# data[].attributes.body
Nikki is a tower of strength as she is always by my side if i have difficulty.

# data[].attributes.headline
Nikki is a real dark horse because she's able to do all the hard work easily.

# data[].attributes.subject
Nikki is a real dark horse because she's able to do all the hard work easily.

# data[].attributes.attachment_link.readable_text
Despite the widely accepted ideal of "shared value," research led by Harvard Business School's Kasturi Rangan suggests that this is not the norm-and that's OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic. To maximize their impact, companies must ensure that initiatives in the various theaters form a unified platform. Four steps can help them do so:

Pruning and aligning programs within theaters.

Companies must examine their existing programs in each theater, reducing or eliminating those that do not address an important social or environmental problem in keeping with the firm's business purpose and values.

Developing metrics to gauge performance.

Just as the goals of programs vary from theater to theater, so do the definitions of success.

Coordinating programs across theaters.

This does not mean that all initiatives necessarily address the same problem; it means that they are mutually reinforcing and form a cogent whole.

Developing an interdisciplinary CSR strategy.

The range of purposes underlying initiatives in different theaters and the variation in how those initiatives are managed pose major barriers for many firms. Strategy development can be top down or bottom up, but ongoing communication is key.

These practices have helped companies including PNC Bank, IKEA, and Ambuja Cements bring discipline and coherence to their CSR portfolios.

HBR Reprint R1501B

# data[].attributes.attachment_link.description
Despite the widely accepted ideal of "shared value," research led by Harvard Business School's Kasturi Rangan suggests that this is not the norm-and that's OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic.

# data[].attributes.body
financial SCR

# data[].attributes.attachment_link.readable_text
As businesses increasingly cross geographic and cultural borders to build their brand, they must function less like a profit-hungry interloper and more like a good neighbor. Watching the bottom line while addressing everyday concerns of people in emerging markets-especially ones that are potentially politically and economically volatile-can pay off.

That was the core message of experts during the recent Leadership Conference on Global Corporate Citizenship in New York City. Addressing an audience composed of environmental consultants, corporate philanthropists, human resource directors and CEOs, experts rattled off, case by case, the rising profits of companies operating under this new business model.

CSR Pays Off

Take, for example, Amanco, a PVC and plastics producer in Brazil: It invested $100,000 in irrigation kits that since 2007 have been sold to a fraction of the small farmers in Guatemala, a nation with roughly 300,000 small farms. That Amanco division has grown, yielding annual revenues of $4.1 million thus far. (The company's yearly earnings were $800 million in 2006.) It saved $580,000 through an assortment of eco-efforts at company plants. Its heavily promoted environmentally sustainable efforts have won the firm clean contracts from organizations throughout Latin America.

Or consider DQY Ecological, an egg producer in China: Its strong environmental and safety performance has attracted foreign investment from the Global Environment Fund and the International Finance Corp., which focuses on sustainable business development that improves people's lives. DQY's sales soared from $600,000 in 2002 to $6.7 million in 2006, climbing even during the infamous SARS outbreak of farm-borne pneumonia-and despite the fact that DQY's eggs are more expensive than many.

Consumers trust DQY, said Jeff Erikson, vice president of SustainAbility Inc., an independent think tank and consultancy with offices in Europe, South Asia, Washington, D.C. and New York. Erikson provided snapshots of DQY, Amanco and other firms during a panel discussion on investment returns from corporate socially responsible initiatives.

"There are tools out there to help [companies] frame a return on investment," Erikson said, "and to help describe qualitatively what [CSR] programs can bring to your company."

Far from being businesses in which all major decisions trickle down from the top, socially responsible firms demand that innovations, ideas and input emanate from the ground up as well, experts said. CSR initiatives flourish when a firm's subordinates and managers buy into CSR and when companies doing business on foreign turf listen to what the locals have to say.

For London-based Anglo-American Inc.-which mines coal, minerals and metals in regions including South Africa-that has meant mitigating water pollution, which is a by-product of the water-dependent mining process. And it has meant confronting the impact of AIDS on mine workers and their families, an imperative realized partly by sending Anglo-American's managers into the field to engage the community about its concerns.

Good for Business

Corporations must "raise the bar for best practices," said Sir Mark Moody-Stuart, Anglo-American's chairman.

For its part, his conglomerate responded to what local people were saying by extracting toxic sulfates from water left over from mining and using the extractions to cultivate a coterie of local entrepreneurs who build and sell construction materials made from the sulfates.

Also, Anglo-American opened HIV-AIDS clinics on mining sites, paying $125 per month for retroviral drugs for each HIV-infected employee. That, and educating workers about AIDS, has helped reduce the infection rate, slashed employee absenteeism and saved Anglo-American $200 per month for each infected worker.

"You might say, 'Why is this a job for a company?' The answer is ... that societal and business interests merged," Moody-Stuart said. "To remain welcome [globally], we must be part of the solution. Without the support of local societies, we cannot be successful. It just won't work. Doing good is good business."

CSR is a far more organic process than prior business models, said Andrew Mercy, CEO of Angel Points. His Sausalito, Calif., company shows firms how to engender a philosophy of social responsibility and lists among its clients such giants as Blue Cross Blue Shield, Hilton Hotels and General Electric. CSR, Mercy said, taps the know-how of rank-and-file employees, corporate partners, corporate suppliers and corporate chiefs. "You have to be able to foster this culture in your people before you can expect other things to happen," Mercy said.

GE, for one, has formally told its international workforce that the areas in which its bottom line interests converge with public interests include health care, digitization of medical records, water and energy conservation.

Louisville, Ky.-based Yum!, another Angel Point client and owner of Taco Bell, KFC, Long John Silvers and Pizza Hut, most recently used national Hunger Relief Week to launch its long-range hunger and nutrition initiatives, Mercy said. Yum!'s move, he added, is "superficial, first level, in that it gets people educated and involved. You build from there."

Deloitte, another Angel Point client, enlisted roughly 32,500, or 75 percent, of its workers for 700 projects in 70 countries for its self-fashioned Impact Day 2008. The program linked workers to volunteer projects, especially those that take advantage of a worker's particular expertise. In that way, Deloitte aims to identify community needs and new markets. "Think of your people, how you involve them in the process, the journey," Mercy said. "If you can't make these a part of your process, CSR and sustainability don't have a shot."

Employee Engagement Important

"For corporate social responsibility to be as effective as it can be, it does need to engage everybody," said Washington, D.C. attorney Peter Petesch of Littler, a San Francisco-based employment law firm with 46 offices in the United States. "It has to be integrated into an organization's overall business strategy. An effective program needs to win over the hearts and minds of the workforce at all levels."

Anecdotally, that might be as simple as inviting employees in a building supply, hardware or similar enterprise to sign up to help with Habitat for Humanity housing construction, he said.

Fundamentally, companies eyeing CSR must be intentional, said David Logan, co-chairman of United Kingdom-based Corporate Citizenship, which has an office in Washington, D.C. "You have to ask why you're doing this," said Logan, whose clients include Ford, Guinness and Unilever, and who has been working in 30 emerging markets in Africa, Asia and Latin America. Which laws, Logan added, govern workers and workplaces in various locales? Beyond philanthropy, how does a CSR plan build business and save money? How willing is a company to accept that some worthy initiatives are profitable, while others are cost-neutral; that some are expensive but merely the proper thing to do?

Vodafone, the global cellular phone giant (operating as Verizon Wireless in the United States), has undertaken such tasks as curbing its climate-changing carbon emissions and extending its cellular reach in developing countries where small and large businesses rely heavily on mobile phones, said Logan, who has consulted for Vodafone.

