AP MACRO ECONOMCS UNIT 5 THE FINANCIAL SECTOR MODULES 22-29.
Measuring the Effect of Obesity on Earnings Xiaoshu Han Department of Economcs.
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Transcript of Measuring the Effect of Obesity on Earnings Xiaoshu Han Department of Economcs.
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Measuring the Effect of Obesity on Earnings
Xiaoshu HanDepartment of Economcs
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Definition
Body Mass Index (BMI) [Weight in Pounds / (Height in Inches)2]*703
Underweight BMI < 18.5Normal Weight 18.5 ≤ BMI ≤ 24.9
Overweight 25 ≤ BMI ≤ 29.9
Obesity BMI > 30
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1998
Obesity Trends Among U.S. Adults
2007
1990
No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%
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Obesity• An estimated 66 million adults in the United States are
obese.
• Being obese substantially raises one’s risk of morbidity from:– Hypertension– Dyslipidemia– Type 2 diabetes– Coronary heart disease– Stroke– Gallbladder disease– Osteoarthritis– Sleep apnea and respiratory problems– Endometrial, breast, prostate and colon cancers.
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Economics Impact• According to a study of national costs
attributed to both overweight and obesity, medical expenses accounted for 9.1% of the total U.S. medical expenditures in 1998.
• Medical expenses for overweight and obesity may have reached as high as $78.5 billion in 1998.
• Obesity may also have consequences on individual economic outcomes such as earnings and employment.
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Question
• Does obesity affect earnings negatively?
-Less productive -Discrimination
• If yes, by how much?
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The model
Two sets of instruments:• a lagged value of BMI • the regional mean BMI
0 1 0 2log( )wage BMI X
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The Data
• Medical Expenditure Panel Survey: Detailed information on demographic characteristics, health
conditions, health status, use of medical care services, charges and payments, health insurance coverage, income, and employment.
• Panel 7,8,9,10 : data of year 2002 – 2005
• Individuals of age over 18 but below 65: 14745 data points
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Table 1: BMI and Earnings by sex and age:
Female (n=7220) Male (n=7575)
BMI Wage Sample (%) Wage Sample (%)
<18.5 14.05 1.84 11.09 0.74
18.5-24.9 15.59 39.60 17.65 27.66
25.0-29.9 14.37 28.16 18.67 43.62
>=30 13.76 30.40 17.43 27.99
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Table 2: BMI and Earnings by sex and age:
18-40 (n=7956) 41-64 (n=6839)
Female (n=3797) Male (n=4159) Female (n=3423) Male (n=3416)
BMI Wage Sample(%)
Wage Sample(%)
Wage Sample
(%)
Wage Sample(%)
<18.5 13.35 2.58 11.07 1.06 16.00 1.02 11.14 0.35
18.5-24.9 14.02 43.90 15.83 32.03 17.80 34.82 20.84 22.34
25.0-29.9 12.85 25.97 16.56 41.45 15.79 30.59 20.98 46.25
>=30 12.03 27.55 14.99 25.46 15.32 33.57 19.86 31.6
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Results
• Negative impact of obesity on earnings is found for females
For every 1 unit increase of BMI, there will be a 0.2 percent decrease of earnings
40-years old woman with a height of 65 inches the obese one: $13.8 per hour the normal weight one: $15 per hour
• But not for males
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The End
• Any questions?