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 try hard to believe certain things because we want to believe those things; and we end up believing them. 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? At the end of the day, it's almost surely 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. You can be fooled easily with a multi-variate analysis. 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 until the end of the day. 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.

Copyright (c) 2007 Luke Burgis