As far back as 15 years ago, Logan added, companies were proving that addressing the human needs of communities where they operate would pay off.A study he conducted for the U.S. Agency for International Development tracked a dramatic fall in absenteeism among the largely female workforce at a garment factory in the Caribbean island of St. Lucia after company owners heeded the women's requests for reproductive and other gender-specific health services.

"We leveraged free public health supplies through the plant. That seemed to be a do-good program," Logan said. "The bottom line is that for every dollar put into it, we saved 3.2 dollars. What the world is doing is reinventing how all of this works."

New York-based freelance journalist Katti Gray's work has appeared in Newsday, Ms.,Essence, the Los Angeles Times, Chicago Tribune and other publications. Reach her at katti@kattigray.com or www.kattigray.com.

# data[].attributes.attachment_link.title
ROI: Companies See Financial Benefit in CSR Programs

# data[].attributes.attachment_link.description
As businesses increasingly cross geographic and cultural borders to build their brand, they must function less like a profit-hungry interloper and more like a good neighbor. Watching the bottom line while addressing everyday concerns of people in emerging markets-especially ones that are potentially politically and economically volatile-can pay off.

# data[].attributes.attachment_link.readable_text
Corporate social responsibility (CSR) often refers to 'companies voluntarily going beyond what the law requires to achieve social and environmental objectives during the course of their daily business activities.' CSR is typically considered voluntary and beyond compliance with the law. Yet, a few countries such as China, India and Indonesia have taken a progressive approach to CSR under corporate law, a legal area where CSR has been deemed highly controversial. Their corporate statutes expressly state that companies shall engage in CSR activities.

China is probably the first country in the world that expressly writes the phrase of 'corporate social responsibility' into its corporate statute. China's 2006 Company Law provides that '[i]n the course of doing business, a company shall comply with laws and administrative regulations, conform to social morality and business ethics, act in good faith, subject itself to the government and the public supervision, and undertake social responsibility.'

The recent emergence of such CSR legislation has raised controversies. Advocates of shareholder primacy denounce this CSR legislation, believing that any deviation from shareholder interests would just do more harm than good. While CSR advocates generally welcome this legislative endeavor, their acceptance comes with reservations. A common concern is that although the CSR law appears imperative, it is probably merely aspirational in practice given that the statutory language of CSR is too vague to be operational.

As the CSR law has become an emerging legal reality, there is an urgent need to look beyond the theoretical debate and examine the law's real world application. In practice, how have courts applied the CSR provision under the corporate statute? Existing literature generally presents a depressing picture primarily with the analysis of the statutory language and the common perception of incompetent courts in developing countries that have adopted the law. This picture appears so pessimistic that empirical research on the judicial application of the CSR law is not something worth pursuing.

Nevertheless, my article ' Mandatory Corporate Social Responsibility? Legislative Innovation and Judicial Application in China ' shows some hopeful lights shining from the generally negative image through an empirical analysis of Chinese court cases. The Chinese CSR law has been more than a decade old, which provides a long enough time span to evaluate its effects. The empirical research reveals what the CSR provision means in judicial practice, whether CSR is in fact mandatory, and in what types of disputes CSR is relevant or determinative of the outcome.

Since 2006, at least 169 unique Chinese court cases have explicitly referenced the CSR provision or the CSR concept. Although the judicial application of the CSR law remains limited, the law is not useless or simply expressive. Chinese courts have used it in a legally consequential manner. Moreover, the substantive interpretation of CSR is contingent on the political, economic and social situations in China. For instance, Chinese courts take social stability as an important dimension of CSR. The judicial use of CSR has been made possible because the CSR law has a certain fit with China's macro and micro institutions including relevant legal infrastructure.

The recent development of the CSR law provides a practical lens to revisit the purpose of the corporation from a comparative perspective. The traditional debate about the corporate purpose tends to be firm-based, theoretical and insulated from real-world macro institutions including politics. The CSR law reveals the institutional forces in shaping corporate purpose in legal terms. In addition, the article provides insights into the multi-faceted relationship between CSR and corporate law. Existing corporate law scholarship, mainly based on the experience of Anglo-Saxon countries, takes CSR analysis to be exclusively tied with directors' fiduciary duties. However, Chinese courts have innovatively applied CSR in other corporate law contexts unrelated to directors' fiduciary duties. The Chinese experience suggests that the CSR law is more of a judicial review standard than a corporate behavior standard. It further evidences that interpreting CSR places high demands on the judiciary.
Li-Wen Lin is Assistant Professor at the University of British Columbia Peter A. Allard School of Law.

# data[].attributes.attachment_link.title
Mandatory Corporate Social Responsibility? Legislative Innovation and Judicial Application in China

# data[].attributes.attachment_link.description
Corporate social responsibility (CSR) often refers to 'companies voluntarily going beyond what the law requires to achieve social and environmental objectives during the course of their daily business activities.' CSR is typically considered voluntary and beyond compliance with the law.

# data[].attributes.attachment_link.readable_text
For K lara Kozlov, head of corporate clients at the Charities Aid Foundation, every company's situation is unique, with many different models in existence which can help organisations to achieve their CSR aims. In turn, this preponderance of choice has led to many companies recognising that they are defined by what they do, not just what they give. "Companies are not solely providing a financial contribution but are increasingly unlocking their intellectual assets and the power of their people to achieve a positive impact," claims Ms Kozlov. "Ultimately, coherency comes from clear purpose, programmes of work which are authentic to and valued in the business and an acceptance that it is critical to business performance."

Tobias Webb, founder and managing director of the Innovation Forum, is clear on what a CSR programme, or a sustainability strategy, should accomplish. "It comprises re-evaluating how the company thinks about its impact, engaging stakeholders beyond shareholders and coming up with a plan to improve the impact of the business on society and seize business opportunities and make cost savings as a result," he attests. "This would involve a lot of planning and engagement with employees, managers, suppliers, NGOs, perhaps academics and others, to figure out where and how this is best done."
CSR resistance
Cynics suggest that companies often develop a CSR agenda not because of an altruistic desire to assist in curing the ills of society, but for reasons more akin to a box ticking exercise. Whatever the consensus, some organisations either implement their CSR programme with a distinct lack of heart or resist adopting a CSR policy altogether.

In the opinion of Mr Potts, if a resistance to CSR policies does exist, it usually stems from the notion of allowing external stakeholders to directly influence corporate policies and strategies, an idea that is largely antithetical to the basic mindset under which many, if not most, corporations operate. "An honest adoption of CSR often requires a serious reformulation of corporate purpose and decision-making structures," advises Mr Potts. "Such change also implies, and rests upon, the adoption of a corporate culture which actively encourages employees to consider how the company might be able to do better in the world. When CSR policies are adopted without simultaneous tools for stimulating and allowing deep change, one can expect similarly soft results in terms of CSR outcomes and impacts."
Avoiding ethical blowback
According to Mr Webb, many companies are shackled by an adherence to a 20th century mindset imbued by the Milton Friedman paradigm of 'only shareholder returns count'. Instead, companies should be looking at business strategy through the lens of sustainable supply or resilience - a very different proposition from the Friedman philosophy. "Tesco suffered hugely because all their suppliers hated them, and so did everyone else," says Mr Webb. "This was because they squeezed everyone and it backfired on them in the end. The Wharton Business School professor Thomas Donaldson calls this type of scenario the 'ethical blowback'."

