Dollars to Doughnuts
Katherine Mangu-Ward | July 13, 2007, 5:00pm
A tidy little study from Hoover debunking the "we all pay for obesity in the end" thesis and undermining the push to treat obesity as a public health problem. The Homer Simpson example is brought into play, and so the paper is (sorta)cleverly titled "Dollars to Doughnuts":
Obese workers earn less per hour than their thinner colleagues—a finding that is surprisingly robust and does not appear to be explained by differences in education, age, or training. This obesity wage gap is greater for female workers, but it is also true for men. Most often, economists attribute the gap to discrimination against the obese. Occasionally, economists argue that in some jobs (think of supermodels), thinner workers are more productive than obese ones.
My colleague Kate Bundorf and I have developed evidence that favors a different explanation. We think an important reason for the obesity wage gap is that the costs of health insurance are passed through to obese workers. This would be consistent with the theory of wage pass-through, because expected medical expenditures and hence the value of health insurance are greater for obese workers than for thin workers.
In our research, we examined the wage path over a decade for a nationally representative cohort of 12,686 people ages 24 to 31 years old in 1989. For our study, we focused on full-time workers but excluded pregnant women. We separated the workers into two groups: one with health insurance provided by their employer and one without.

We first looked at the wage paths for the group with health insurance (see figure above). As expected, given the discussion so far, obese workers earn less than thinner workers and the gap grows as the cohort ages and becomes more likely to use medical care. By 2000, obese workers were earning nearly $4.60 an hour less than thinner workers. This wage gap is at least as big as the expected difference in medical expenditures between obese and thin workers.
We then looked at wage paths for the group without health insurance (see directly above). For this group, the obesity wage gap never develops—thin and obese workers earned about the same, on average, exactly what one would expect to find under the theory of wage pass-through.
Our evidence has important implications for pooling in health insurance between thin and obese workers. Because wages are lower for obese workers only at jobs where health insurance is provided, the obesity wage gap would seem to undo whatever nominal pooling there is of health insurance premiums. If there is no real pooling, Carl and Lenny do not pay for Homer’s body weight decisions and there is no public health crisis.
For the systematic treatment of the obesity-as-public-health issue, check out Jacob Sullum's May cover story on the "An Epidemic of Meddling."
Stevo Darkly | July 13, 2007, 5:48pm | #
Wait a minute, what is "wage pass-through" and how does it work?
I see that the difference in wages basically makes up for the difference in health insurance costs, but how does that work? At performance review time, do managers say to themselves, "This fat guy is costing us more in health care coverage, so he isn't going to get as big a raise?"
If this was explained in the linked study, I missed it, and so far Google isn't yielding a compact explanation of "wage pass-through" either.
Or I might just be too chunky too understand. ;)
Pinette: Speaking anecdotally myself, you are probably being too broad in connecting poor-impulse control (insofar as that is a factor in obesity, and I think it is an important factor most of the time) to intelligence as applied on the job. I know plenty of pudgy but very smart IT people (also lots of skinny IT people). Some doctors too, even.
On the other hand, most of the business types I've know who are really driven workaholics also tend to be thin people who exercise regularly, so you may possibly be onto something there, although it probably has more to do with focus (or even compulsiveness) than with intelligence per se.
Although, come to think of it, compulsiveness itself might be considered a form of poor impulse control -- just one that, in the case of the business-compulsive, happens to be linked positively with income.
Russ R | July 14, 2007, 9:43am | #
One needs to be careful when looking at averages alone, without regard to distributions.
To say that obese people earn less on average than the "non-obese" leads most people to the erroneous conclusion that any obese person earns less than a similarly qualified non-obese person. This is a serious oversimplification, because it ignores the variance and skewness of income distribution.
I would bet dollars to doughnuts that the income distribution of the non-obese is significantly greater, and that it is sharply skewed to the upside.
As a thought exercise, make a mental list of all the people you can think of who earn more than $150,000 per year, and count the number of people on the list who are obese. (Don't even bother including professional athletes or entertainment media celebrities, they'll just skew the sample even more.) My bet is that the obesity ratio on your list is far lower than the rate of obesity in the general population.
In my firm (a management consultancy, though I'm confident the situation is the same in most industries), among the professionals the pay is high (starts at ~$150,000) and the obesity ratio is extremely low (close to zero).
Among the non-professionals, the pay is lower (maybe 60% to 75% lower), and the obesity ratio is definitely higher, but the obese folks earn the same as their non-obese counterparts.
Maybe the high-income people got to where they were because they are skinny and get shown favouritism, but a low BMI alone doesn't get you an MBA.
My take is that while body shape and career trajectory are definitely correlated, it isn't due to a direct cause-effect relationship, rather the two are both results of other personal characteristics.
