The Impact of Obesity, Cardiovascular Diseases and Diabetes on Labor Market Participation and Productivity

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Worldwide obesity has nearly tripled since 1975. Although estimates suggest heritability of obesity of more than 60 percent, the evolving human phenotype cannot be explained by a changing genotype because it occurred too rapidly. The prevailing explanation for the obesity epidemic is thus gene-environment interaction. While genotypes are exogenously determined and fixed in the medium run, the individual response to a changing obesogenic environment (labor saving technology, price, availability, and energy content of food) is largely genetic. These observations are the inspiration for our study.The proposed research project consists of three work packages. The first work package focuses on empirically estimating the causal effect of obesity, diabetes, CVDs, and hypertension on employment, wages, and other labor market outcomes. We use genetic markers as instruments for the diseases and take gene-environment interaction into account by controlling for the duration of exposure to an increasingly obesogenic environment. We use genotyped data and labor market outcomes from a large panel of US American adults born between 1900 and 1958 obtained from the Health and Retirement Study (HRS) and combine it with genetic information obtained from genome-wide association studies.In work package 2, we investigate the association between obesity and the development of other health deficits in the course of human aging. We measure individual health by constructing a frailty index, which captures in one number the biological aging process defined as the intrinsic, cumulative, progressive, and deleterious loss of function. We use the same data sources and instrumental variable strategy as WP 1 to determine the impact of obesity on physiological aging. We then test whether and to which extent the impact of obesity on labor market outcomes is mediated through increasing frailty. In work package 3 we use the empirical findings to develop a new economic theory of obesity, which explains the evolution of body weight and its impact on health, aging, productivity, and labor supply. Specifically, we further develop the health deficit model, which uses the frailty index as measure of human health and aging. We also investigate the role of bounded rational behavior in form of imperfect self-control and time inconsistent decision making. We calibrate numerical versions of the model with the HRS data and the results from WP 1 and 2 and use these models for inferences on the behavioral changes that are elicited by changing food prices, medical progress, and policy interventions to curb the obesity epidemic.