Sustainability is clearly important. More businesses are adopting a strategic approach to their CSR policies because they are increasingly seeing the benefit across their business and for their stakeholders. "Many businesses have made significant strategic advances in sustainability," affirms Ms Kozlov. "CSR allows businesses to demonstrate their values, engage their employees and communicate with the public about how they operate and the choices they make, to ensure a sustainable future. CSR helps pave the way for partnerships between businesses and civil society that are based on common goals and shared actions to deliver impact-driven outcomes."
Pressure to deliver strong financial results
As CSR programmes continue to evolve and extend their reach, it may well become the case that companies find themselves under added pressure to have their CSR initiatives deliver a strong financial result. If this is indeed true, many would question whether this financially-orientated approach is not somewhat at odds with what the core aims of a CSR programme are supposed to be. "This depends on your timescale," suggests Mr Webb. "In three to five years, a good CSR strategy will have delivered more engaged employees, better access to talent, lower capital constraints and a better reputation. In the longer term it can deliver serious business innovation and transformation of the company culture and how the firm sees its role in the world. Companies attempting this - not yet successfully, but on the way - include Unilever and Nestle, among others. Two well-known examples of those that are already there are Interface and Patagonia."

Others are not convinced that organisations are feeling extra pressure due to a need to demonstrate stronger financial outcomes in conjunction with their CSR activities. "Significant pressure to bolster financial outcomes has always existed and will continue to exist," says Mr Potts. "There is no reason why CSR commitments cannot deliver strong financial results, and it would be folly to expect companies to throw this core corporate objective out the window altogether."

The problem arises when companies attempt to measure the financial results of their CSR policies independent of their other corporate activities. Rather, CSR policies need to be considered as a core and inseparable component of the overall service or product offering. Furthermore, the costs related to CSR should not be expected to demonstrate traceable financial gains.

CSR policies should set the 'rules of the game' which the company concerned has established, and within which broader corporate financial returns need to be secured. "Basic CSR principles and commitments should be considered non-negotiable parameters of business operations rather than being subject to specific financial performance requirements," says Mr Potts.
Future embrace
At present, the incorporation of CSR programmes by businesses on a fundamental level appears as prevalent as ever. However, the jury is still very much out as to whether companies have it within them to embrace a broad or multifaceted vision of CSR. "It would be utopic to expect a sea change among industries," says Mr Potts. "While there are plenty of examples of companies using strong CSR performance as a brand-building and product marketing strategy, far too many corporate executives still rely on the old financial and hierarchical models of yesteryear as the basis of their own planning. The biggest and most influential companies also tend to be the most reliant on the 'conventional way' of doing business. What is happening, however, is a broad transition to the adoption of external multi-stakeholder processes - in the form of multi-stakeholder sustainability standards and labels - as a way of outsourcing the stakeholder engagement process."

Ultimately, there are no hard and fast rules governing CSR. The more companies understand the growing resilience, reputation and legal risk they face, the more opportunities our globalised and connected world has to offer them. "This often depends on the sector," points out Mr Webb. "If you make mining equipment, your focus will be energy efficiency and perhaps new technology that is safer. If you sell chocolate, your concerns are around the economic viability of your supply chain."

With a number of recent legislative and behavioural developments, such as the transparency of supply chains, sustainable development goals, the ramifications of the Modern Slavery Act 2015 and the zero landfill initiative, all contributing to the CSR melting pot, Ms Kozlov is in no doubt that companies are unifying their CSR activities under an overarching, business-aligned strategy, and using them as a tool to drive innovation, tackle material issues, strengthen community engagement and mitigate risks.

Whether a force for good or an exercise in brand enhancement, what cannot be denied is that CSR is very much an integral part of the global business landscape.
© Financier Worldwide

# data[].attributes.attachment_link.title
The importance of corporate social responsibility - Financier Worldwide

# data[].attributes.attachment_link.description
For K lara Kozlov, head of corporate clients at the Charities Aid Foundation, every company's situation is unique, with many different models in existence which can help organisations to achieve their CSR aims. In turn, this preponderance of choice has led to many companies recognising that they are defined by what they do, not just what they give.

# data[].attributes.attachment_link.readable_text
Corporate Social Responsibility (CSR) is defined by the Financial Times as 'a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.' It is an idea that has really grown in importance in recent years, and a number of Fortune 500 companies have announced aggressive CSR programs.

This new found charitability is not a purely selfless play. The 2017 Cone Communications survey found that seven in ten Americans believe companies have an obligation to take actions to protect and benefits society and the environment, while 90% said companies should operate in such a way as to achieve it. The issue is particularly important for millennials. According to The Millennial Impact report, 72% of Millennials have volunteered for a charitable cause in the past year, while 94% said they enjoyed using their skills to help a cause.

Companies must pay attention to this trend for two reasons. Firstly, they need it to attract and retain consumers. According to Cone Communications, when presented with a choice between two similar products, 90% of consumers will select the brand they perceive to have a better CSR presence. Secondly, it is important to attract and retain employees. By 2025, millennials are likely to make up 75% of the US workforce, and their desire to combine performing a social good with employment is well documented. In the Deloitte Volunteer IMPACT survey, young professionals who regularly participate in workplace volunteer activities were found to be almost twice as likely to be satisfied with the progression of their career than those who did not.

We spoke to four leading strategists from organisations that have been highly successful in promoting CSR about why they felt it was so important.
Chris Bosch, Director of Strategy and Operations at World Vision International
CSR is inherently important because everyone has a responsibility to care for people and the planet. Profit is an important motivation and goal for organizations but corporations will not sustain success if it is the only goal. People are hard-wired to care for each other and their environment and they expect the organizations they interact with to do the same. The generation coming of age in the workforce right now has a new expectation for consumption and investing. They are creating an obligation on corporations to do good while they do well. This new generation of consumers and investors thinks much more integrative about their lives - mixing consumption with the spiritual and the spiritual with their daily actions. They have the same expectation of the corporations they relate with.
Benjamin Kumpf, Innovation Lead at the UNDP
The depletion of natural resources, unsustainable consumption patterns, climate change and also the effects of political instability have global reach and are becoming more and more tangible for people in the global North. As a consequence, more and more consumers turn to products and services that have clear sustainability and social good components.
Jeremy Renna, former Vice President of Leased-Strategic Planning and Vendor Collaboration at Macy's
Everyone is attempting to capture the Millennial generation both as a customer and an employee. Every significant survey I've seen tells of a socially conscious millennial group. Companies have pivoted to be more openly responsible to capture this group's attention.
Emil J. Dzuray Jr., Director of Strategic Planning at the US Postal Service HQ
The Postal Service has held paramount the importance of socially responsible behavior since our inception. Today, the best organizations realize that customers want to do business with organizations and brands that operate in a socially responsible way. This expectation is key to sustaining customer loyalty and brand trust. Furthermore, the best companies realize that attracting and retaining the best employees is foundational for future success. More and more, we see that the top talent in our industry want to work for organizations that operate in a socially responsible manner and enable them to contribute to their local communities and to the world in a positive way.

# data[].attributes.attachment_link.title
Why Corporate Social Responsibility Is Becoming More Important To Organizations | Articles | Chief Strategy Officer

# data[].attributes.attachment_link.description
Corporate Social Responsibility (CSR) is defined by the Financial Times as 'a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders.' It is an idea that has really grown in importance in recent years, and a number of Fortune 500 companies have announced aggressive CSR programs. This new found charitability is not a purely selfless play.

# data[].attributes.attachment_link.readable_text
Who does CSR impact?

CSR impacts companies, nonprofits, and employees alike. Corporate social responsibility is not a mandated practice in the United States; instead, it is something extra that companies do to improve their local and global communities.

How can CSR programs help nonprofits?

Individuals make up roughly three-fourths of an organization's total monetary contributions. CSR initiatives can help nonprofits make up that leftover 25% after they've looked to individual donors.

How much money has been donated as a result of corporate giving?

Corporate giving in 2017 increased to $20.77 billion, up 8% from 2016. Corporate giving was also bolstered by $405 million contributed as part of disaster relief.

# data[].attributes.attachment_link.title
Corporate Social Responsibility: The Definitive Guide

# data[].attributes.attachment_link.description
CSR impacts companies, nonprofits, and employees alike. Corporate social responsibility is not a mandated practice in the United States; instead, it is something extra that companies do to improve their local and global communities. Individuals make up roughly three-fourths of an organization's total monetary contributions.

# data[].attributes.attachment_link.readable_text
Business education tends to produce zombies with self-contradictory minds.

Except for medicine-which dates back to the 10th century in Salerno-early institutions of higher learning in Europe used to consist of philosophy, mathematics, history, and the classics of literature, whose purpose was not the direct application of these disciplines for practical purposes. Such professions as the law, soldiering, and seamanship as well as architecture and the various branches of engineering had been learned in apprenticeships and through practice in the field. They began to have their place in the universities only in the last two centuries. After the Second World War, they were joined by business schools, which have rapidly taken a more and more prestigious place in graduate studies.

It is tempting to regard the very subject of management science as a confidence trick without any deliberate fraudulent intention, but nonetheless causing both professors and students of the discipline to gain prestige, goodwill, and careers by cultivating a subject which perhaps two generations ago would not be considered as a subject at all. Much of it is written in management consulting English or what we might also recognise as "junior vice president-ese". In fairness, it must contain useful knowledge as well as the practice of thinking about the application of the subject to real life situations, because otherwise the subject would not have become quite as popular as it has. Nevertheless, it must flourish under a cloud of suspicion, jargon, wind, and wool, much of it deserved.

The oath of the ethical business professional

Since 2009, 8,500 graduate students from 300 business schools, including Harvard and Wharton, have taken an oath laying down what the future business executive must do in his professional life to satisfy his own conscience, the requirements inherent in his profession, and the community at large. The oath is manifestly written for the use of future chief executives of businesses of a certain size, with access to labour and capital markets, including a stock market for their shares. It is not really written for owner-managers of private companies, although some of the text may be applicable to them as well. This oath consists of seven articles. Two of them are relevant to the present argument that seeks to substantiate the claim of confused thinking.

Article 1: " I will manage my enterprise with loyalty and care and will not advance my personal interests at the expense of my enterprise or society. "

"The chief executive takes an oath to be loyal, but his promise is an almost empty one, because he promises to be loyal to everybody and anybody without establishing a rank order between all his loyalties."

The chief executive, in other words, takes an oath to be loyal, but his promise is an almost empty one, because he promises to be loyal to everybody and anybody without establishing a rank order between all his loyalties. There is no question of being particularly loyal to the shareholders who are paying his salary. It is not always, but nevertheless often, that the interest of one group can only be enhanced by diminishing the interest of one or more other groups. The article implicitly regards the interest of anybody concerned as being coextensive with the interests of everybody else. This is fairy tale land or nearly so, because, in most situations, the interests in question compete with one another. You cannot give more to one without taking away some from the others.

The attempt of the business manager to be the judge of who gets something at the expense of taking something away from the others would in many instances result in Solomonic verdicts with the result being worse than if no judgment had been proclaimed.

Article 7: " I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society. "

This article is designed to persuade public opinion that business management has the same ethical rank and authority as older professions such as medicine and the law. This article is manifestly "self-interested". This claim is in itself a demonstration of confused thinking.

The Maximization of Future Profit

As a result of past events, a business disposes of resources of labour and capital. It seeks to deploy them in such a way that the marginal resources invested in labour will result in the same level of profit as the marginal resources invested in capital, so that no redeployment of the same resources could produce a larger profit. The business will try and maintain this equality over time into the future, with successive and progressively farther time periods eventually qualifying as the "long term". However, the result in every time period is not a single quantity of future profit, but several quantities of alternatives, with each alternative having an estimated probability of occurring. Moreover, this probability distribution may be estimated by each shareholder differently, and thus may differ according to the information available to each shareholder as well as the temperament of each. Ideally, the chief executive as an agent of the shareholders would conduct the business so as to represent a single quantity of a long-term profit. This single quantity would in some sense represent all the expectations of the shareholders with all the probabilities attached to them. For obvious reasons, of which the information relating to each shareholder is only one, it is impossible to compose such a representative number. Instead, the chief executive must compose the number representing long-term future profit as a matter of his own responsible judgment.

Long-term profit implies a result that we obtain via short-term profits.

"Short-termism" is a reproach the investment community often makes to the chief executive. "Long-termism" would be just as justified, perhaps more so. Short-term profit is the most recent information one can have about the long-term profit which remains only a forecast. Whether the short-term profit is under- or over-fulfilled on the way to the long-term is the only information about it; the rest of the way towards the long-term has an irreducible subjective element. The short-term information may of course give rise to adjustments in labour or capital or both for the remainder of the way towards the long-term profit.

The appropriation account

The result from the profit-and-loss account is divided between the dividend and the retained profit. The retained profit must promise an adequate return in terms of future profit so as to compensate for it not being distributed as a present dividend. Future profit yielded by the retention must, in turn, be adequate to satisfy the forecast of long-term profit. In equilibrium, there would be no further call for adjustment between the dividend, the retained profit, and the future long-term profit.

As far as logic can carry it, the above equilibrium satisfies a sketch of a theory of a publicly traded for-profit.

This sketch has almost nothing to do with the oath the professionally trained chief executive is supposed to obey. He must obey what all his colleagues of professional business school graduates must do, namely to contradict elementary logic and pursue mutually contradictory and confusing practices. They must persuade themselves that they are heading a business which, as the previous version of the oath stipulated, will satisfy "shareholders, co-workers, customers and the society in which [they] operate" as well as "those who may not have power, but whose well-being is contingent on [their] decisions".

With due respect, only the brain of a zombie can fulfil an oath which obliges him to contradict, together with the same zombies what a "well-ordered" brain would command him to do.

*Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State as well as other books, including Social Contract, Free Ride, Political Philosophy, Clearly, Political Economy, Concisely, Economic Sense and Nonsense, Helmut Kliemt, ed., and Justice and Its Surroundings. His books may be purchased through the Liberty Fund Book Catalog.

The State is also available online on this website.

For more articles by Anthony de Jasay, see the Archive.

"As word gets out that corporation B consistently refuses to help worthy causes in the community, most people will see B as socially irresponsible." What is "corporate social responsibility (CSR)?" While the term may be easy to define, identifying which corporations are socially responsible and which are not is difficult. The difficulty in correctly identifying a socially responsible firm is an example of a broader problem in making sound economic judgments: the need to take into...

# data[].attributes.attachment_link.title
Profit Maximization: A Much Abused Doctrine - Econlib

# data[].attributes.attachment_link.description
Business education tends to produce zombies with self-contradictory minds. Except for medicine-which dates back to the 10th century in Salerno-early institutions of higher learning in Europe used to consist of philosophy, mathematics, history, and the classics of literature, whose purpose was not the direct application of these disciplines for practical purposes.

# data[].attributes.attachment_link.readable_text
What Is Corporate Social Responsibility (CSR)?

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.

Engaging in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment instead of contributing negatively to them.

