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June 28, 2016

Weighing more and earning less: The hidden individual costs of obesity

Opinion image

Rising obesity rates plague many countries around the world; in some cases obesity has even replaced smoking as the most pressing public health problem. The potential health care costs of rising obesity rates—estimated to be as high as 20% of a country’s annual health care expenditures—affect individuals and the public alike and are of particular concern for policymakers. However, it is the costs to obese employees that are perhaps less well-known: obese workers lose out in the labor market.

Studies using data from many developed countries indicate that there is a negative and statistically significant effect of obesity on earnings and employment: obese people, particularly women, are less likely to be employed and, when employed, are likely to earn lower wages. Definitively establishing cause and effect is difficult, the gold standard for establishing causality, the randomized controlled trial, is fraught with ethical issues in this area (imagine a randomized control trial where some individuals are “assigned” to be obese and others are not and then we examine their earnings before and after such an experiment). Scholars in many countries have had to be careful in their attempts to determine if obesity is the cause of adverse labor market outcomes because, in most developed countries, poor and less-educated people are more likely to be obese. Poor labor market outcomes may lead to depression and low self-esteem, which in turn lead to weight gain. Thus, untangling the causal effect running from obesity to labor market outcomes requires clever statistical analysis.

Using innovative methods applied to survey data, researchers have produced a body of evidence that establishes that obesity does exert a causal, negative impact on earnings and the chance of being employed, even after accounting for a host of potentially confounding factors. Being obese will lead to lower earnings.

The findings are pretty compelling—across many countries, the obese suffer a lower chance of employment and when they are employed, they have lower wages—potentially up to 9% lower than their non-obese counterparts. In the US the loss is equivalent to 1.5 fewer years of education or three fewer years of work experience. This effect in the US is concentrated among women, particularly white women, but in several other developed countries, a negative effect on earnings is also found for men.

Some persuasive evidence of discriminatory practices being used against obese people was established in a study where pairs of fictitious job applications were submitted for real job openings. The only difference between the applications was the photo of the applicant: one photo was of an individual of normal weight and the other photo was of the same person digitally modified to appear obese. The applications with the modified photo were less likely to receive callbacks for an interview. That employers prefer not to hire obese workers is consistent with the considerable evidence that obese people are stigmatized: studies have shown that there are widespread negative stereotypes that overweight and obese people are lazy, unmotivated, lacking in self-discipline, and less competent. Given that obesity rates continue to rise, and given the magnitude of the public health problem, these research findings suggest that governments and employers have a compelling interest in finding ways to reduce both obesity and discrimination against obese workers.

See Susan L. Averett, "Obesity and labor market outcomes," for more information.

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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.