Cesar | July 14, 2007, 3:17pm | #
Every part of the world is better off than it was 50 years ago. That's because Africans and others, who would've never been able to invent modern technology and medicine, are able to use them.
Africans aren't better off than they were 50 years ago, mostly because of socialism and AIDS.
Technology, for the last 2,000 years at least, has developed in a crescent stretching from western Europe, through the Middle East and India, to East Asia. Is it because Europeans, Arabs, East Indians, and Asians are smarter than everyone else? No, its because all these places are along major trade routes. With trade comes an exchange of ideas, which helps everyone develop better technology.
Europeans didn't invent the Caravel ship, which allowed them to sail to America. They didn't invent Arabic numerals, which allowed higher mathematics. They didn't invent gunpowder, which gave them the best weapons technology. All those things were done by the Arabs, Indians, and Chinese respectively.
Take away the Caravel ship, gunpowder, and Arabic numerals, and theres no Age of Exploration, and no European domination of the world. Theres also no higher mathematics, no physics, etc, etc. Europeans didn't develop these things in isolation as you would have everyone believe.
If Europe had been as isolated as Australia or the Western Hemisphere, its doubtful they would have ever figured out those things on their own.
You don't believe me? When Spain explored the Canary islands in the 1500s, they found a race of white, light-eyed people living in paleolithic age. Since the islands were isolated, they were never able to trade, never able to exchange ideas, and never able to advance. But the genetic difference between them and Western Europe was nil.
But it won't happen, and the idea that Mexico or Brazil will ever catch up to the United States is based on wishful thinking.
You would have said the same thing about China in 1900. "Those inferior Asians, they will never develop, they don't have the right blood", like so many "Racial realists" did then.
morecarlthanhomer | July 14, 2007, 6:57pm | #
OK,
Now that all the political correct naziism has been properly applied to everyone who notes that morbidly obese people are not as smart as other people ... let's reexamine that issue.
Can a smart person become morbidly obese? The answer is yes, depending on how you define "smart." If you merely define "smart" as having a high IQ, then of course, there cannot be a correlation between weight and "smart."
Are morbidly obese people "intelligent?" I think a prima facia case can be made that they cannot be. "Intelligent" people know that there is a direct correlation between caloric intake and caloric output, and intelligent people thus choose not to become morbidly obese because of both the adverse health and financial effects.
Financial effects? Quite. Have you ever gone grocery shopping with a morbidly obese person? I bet you haven't. Let me just note for the record that the average grocery bill for a morbidly obese person is three to four times what it is for people with normal appetites.
Many studies have also shown that people in the South, who are demonstrably poorer and have a higher-fat diet, are significantly less likely to be morbidly obese than people in the Northeast ... so the argument that income, geolocation or high-fat diet has something to do with obesity is settled science. We shouldn't even be discussing it.
People become morbidly obese because they eat more calories than they expend, and because there are not enough disincentives to discouage it.
We should tax obese people, charge them more for insurance and discriminate against them in employment and pay. We do that out of love for them; to show them the error of their ways. And hopefully they'll become non-obese ... thus, extending their useful lives considerably.
To pat the morbidly obese on the noggin and suggest that somehow "you're a person too," thus excusing the abuse they put their bodies through would be to condemn them to a crappy life and a certain untimely death.
joel | July 15, 2007, 7:00am | #
It would be interesting to see this data broken down by sex.
It has been my observation over time that good looking women get better offers, both professionally and personally.
This is not a new observation.
Our female janitorial staff is almost uniformly way overweight, whereas the male janitorial staff is not. Also, the night cleaning crew tends to be a lot heavier than the daytime crew.
The female professional staff is more of a mixed bag, some being quite thin, others being obese.
This data should also be broken down by race. What if blacks, who earn less than whites, are either more or less obese than whites?
There is no doubt that obesity is determined in part by culture and genes. Years ago there was an attempt made to look at the effect of obesity on highblood pressure. They wanted to use railroad workers, who had 20 or 30 years of consistent health records, in Norway and Italy so as to have an international study.
They had to give up. They couldn't find enough fat Norwegians.
Looks like the Norwegians are still fairly thin.
http://www.oecdobserver.org/news/fullstory.php/aid/1046/Weighty_problem.html
About poverty and obesity. I guess you guys don't live in a diverse neighborhood like me. When I am on the checkout line, I am always amazed at what poorer people buy for food. Just crap. Imagine buying potato chips and soda with your "Freedom" card.
One more thing:
Since being fat is usually a social negative, fat people are saying they just don't care what you think about them. "Screw you, I like to eat."
What if this "screw you" attitude spills over into their professional life? That might impact their pay scale. I have seen this happen at my job.
On the other hand, keeping thin makes the statement that you care about what others think about you. That might result in higher wages.