Key Takeaways

Understanding Corporate Social Responsibility (CSR)

Corporate social responsibility is a broad concept that can take many forms depending on the company and industry. Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.

For a company to be socially responsible, it first needs to be accountable to itself and its shareholders. Companies that adopt CSR programs have often grown their business to the point where they can give back to society. Thus, CSR is typically a strategy that's implemented by large corporations. After all, the more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition, and industry.

Types of Corporate Social Responsibility

In general, there are four main types of corporate social responsibility. A company may choose to engage in any of these separately, and lack of involvement in one area does not necessarily exclude a company from being socially responsible.

Environmental Responsibility

Environmental responsibility is the pillar of corporate social responsibility rooted in preserving mother nature. Through optimal operations and support of related causes, a company can ensure that it leaves natural resources better than before its operations. A company can pursue environmental stewardship through:

Reducing pollution, waste, natural resource consumption, and emissions through its manufacturing process.

Recycling goods and materials throughout its processes, including promoting re-use practices with its customers.

Offsetting negative impacts by replenishing natural resources or supporting causes that can help neutralize the company's impact. For example, a manufacturer that deforests trees may commit to planting the same amount or more.

Distributing goods consciously by choosing methods that have the least impact on emissions and pollution.

Creating product lines that enhance these values. For example, a company that offers a gas lawnmower may design an electric lawnmower.

Ethical Responsibility

Ethical responsibility is the pillar of corporate social responsibility rooted in acting in a fair, ethical manner. Companies often set their own standards, although external forces or demands by clients may shape ethical goals. Instances of ethical responsibility include:

Fair treatment across all types of customers regardless of age, race, culture, or sexual orientation.

Positive treatment of all employees including favorable pay and benefits in excess of mandated minimums. This includes fair employment consideration for all individuals regardless of personal differences.

Expansion of vendor use to utilize different suppliers of different races, genders, veteran statuses, or economic statuses.

Honest disclosure of operating concerns to investors in a timely and respectful manner. Though not always mandated, a company may choose to manage its relationship with external stakeholders beyond what is legally required.

Philanthropic Responsibility

Philanthropic responsibility is the pillar of corporate social responsibility that challenges how a company acts and how it contributes to society. In its simplest form, philanthropic responsibility refers to how a company spends its resources to make the world a better place. This includes:

Whether a company donates profit to charities or causes it believes in.

Whether a company enters into transactions only with suppliers or vendors that align with the company philanthropically.

Whether a company supports employee philanthropic endeavors through time off or matching contributions.

Whether a company sponsors fundraising events or has a presence in the community.

Financial Responsibility

Financial responsibility is the pillar of corporate social responsibility that ties together the three areas above. A company might make plans to be more environmentally, ethically, and philanthropically focused; however, it must back these plans through financial investments of programs, donations, or product research. This includes spending on:

Research and development for new products that encourage sustainability.

Recruiting different types of talent to ensure a diverse workforce.

Initiatives that train employees on DEI, social awareness, or environmental concerns.

Processes that might be more expensive but yield greater CSR results.

Ensuring transparent and timely financial reporting including external audits.

Volunteering

Benefits of Corporate Social Responsibility

As important as CSR is for the community, it is equally valuable for a company. CSR activities can help forge a stronger bond between employees and corporations, boost morale, and aid both employees and employers in feeling more connected to the world around them. Aside from the positive impacts to the planet, here are some additional reasons businesses pursue corporate social responsibility.

Brand Recognition

According to a study published in the Journal of Consumer Psychology, consumers are more likely to act favorably toward a company that has acted to benefit its customers as opposed to companies that have demonstrated an ability to delivery quality products. Customers are increasingly becoming more aware of the impacts companies can have on their community, and many now base purchasing decisions on the CSR aspect of a business. As a company engages more in CSR, it is more likely to receive favorable brand recognition.

Investor Relations

In a study by Boston Consulting Group, companies that are considered leaders in environmental, social, or governance matters had an 11% valuation premium over their competitors. For companies looking to get an edge and outperform the market, enacting CSR strategies tends to improve how investors feel about an organization and how they view the worth of the company.

Employee Engagement

Another study by professionals from Texas A&M, Temple, and the University of Minnesota found that CSR-related aligning firms and employees serve as non-financial job benefits that strengthen employee retention. Workers are more likely to stick around a company that they believe in. This in turn reduces employee turnover, disgruntled workers, and the total cost of a new employee.

Risk Mitigation

By adhering to CSR practices, companies can mitigate risk by avoiding troubling situations. This includes preventing adverse activities such as discrimination against employee groups, disregard for natural resources, or unethical use of company funds. This type of activity is likely to lead to lawsuits, litigation, or legal proceedings that may harm the company financially or expose it to negative news headlines.

In 2010, the International Organization for Standardization (ISO) released ISO 26000, a set of voluntary standards meant to help companies implement corporate social responsibility. Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified.

ISO 26000 clarifies what social responsibility is and helps organizations translate CSR principles into practical actions. The standard is aimed at all types of organizations, regardless of their activity, size, or location. And because many key stakeholders from around the world contributed to developing ISO 26000, this standard represents an international consensus.

Examples of Corporate Social Responsibility

Starbucks ( SBUX) has long been known for its keen sense of corporate social responsibility and commitment to sustainability and community welfare. In its 2022 Environmental and Social Impact Report, the coffee giant highlights taking care of its workforce and the planet among its CSR priorities. Starbucks points to its investments in its employees through stock grants and providing additional medical, family, and educational benefits. In terms of environmental sustainability, the company's goals include achieving 50% reductions in greenhouse gas emission, water consumption, and waste by 2030.

As part of its annual reporting on ESG, Home Depot ( HD) highlighted its achievements in focusing on its employees, operating sustainably, and strengthening its communities. The company has invested more than 1 million hours per year in training to help front-line employees advance in their careers, aims to produce or procure 100% renewable energy to operate its facilities by 2030, and has plans to spend $5 billion per year with diverse suppliers by 2025.

General Motors

General Motors won the Sustainability Leadership Award from Business Intelligence Group in 2022 and was among Diversity Inc.'s top 50 companies for diversity for a seventh consecutive year in 2021. According to its latest Sustainability Report, the automaker provided $60 million in grants to more than 400 U.S. nonprofits focusing on social issues, and it has agreements in place to use 100% renewable electricity at its U.S. sites by 2025.

Why Should a Company Implement CSR Strategies?

Many companies view CSR as an integral part of their brand image, believing that customers will be more likely to do business with brands that they perceive to be more ethical. In this sense, CSR activities can be an important component of corporate public relations. At the same time, some company founders are also motivated to engage in CSR due to their convictions.

Why Is CSR Important?

The movement toward CSR has had an impact in several domains. For example, many companies have taken steps to improve the environmental sustainability of their operations, through measures such as installing renewable energy sources or purchasing carbon offsets. In managing supply chains, efforts have also been taken to eliminate reliance on unethical labor practices, such as child labor and slavery.

Although CSR programs have generally been most common among large corporations, small businesses also participate in CSR through smaller-scale programs, such as donating to local charities and sponsoring local events.

What Are the Benefits of CSR?

CRS initiatives strive to have a positive impact on the world through direct benefits to society, nature and the community in which a business operations. In addition, a company may experience internal benefits through the initiatives. Knowing their company is promoting good causes, employee satisfaction may increase and retention of staff may be strengthened. In addition, members of society may be more likely to choose to transact with companies that are attempting to make a more conscious positive impact beyond the scope of its business.

What Are the 4 Types of CSR?

