Monday 7 January 2013

Social Costs of Healthy

Chris Auld was prescient. If we require corrective policy to internalise pecuniary costs running through the public health system, then we have to do it across the board. And what if it turns out that healthy people wind up costing more because they have a longer retirement in which they consume lots of subsidized health services? He wrote:
If healthy behaviors wind up increasing lifecycle health care costs, we should either subsidize less than we otherwise would, or perhaps even tax, healthy behaviors. Healthy behaviors in this scenario benefit the person exhibiting the behavior but impose costs on everyone else, and this logic demands that we discourage healthy behavior relative to whatever policies we would otherwise have enacted.

This argument does not sit well with me.
A new article in PLOS Medicine finds that the lifetime health costs of the healthy are indeed highest:Non-smokers of moderate BMI imposed the highest lifetime costs. [HT: @Dick_Puddlecote, who points to the Telegraph's report on the study.] Update: I'd missed the date on the PLOS online study; it's from a few years ago. So Auld's prescience may have been overstated. Thanks to Chris Snowdon for the correction.

From the article's conclusion:
In this study we have shown that, although obese people induce high medical costs during their lives, their lifetime health-care costs are lower than those of healthy-living people but higher than those of smokers. Obesity increases the risk of diseases such as diabetes and coronary heart disease, thereby increasing health-care utilization but decreasing life expectancy. Successful prevention of obesity, in turn, increases life expectancy. Unfortunately, these life-years gained are not lived in full health and come at a price: people suffer from other diseases, which increases health-care costs. Obesity prevention, just like smoking prevention, will not stem the tide of increasing health-care expenditures. The underlying mechanism is that there is a substitution of inexpensive, lethal diseases toward less lethal, and therefore more costly, diseases [9]. As smoking is in particular related to lethal (and relatively inexpensive) diseases, the ratio of cost savings from a reduced incidence of risk factor–related diseases to the medical costs in life-years gained is more favorable for obesity prevention than for smoking prevention.
Here's the graph of the expected costs and benefits of smoking and obesity prevention, imagining a costless intervention that would switch the obese or smokers into normal-weight non-smokers. For the first few decades after the assumed-costless intervention, all's great. And then...

If it were free to turn smokers into non-smokers, and if we ignore tobacco excise revenues entirely, they say the costless intervention only passes a fiscal cost-benefit analysis for discount rates higher than 5.7%. If we remember that tobacco excise revenues are heavily front-loaded, being paid often decades before the health costs obtain, then you're not going to find a discount rate where the costless intervention saves the government money.

They warn that they've only focused on health care costs and have left aside productivity costs. But the bulk of productivity costs are borne by the drinker, smoker, or eater himself: they're reflected in lower wages.

Smokers remain the benefactors of the rest of us - voluntarily paying ridiculous levels of tax and then dying before taking much out of the superannuation system.

It's a mistake to model governments as unitary agents. The zealot parts of government want to ban tobacco; the sane parts worry about revenue consequences. I wonder, as does Lionel Shriver, whether worries about lost excise motivate government antipathy towards electronic cigarettes. The zealot side of government doesn't like them because they let smokers keep having fun without moral consequence; the fiscal side doesn't like the lost revenue: bootleggers and baptists in different government departments.

Meanwhile, the British Labour Party contemplates bans on sugary breakfast cereals. I agree entirely with Alex Masse's piece at the Spectator. Alex writes:
Yet one of the features of our society is the steady accumulation of influence – and increasingly of power too – of what might be termed the Government-Health-Security Complex*.
Sometimes slippery slopes really do exist. Some folk warned that the public health industry – that is, the Government-Health-Security Complex – would never be satisfied with its battles against tobacco and alcohol and that it would, in time, launch fresh offensives against fast food, soft drinks, and all things salty an sweet.Don’t be silly, we were told. That’s different. Well, who looks stupid now?
Like so much else this is also, in the end, a question of power and class. The NHS – treated as some kind of secular religion – is to be used as a means of shaming the population (especially the bestial lower orders) into behaving in a more comely, acceptable fashion. The class prejudice inherent in all this is rarely far from the surface. The common people are revolting. Their pleasures must be taxed or, wherever possible, suppressed entirely (see extending the ban on smoking in working-class clubs for example).
And, always, the message is simple: the people – poor, lardy, wheezing, sods – are too stupid to make their own choices and it is government’s role to save them from themselves.
Next step then is plain packaging for breakfast cereals....


  1. Eric, care to weigh in on a debate I'm having about this elsewhere? Specifically, does loss of tax revenue as a result of lower productivity (e.g. due to smoking, eating too much) count as an externality? I've argued that the government would have to be spending efficiently, which is unlikely, for the loss of revenue to count as an externality and so it probably doesn't (count). Not sure if that's right, but the notion (i.e. loss-of-revenue-due-to-lower-productivity-as-externality) seems odd to me.

  2. Its those productivity costs and lifestyle costs where the nazis propagandists make the real fairytale claims in costs..........when it comes down to actual costs over revenue generated by tobacco the government wins per the plan. However the prohibitionists still create mythological studies and never ending claims based upon their own invented terminology in junk studies produced whether economic or science.

  3. Chaouachi, Kamal

    Tobacco researcher specializing in medical anthropology. Holder
    of a post-graduate diploma in Tobacco Science from the University of
    Paris (1998). Taught hookah science to French doctors (University of
    Paris XI–XII, 2006–2010). Scientific collaborator of various research
    centres in Asia, Africa and Europe. Paris, France

    – Since prohibitionists are not capable of producing quality
    evidence, they rely on quantity so that each new “study” can contain
    sentences like “There is an accumulation of evidence that”
    environment[al] tobacco smoke kills, etc.… and the not less classical
    ending call for funding: “More research is needed.”

    – Besides, they have themselves set the criteria for considering
    acceptable “evidence”. For instance, who controls the so­ called
    evidence published in WHO reports? The WHO Tobacco Study Group (TobReg)
    experts of course. Who are those experts? The same who are to be found
    in the editorial boards and peer­ reviewers lists of numerous journals
    supposed to provide the evidence at the grass­root level. This is a
    vicious circle, a global trick, a global hold up of science.

  4. Slim truth in fat and smoking figures

    Michael West
    November 23, 2011 - 11:39AM.

    A leading actuary has lampooned health lobby figures on the costs of smoking and obesity as being extravagantly inflated and based on suspect methodology.

    “The numbers are all over the place,” writes Geoff Dunsford in the September edition of Actuary Australia. And they are “big numbers” – the implication being that they are too big.

    “Obesity costs $58.2 billion,” he exclaims, “that’s around twice the cost of age pensions!”

    The sheer size of the numbers, argues the Sydney actuary, perverts government policy. It can lead to poor spending decisions. The credibility of the numbers from the health lobby is therefore critical to government policy.

    The press and the public have been led to believe that the costs to the system are higher than they really are so the government can “justify use of taxpayers’ money on measures to reduce its prevalence and prevention”.

    Dunsford looks at three public health issues: obesity, smoking and depression.Read more: