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The Importance Of Obesity In Australia's Economy

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The Importance Of Obesity In Australia's Economy
The prevalence of obesity in Australia has increased dramatically over the past few decades. According to MODI (2014), obesity has overtaken smoking as the leading cause of premature death and illness in Australia. It is currently a national public health crisis with huge negative impacts on the nation and its economy. This essay will explore obesity rates and costs in Australia and then it will examine the economic theory and the government interventions that underlie policies to deal with obesity rates. Government failures that could arise from these interventions will also be considered.

Australia is considered as one of fattest nations in this developed world. National Heart Foundation of Australia (2012) findings illustrate that nearly
…show more content…
This is supported by Hubbard et al. (2013, p. 130) who state that government interventions attempt to increase market’s economic efficiency. The government can impose a fat tax that equals to the obesity cost to eliminate the negative externalities. Figure 2 shows that taxation will drive the supply curve up from S1 to S2. Price goes up from P1 to P2 and deadweight loss is internalised. Taxes on unhealthy food may encourage people to lower their consumptions and suppliers to produce less unhealthy food. This fat tax will raise the cost of unhealthy food and reduce the quantity being exchanged in the market. As a result, the market may produce at an efficient equilibrium …show more content…
(2012). 'Fat tax ' ineffective in countering obesity. Retrieved from http://www.esrc.ac.uk/news-and-events/features-casestudies/features/19779/Fat_tax_ineffective_in_countering_obesity.aspx

Hubbard, R. G., Garnett, A. M., Lewis, P. & O’Briend, A. P. (2013). Essentials of economics (2nd ed.). Frenchs Forest, NSW: Pearson Australia.

Ketter, P. (2006). Obesity affects workplace productivity. T + D, 60(6), 14. Retrieved from http://search.proquest.com/docview/227016684?accountid=13380

Martin, S. S. (2005). From poverty to obesity: Exploration of the food choice constraint model and the impact of an energy-dense food tax. American Economist, 49(2), 78-86. Retrieved from http://search.proquest.com/docview/200704386?accountid=13380

MODI (Monash Obesity and Diabetes Institute). (2014). Facts & Figures: Obesity in Australia. Retrieved from http://www.modi.monash.edu.au/obesity-facts-figures/obesity-in-australia

National Heart Foundation of Australia. (2012). Factsheet: overweight and obesity statistics. Retrieved from

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