CSR initiatives are often broken down into four categories: environmental, philanthropic, ethical, and economic responsibility. Environmental initiatives focus on preservation of natural resources, while philanthropic initiatives focus on donating to worthy causes that may not relate to a business. Ethical responsibility ensures fair and honest business operations, while economic responsibility promotes the fiscal support of the goals above.

What Companies Have the Best CSR?

There is no single defining rubric for evaluating the CSR of all companies. Various sources will review and compile rankings differently. Since 1999, Corporate Responsibility Magazine has ranked the top 100 Best Corporate Citizens each year among the 1,000 largest U.S. public companies. Rankings are determined based on employee relations, environment impact, human rights, governance, and financial decisions.

In 2022, the top five ranked companies on the list were Owens Corning ( OC), PepsiCo ( PEP), Apple ( AAPL), H.P. ( HPQ), and Cisco ( CSCO).

The Bottom Line

Companies striving to measure success beyond bottom-line financial results may adopt corporate social responsibility strategies. These strategies may target environmental, ethical, philanthropic, and fiscal responsibility that extend beyond the products they sell. CSR aims to make the world a better place beyond transacting with customers and may result in company-specific benefits as well.

# data[].attributes.attachment_link.title
Corporate Social Responsibility (CSR) Explained With Examples

# data[].attributes.attachment_link.description
Corporate social responsibility (CSR) is a business model that helps a company be socially accountable to itself, its stakeholders, and the public.

# data[].attributes.attachment_link.readable_text
Welcome to Thomas Insights - every day, we publish the latest news and analysis to keep our readers up to date on what's happening in industry. Sign up here to get the day's top stories delivered straight to your inbox.

For decades, companies have been using corporate social responsibility (CSR) to give back to society while bolstering brand reputation. This management concept as we know it today is mainly a product of the twentieth century, taking shape in the early 1950s.

However, the history of corporate social responsibility is one that actually spans over two centuries.

The 1800s and the Birth of Responsible Organizations

While there has been a recent spike in the popularity of CSR, evidence of businesses' concern for society can be traced back to practices originating from the Industrial Revolution. In the mid-to-late 1800s, there was growing concern about worker wellbeing and productivity among industrialists.

Growing criticisms of the emerging factory system, working conditions, and the employment of women and children were being brought to light, especially in the United States. The consensus among reformers was that current employment practices were contributing to social problems, including poverty and labor unrest. However, industrial betterment and welfare movements at the time were viewed as a combination of humanitarianism and business acumen.

Also making an appearance in the late 1800s was the rise of philanthropy. Industrialist Andrew Carnegie, who made most of his fortune in the steel industry, was known for donating large portions of his wealth to causes related to education and scientific research.

Following in the footsteps of Carnegie, oil industry business magnate John D. Rockefeller also donated more than half a billion dollars to religious, educational, and scientific causes.

The Catalyst for Modern Corporate Social Responsibility

Although responsible companies had already existed for more than a century before, the term Corporate Social Responsibility was officially coined in 1953 by American economist Howard Bowen in his publication Social Responsibilities of the Businessman. As such, Bowen is often referred to as the father of CSR.

However, it wasn't until the 1970s that CSR truly began to take flight in the United States. In 1971, the concept of the 'social contract' between businesses and society was introduced by the Committee for Economic Development. This contract brought forward the idea that companies function and exist because of public consent and, therefore, there is an obligation to contribute to the needs of society.

By the 1980s, early CSR continued to evolve as more organizations began incorporating social interests in their business practices while becoming more responsive to stakeholders.

Universal Acceptance of Corporate Social Responsibility

The 1990s marked the beginning of widespread approval of CSR. In 1991, University of Pittsburgh professor Donna J. Wood published Corporate Social Performance Revisited, which expanded and improved on early CSR models by providing a framework for assessing the impacts and outcomes of CSR programs.

In the same year, business management author and professor at the University of Georgia Archie B. Carroll published his article The Pyramid of Corporate Social Responsibility. In his paper, Carroll expanded on areas he believed were crucial when implementing CSR in an organization.

By the early 2000s, CSR had become an essential strategy for many organizations, with multi-million dollar companies, such as Wells Fargo, Coca-Cola, Walt Disney, and Pfizer incorporating this concept into their businesses processes.

Other CSR Articles
Image Credit: Courtesy of the Rockefeller Foundation

# data[].attributes.attachment_link.title
A Brief History of Corporate Social Responsibility (CSR)

# data[].attributes.attachment_link.description
For decades, companies have been using corporate social responsibility to give back to society while bolstering brand reputation.

# data[].attributes.attachment_link.provider_name
Centers for Disease Control and Prevention

# data[].attributes.attachment_link.readable_text
People who have overweight or obesity*, compared to those with healthy weight, are at increased risk for many serious diseases and health conditions. These include: 1,2,3

All-causes of death (mortality).

High blood pressure (hypertension).

High LDL cholesterol, low HDL cholesterol, or high levels of triglycerides (dyslipidemia).

Type 2 diabetes.

Coronary heart disease.

Stroke.

Gallbladder disease.

Osteoarthritis (a breakdown of cartilage and bone within a joint).

Sleep apnea and breathing problems.

Many types of cancer.

Low quality of life.

Mental illness such as clinical depression, anxiety, and other mental disorders4,5.

Body pain and difficulty with physical functioning6.

*Overweight is defined as a body mass index (BMI) of 25 or higher. Obesity is defined as a BMI of 30 or higher. See the BMI calculator for people 20 years and older and the BMI calculator for people ages 2 through 19.

Overweight and Obesity
Data, strategies, and initiatives-CDC.

Weight Loss for Good
Being overweight brings added risks for people with diabetes-American Diabetes Association.

Clinical Guidelines on the Identification, Evaluation, And Treatment of Overweight And Obesity in Adults [PDF-1.28MB]
Health problems associated with overweight and obesity-National Heart, Lung and Blood Institute.

Health Risks of Overweight and Obesity
Causes, risk factors, screening, prevention and more-National Heart, Lung and Blood Institute.

Adult Obesity Maps
Self-reported US adult obesity prevalence by race, ethnicity, and location.

¹NHLBI. 2013. Managing Overweight and Obesity in Adults: Systematic Evidence Review from the Obesity Expert Panel. [PDF-5.89MB]
² Clinical Guidelines on the Identification, Evaluation, and Treatment of Overweight and Obesity in Adults. [PDF-1.25MB]
³Bhaskaran K, Douglas I, Forbes H, dos-Santos-Silva I, Leon DA, Smeeth L. Body-mass index and risk of 22 specific cancers: a population-based cohort study of 5*24 million UK adults. Lancet. 2014 Aug 30;384(9945):755-65.

⁴Kasen, Stephanie, et al. "Obesity and psychopathology in women: a three decade prospective study." International Journal of Obesity 32.3 (2008): 558-566.

⁵Luppino, Floriana S., et al. "Overweight, obesity, and depression: a systematic review and meta-analysis of longitudinal studies. " Archives of General Psychiatry 67.3 (2010): 220-229.

⁶Roberts, Robert E., et al. "Prospective association between obesity and depression: evidence from the Alameda County Study." International Journal of Obesity 27.4 (2003): 514-521.

Connect with Nutrition, Physical Activity, and Obesity

# data[].attributes.attachment_link.description
People who have overweight and obesity, compared to those with healthy weight, are at increased risk for many serious diseases and health conditions.

