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The economics of obesity

Rates of obesity have nearly doubled in recent decades. In 2019 over 28% of UK adults and a quarter of children in year 6 were obese. Food-related ill health, including high BMI, is second only to smoking as a contributor to poor health outcomes in the UK.

This is strongly shaped by the food-environment. Inequalities in food-related illnesses are stark and widening: in the most deprived areas in England, prevalence of obesity is around 17 percentage points higher than in the least deprived.

Why does this matter?

Obesity increases the risk of many preventable diseases including type 2 diabetes, cardiovascular disease and some cancers. Additionally, obesity can reduce life expectancy, sometimes by up to nine years – an effect comparable to that of smoking.

But obesity is not just a health issue. A recent study by Frontier Economics has strengthened the case for tackling obesity by quantifying the huge economic costs associated with its impacts on individual quality of life, as well as the pressure it puts on health care services and the wider economy.

The report estimated that the annual cost of adult obesity to UK society is around £54bn, roughly equivalent to 2-3% of GDP or the total annual funding allocated to schools in England.

Three quarters of the Frontier Economics estimate comes from putting a monetary value on the number of healthy life years lost (either to premature death or ill health) due to obesity using measures known as QALYs (quality adjusted life years). This value is incredibly important to society, even if it’s not directly cashable savings.

The costs of obesity are not just experienced by individuals. According to the Frontier Economics report, the NHS spends around £6.5 billion a year (close to 4% of its 22/23 budget) on treating its consequences. The King’s Fund forecasts that this will increase to £10 billion a year by 2050.

"The NHS spends around £6.5 billion a year on treating the consequences of obesity."

High rates of obesity also result in significant indirect costs to the economy beyond the health sector. Reductions in workforce productivity and increased use of social care are estimated to cost around £7.5 billion a year.

What needs to be done?

The most cost-effective approach to tackling obesity-related ill health is to prevent its rise to begin with.

The first official recognition of obesity as a serious issue requiring a public health response was three decades ago in the 1991 Health of the Nation report. In the years since, despite over a dozen government strategies, hundreds of wide-ranging policy proposals and growing public concern, rates of obesity have only increased.

Too many policies have relied on individual will power or voluntary action from industry to turn the tide. In an environment in which the healthy option is rarely the easy option, it is unsurprising that these approaches have had minimal impact.

We need low-agency obesity-prevention policies that take a population-wide approach and ensure affordable and nutritious food is easily accessible for everyone.

A recent report by the Behavioural Insights Team and Impact on Urban Health examined the economic cost benefit of four such policies that were either recently implemented by the UK government or scheduled for future implementation. The policies included restricting the locations of foods high in fat, salt, and sugar (HFSS) in stores and the Soft Drinks Industry Levy, as well as planned restrictions on HFSS multibuy options and advertising.

"The benefits of four obesity-prevention policies could provide a combined net return to the UK economy of £76 billion over 25 years."

The report used Government impact assessments of expected costs (eg, enforcement costs for the taxpayer or transition costs for industry) and benefits of the four policy options to estimate a combined net return to the UK economy of £76 billion over 25 years. The benefits included individual improvements in quality of life, savings to the NHS and social care, as well as projected gains in workforce productivity due to a healthier population. Since estimates outlined in the report only included data available in the Government’s own impact assessments, which did not always capture the full range of likely benefits, the net return estimate is likely to be a very conservative estimate. To give a sense of scale, an independent academic estimate for the sugar tax put the daily calorie reduction at 17.8kcal per person, which the UK government’s own tool would estimate at a value of £9.5bn over 25 years.

As well as providing significant returns for the public purse, approaches that take the focus away from unhealthy food need not be detrimental to business and their bottom lines. This is no clearer than in the success of the 2018 Soft Drinks Industry Levy (SDIL) which has improved public health and protected industry profits. Whilst the total sugar purchased per household from drinks subject to the SDIL has declined by around a third (and was greatest in groups with lowest income), the total sales of drinks subject to the levy increased by a fifth since its implementation. These gains, many of which have been possible due to significant reformulation of products by industry, are in stark contrast to reported progress towards the Government's voluntary sugar reduction targets in which only a 3.5% average reduction in sugar has been observed.

In 2020, the National Food Strategy called for a new salt and sugar tax to replace the SDIL which it suggests could reduce average calorie consumption by 15-38 kcal a day and save tens of thousands of lives, whilst bringing in around £3 billion in tax revenue. Despite frequent claims to the contrary, public support for these kinds of obesity interventions is high. One recent poll found that 63% of people in the UK would support the expansion of the sugar tax from soft drinks to foods such as sweets and biscuits. What are we waiting for?


Lydia Leon

Lydia Leon

Lydia Leon

Senior Analyst, healthy life mission

Lydia works as a senior analyst in the healthy life mission team.

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