapter describes obesity’s impact on one important economic outcome: wages. In particular, this chapter will discuss the overall correlation between obesity and wages. It describes how we can measure the causal impact of weight on wages, and what such estimates of the causal impact indicate. It explores explanations for the differences across gender and race in the relationship between weight and wages, and concludes by expanding the review to studies of countries outside the USA. A review of the literature yields a strong conclusion: in the USA, heavier women tend to earn less than healthy-weight women. Two studies calculate that obese white females tend to earn 12 percent lower wages than healthyweight women (Cawley, 2004; Averett and Korenman, 1996). Obese black females tend to earn 6.1 percent less than healthy-weight black females, and obese Hispanic females tend to earn 8.2 percent less than healthy-weight Hispanic females (Cawley, 2004). Only for white females is being overweight (having a BMI greater than or equal to 25 but less than 30) associated with...

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