# data[].attributes.attachment_link.readable_text
Abstract

Over the past several decades, obesity has grown into a major global epidemic. In the United States (US), more than two-thirds of adults are now overweight and one-third is obese. In this article, we provide an overview of the state of research on the likely economic impact of the US obesity epidemic at the national level. Research to date has identified at least four major categories of economic impact linked with the obesity epidemic: direct medical costs, productivity costs, transportation costs, and human capital costs. We review current evidence on each set of costs in turn, and identify important gaps for future research and potential trends in future economic impacts of obesity. Although more comprehensive analysis of costs is needed, substantial economic impacts of obesity are identified in all four categories by existing research. The magnitude of potential economic impact underscores the importance of the obesity epidemic as a focus for policy and a topic for future research.

Keywords: obesity, economic impact, United States, economic cost

Introduction

Over the past several decades, obesity has grown into a major global epidemic. By 2002, nearly 500 million people were overweight worldwide. In the United States (US), rates of obesity have doubled since 1970 to over 30%, with more than two-thirds of Americans now overweight. 1 The determinants of this epidemic are likely complex, 2, 3 with substantial heterogeneity at the individual level in both causes and consequences that is beyond the scope of the current review.

In this article, we provide an overview of the state of research on the likely economic impact of the US obesity epidemic at the aggregate level. We conducted a broad search of the literature that addresses potential economic costs of obesity. The most recent studies that sample US populations have identified at least four major categories of economic impact linked with the obesity epidemic: direct medical costs, productivity costs, transportation costs, and human capital costs. We systematically review current evidence on each set of costs in turn, and discuss important gaps for future research along with potential trends in future economic impacts of obesity. This review adds to the current research on the economic impact of obesity by providing a more comprehensive overview of the range of effects, as well as a summary of the most up-to-date estimates.

Direct medical costs

One of the most cited economic impacts of the obesity epidemic is on direct medical spending. Obesity is linked with higher risk for several serious health conditions, such as hypertension, type 2 diabetes, hypercholesterolemia, coronary heart disease (CHD), stroke, asthma, and arthritis. Direct medical spending on diagnosis and treatment of these conditions, therefore, is likely to increase with rising obesity levels. Several studies offer retrospective or prospective estimates of the degree of disease incidence that can be linked to obesity, and of the magnitude of associated direct medical costs.

Incidence of diseases associated with obesity

The most common definitions of obesity are based on body mass index (BMI), defined as weight in kilograms divided by height in meters squared. Obesity in adults is generally defined as a BMI of 30.0 or greater, with BMI of 25.0-29.9 categorized as overweight. 4

Thompson et al 5 present a dynamic model of the relationships between BMI and the risks of five diseases linked with obesity: hypertension, hypercholesterolemia, type 2 diabetes mellitus, CHD, and stroke. The model captures both direct and indirect effects of obesity on health outcomes - obesity is a risk factor for hypertension, hypercholesterolemia, and diabetes, which are themselves risk factors for CHD and stroke. Estimated using a variety of data sources (including the National Health And Nutritional Examination Survey or NHANES, and the Framingham Study), the model gives future risks of all five diseases, life expectancy, and lifetime medical costs associated with the five diseases for men and women aged 35 to 64 years in each of four representative BMI groups ("healthy" BMI of 22.5, "overweight" BMI of 27.5, "obese" BMI of 32.5, and "severely obese" BMI of 37.5). BMI is assumed to be constant at its initial value for all individuals, with other risk factors adjusted for each year of aging. Results from the model demonstrate substantial increases in disease risk with increasing BMI. Relative to the group with BMI of 22.5, risk of hypertension is 40%-60% higher in the overweight (BMI 27.5), and twofold higher in the obese (BMI 32.5). Lifetime risk of CHD is 41.8% in obese men compared to 34.9% in the nonobese; for women, risk increases from 25% for the nonobese to 32.4% for the obese.

Similar relative disease risk rates for the overweight and obese are found in large-scale population studies. The Health Professionals Follow-up Study, based on 29,000 men observed over a three year time-period, found CHD risk to be 50% higher in the overweight (BMI 25-28.9), twice as high in the obese (BMI 29-32.9), and three times as high in the severely obese (BMI > 33), compared to healthy weight men (BMI < 23). 6 For women, analysis 7 based on the Nurses Health Study 8 found the relative risk of type 2 diabetes to be 40.3 for women with BMIs between 31 and 32.9 (compared to those with BMI of less than 22). Analysis of NHANES-II cross-sectional data for both men and women found risk of hypertension and diabetes to be increased 3.0 times and 2.9 times, respectively, compared to the nonoverweight. 9, 10 A large-scale telephone survey of 195,000 adults 11 found the odds ratio for the overweight and obese (compared to normal weight) to be 1.59 and 3.44, respectively for diabetes, 1.82 and 3.50, respectively for high blood pressure, and 1.50 and 1.91, respectively for high cholesterol. Statistically significant effects for asthma and arthritis were also found. A different study quantified an increase of 1 mmHg in systolic blood pressure resulting from each one-unit increase in BMI among healthy 20-29 year olds. 12

Medical costs associated with incidence of obesity-related diseases

Associated with incidence of obesity-related diseases are direct medical costs for diagnosis and treatment of these conditions. Numerous studies estimate these costs, using a variety of methodologies including: cohort studies, case studies, dynamic models, nationwide representative surveys, regression analyses, and simulation forecasting. There is widespread agreement across this literature that the medical costs associated with obesity are substantial; however, there are important differences between the studies.

Two recent studies use cohorts drawn from managed care organizations to estimate relative costs for the obese and overweight compared to the nonoverweight. This approach allows for direct study of individual medical histories (and charged costs) with no aggregation, but relies on self-report for BMI and other initial data. Cohorts examined may not be nationally representative. Thompson et al 13 base their estimates on a retrospective study conducted at Kaiser Permanente in Oregon, with 1,286 subjects who responded to a 1990 random sample survey. Respondents were between 35 and 64 years old, had self-reported BMIs greater than 20, were nonsmokers, and had no history of heart disease. Thompson et al sorted subjects into three categories - healthy, overweight, and obese - according to initial (1990) BMI. They followed each group over a nine year period, using electronic records and local retail prices to tally real costs for all inpatient care, outpatient services, and prescriptions. Results show significantly higher accumulated costs for the obese and overweight than for the healthy-weight group. The obese (BMI ≥ 30) had 36% higher average annual health care costs than the healthy-weight group, including 105% higher prescription costs and 39% higher primary-care costs. The overweight (BMI 25-29) had 37% higher prescription costs and 13% higher primary-care costs than the healthy-weight group.

Wolf 14 and Pronk et al 15 studied health care costs among a stratified random sample (n = 5,689) drawn from members of a managed care organization in Minnesota aged 40 and older. They compare total medical care charges over an 18-month period across BMI categories, controlling for age, race, sex, and chronic disease status. Results show that a one-unit increase in BMI translates to a 1.9% increase in median medical spending during the study period.

Several studies use dynamic models to estimate medical care costs associated with overweight and obesity over a substantial time period. Using a dynamic multi-stage model of the relationship between BMI and risk for five diseases strongly linked to weight status (see above), Thompson et al 13 generate associated medical care costs for each stage of the model. They find overweight (BMI 27.5) to increase expected lifetime medical care costs for the five diseases studied by almost 20% compared to the healthy-weight group (BMI 22.5). Obesity increases lifetime medical care costs for these diseases by 50% above baseline, and severe obesity can almost double them.

