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Sweetest Tax of Them All

Growing up, I always thought that the United States was the most obese country in the world. Whenever someone discussed obesity, not only would the US be mentioned, but it would always spark a comical figure of a very fat guy in a t-shirt with an American flag print. Well, maybe a bit too hypocritical of me, Turkey is one of the most obese countries in the world at 32.1% of the population having a BMI larger than 30. Compared to the US at 36.2%, the gap is really not that significant after all.

The interesting case here, of course, is how a developing nation such as Turkey with rather high income inequality and low GDP per capita has obesity rates comparable to the US, which is significantly wealthier.

Several years ago, when I first started studying economics in high school, I looked into how exactly wealth was related to prevalence of obesity. First shock, of course, was seeing that the most obese nation on Earth was Nauru. It’s a very small island in Micronesia, Central Pacific, with about 10,000 inhabitants. Okay, maybe the United States is the second most obese country then..?

Apparently not! Up until number 11, Kuwait, the list consists entirely of developing nations, with rates that are nearly triple the one of the Netherlands (20.4%). Nauru’s population is 61.0% obese, followed by Cook Islands and Palau at 55.9% and 55.3% respectively. Why is this the case though; how are these people from tiny island nations able to afford being overweight?

The main reason behind this phenomena is the fact that even though poor countries are still poor, they are not as poor as they were before. Increased income across the world has it such that even the poorest right now are much better off than the poorest in the 20th century. Combine the increased income with technological advancements in food manufacturing and processing, and you have yourself the recipe for disaster: Processed food that is easy to consume and packed full of energy is cheaper to get, and people are richer than ever!

Other than that, the modern trend of sedentary lifestyles due to most back-breaking labour becoming obsolete does not help Nauru either. For them specifically, the sudden discovery of minerals lead to a boost in people’s incomes. Dis-incentivised from working anymore, the people of Nauru started spending more on processed food, and lost less calories. Kuwait (37.9%, at 11th place, right ahead of the US) is similar to Nauru in the sense that they also prospered based on exploitation of natural resources, namely petroleum, and such faced similar changes in diet and lifestyle.

Even though there are exceptions, the list’s top 50 is essentially dominated by developing African and South American countries, and several other island nations such as Nauru. This only shows the significance of the issue—developing countries are in need of a labour force capable of active manual labour.

As we all know, tobacco products are very heavily taxed in order to reduce consumption and to reduce costs associated with tobacco consumption. Such taxes that attempt to lower the scale of negative externalities are called Pigouvian taxes. By taxing tobacco products, people demand less tobacco, and in turn reduce the direct negative consequences of tobacco consumption on both themselves and the healthcare system.

Sugar taxes have come under the spotlight given the rapid increase in obesity rates not just in developing, but also developed nations. It’s not a new idea either, Samoa (47.3%) introduced it in 1984. Most forms of the implementation focus solely on sugary drinks rather than all forms of processed sugar, but even that seems to have a very strong effect: In 2013, the Mexican government introduced a tax on both sugary drinks and junk foods, and several recent papers in medical and nutrition journals have shown that these taxes did indeed reduce the sales of the taxed products. In turn, they can prevent hundreds of thousands of new cases of Type 2 diabetes, and many more heart attacks or deaths. One of these studies even goes to the extent to predict the amount of savings from this specific tax over the next decade: 983 million international dollars, nearly 10% of Mexico’s GDP.

It seems that, similar to how developed nations have lower birth rates, education plays a very significant role here as well. Attempting to cut down obesity rates through one-size-fits-all attempts such as sugar taxes will likely not help in the long term: as soon as welfare and wealth increases, people will revert their diets back to accommodate more processed foods rich in fats and carbohydrates. A study by Abdulai found that, “…those who attained secondary and tertiary education had lower body mass indices and were much less likely to be overweight or obese…,” indicating that a combination of supplementary policies is necessary to combat obesity in developing nations.

Contributing heavily to healthcare costs through direct or indirect complications, obesity can impact developing nations even worse than developed nations. If no action is taken against it, lower life expectancies and a labour force unfit for the type of labour needed to bootstrap these countries’ economies can hinder their development even further.


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