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The high and rapidly rising adult obesity rates in the United States, United Kingdom, Australia and New Zealand are associated with major health risks, including cardiovascular disease, diabetes, stroke, and some forms of cancer; large health care costs; and premature deaths annually. For example, the death rate from diabetes mellitus has been rising in the U.S. In contrast, death rates from circulator diseases have a strong negative trend, but rising obesity rates almost certainly have slowed this trend. This paper focuses on obesity-related mortality from diabetes and circulatory diseases and establishes the econometric underpinning of an aggregate household health production function and an aggregate household health supply function using data for 15 high income countries, 1971-2001. Our health production function estimates show that mortality is related with a lag to diet, health care, organization of the health care system, and knowledge and technical change. Our aggregate household supply function shows that lower food prices increase and socialized medicine at a modest level decreases mortality with a lag, other things equal, including medical and dietary information and medical technology. From a policy perspective, cheap, unhealthy food is bad for human health and socialized medicine at some level is good for health.

The Economics of Obesity-Related Mortality Among High Income Countries