Gorsky et al 9 construct three "hypothetical" cohorts of 10,000 women each - one cohort with healthy weight, one overweight, and one obese. They begin each cohort at age 40 years and extrapolate into the future through age 65 years, conducting incidence-based analysis of the excess costs associated with remaining overweight or obese over this time period. Results show that the obese cohort would incur excess costs of $53 million (with 3% annual discounting) over the 25 years, and the overweight cohort would incur excess costs of $22 million. Applying these results to the broader US population, the authors estimate that approximately $16 billion will be spent between 1996 and 2021 on treatment of health conditions associated with overweight and obesity in middle-aged American women.

Regression analysis based on nationally representative surveys is another widely-used approach in the literature on health care costs associated with obesity. Finkelstein et al 16 use data from the 1998 and 2006 Medical Expenditure Panel Surveys (MEPS) along with National Health Expenditure Accounts data on health spending to construct a regression that controls for demography, smoking status, and insurance status. They divide cost estimates among payers (Medicare, Medicaid, or private) and cost category (inpatient, outpatient, or prescription). Estimated medical costs of obesity are as high as $147 billion a year for 2008, or almost 10% of all medical spending. This is a substantial increase from their 1998 estimate of $78.5 billion a year. The authors attribute the majority of this increase to higher prevalence of overweight. Private payers bear the majority of estimated costs, although public-sector spending is also substantial - Medicare spending would be an estimated 8.5% lower and Medicaid spending 11.8% lower in the absence of obesity. Across all payers, comparison of the obese to healthy-weight individuals shows 2006 medical spending that is 41.5% higher as a result of obesity.

Rather than providing a point-estimate of obesity's impact on spending, Thorpe et al 17 focus on assessing the link between increases in obesity prevalence and increases in spending over time. They use self-reported data on both medical conditions and BMI from two nationally representative surveys (the National Medical Expenditure survey and the Household Component of the MEPS), and construct a two-part regression controlling for key individual variables (such as demography, smoking, and insurance status). The regression estimates the "obesity-attributable" portion of per-capita health care spending increases between 1987 and 2001 to be 27% (adjusted for inflation), with 12% due solely to increases in prevalence of obesity. Most of this increase was found to be due to spending on diabetes or hypertension specifically. At the beginning of the study period in 1987, per capita health care spending was estimated to be 15.2% higher for the obese than for healthy-weight individuals. By 2001, this gap had grown to 37%. The rate of growth in spending among the obese group was much higher than overall per capita spending growth.

Allison et al 18 examine whether any of the direct medical costs of obesity estimated in previous studies might be offset by increased (early) mortality associated with obesity. They conclude that increased mortality may lower costs somewhat, though inclusion of this factor does not affect the qualitative conclusion that such costs are likely substantial.

Obesity-related medical costs occur not only in adult populations, but in children as well. The annual direct costs of childhood obesity in the US are estimated at about $14.3 billion. 19, 20 In addition to these immediate costs, current childhood obesity implies future direct costs given that overweight children and adolescents may become obese adults. 21 Lightwood et al 22 estimate the likely future economic burden that will result from current high rates of overweight in US adolescents. They simulate the costs of excess obesity (and associated diseases) among US adults aged 35 to 64 years from 2020 to 2050. Results suggest that currently existing levels of adolescent overweight will result in close to $45 billion in direct medical costs over this period, affecting young as well as middle-aged adults. The authors argue that these costs may be unavoidable, with currently existing technologies unable to reduce significantly the likely future consequences of current adolescent overweight.

A pair of recent studies examines who ultimately bears the health care costs associated with obesity. Bhattacharya and Bundorf 23 use data from the National Longitudinal Survey of Youth (NLSY), collected by the Bureau of Labor Statistics (BLS), to capture worker wage information and the MEPS to capture medical expenditure information. Their regression analysis concludes that many of the health care costs associated with obesity "are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages". The authors argue that this gap in health-insurance premiums may explain most of the wage gap usually attributed to discrimination.

Dall et al 24 focus specifically on diabetes, estimating that the US national economic burden of pre-diabetes and diabetes was $153 billion in higher medical costs for the year 2007 alone, with an average annual medical cost per case of $1,744 for undiagnosed diabetes, $6,649 for diagnosed diabetes, and $443 for pre-diabetes. Although this study does not estimate the fraction of these diabetes costs that are attributable to obesity, other evidence suggests it may be substantial (see above). Dall et al argue that the costs of diabetes are borne by all Americans, not only those with diabetes, and amount to a per-person cost of around $700 a year.

Productivity costs

In addition to direct medical costs of obesity, a number of more indirect costs are part of the overall economic impact of obesity. Of these, effects on productivity play the largest role empirically. The productivity costs of obesity have been well-documented in a variety of studies, with widespread consensus that such costs are substantial, but with important differences in magnitude between the individual estimates.

The literature in this area includes analyses of the aggregate productivity loss due to obesity, as well as estimates for several distinct sub-categories of productivity costs. Many of these categories relate to productivity loss originating in the labor market, including 'absenteeism' (first-order productivity costs due to employees being absent from work for obesity-related health reasons) and 'presenteeism' (decreased productivity of employees while at work). Other categories of productivity costs that have been analyzed thus far include: premature mortality and loss of quality-adjusted life years (QALYs); higher rates of disability benefit payments; and welfare loss in the health insurance market.

Absenteeism

Due to relative ease of measurement, studies estimating the absenteeism costs of overweight and obesity make up the largest category of productivity cost studies to date. Methodologies vary, though the studies consistently find strong correlation between obesity and higher rates of absenteeism. Rather than giving an exhaustive review of absenteeism studies, we summarize here key findings and methodological differences across several recent papers that have addressed the relationship between obesity and absenteeism and the associated costs.

Studies vary by the measures used to identify obesity - the most common is BMI, but several studies use weight directly (and control for height in regression analysis). Generally, studies allow for a nonlinear relationship when modeling the effects of weight on absenteeism by dividing BMI into categories such as under-weight, normal weight, overweight, and obese. BMI is most often derived from data based on self-reported height and weight. Some studies correct for potential bias (under- or over- reporting) in data of this kind using correlations between self-reported weight and height and objectively observed values from NHANES. The outcome variables used also vary in definition across studies. Certain authors, such as Burton et al 25 use only longer periods of health-related work absence, defined as short-term disability, while others use either paid time off for sick leave or self-reported absence due to illness.

In order to identify a causal relationship between obesity and absenteeism, authors control for a list of observables that also affect absenteeism; some authors employ econometric models other than standard ordinary least squares (OLS) regressions in order to control for endogeneity of weight in determining work absence. Covariates generally include demographic variables, years of education, income, occupation, smoking or alcohol consumption, and various other health risks or conditions. Frone 26 runs two sets of regressions, the first of which excludes nonweight - related physical and mental health conditions, in order to test whether the addition of those conditions mediates the effect of obesity on absenteeism; he finds that it does.

The result most consistently identified across the studies is a positive and statistically significant correlation between obesity and measures of absenteeism, even after controlling for the covariates discussed above. Because of the differences in methodologies, the magnitudes of the parameter estimates on obesity are not widely comparable. For example, Tsai et al 27 find that in the North American division of Shell Oil Company, 3.73 additional days of work were lost per year for each obese employee relative to their normal-weight co-workers, while Serxner et al 28 report that employees considered at risk for obesity were 1.23 times more likely to be in the 'high-absenteeism' group than those who were not. Durden et al 29 show that obese workers were 194% more likely to use paid time off than their counterparts.

A subset of the authors discussing absenteeism translates their results on the correlation between obesity and absenteeism into dollar amounts representing the cost of the estimated productivity loss. This is usually done by calculating the level of compensation for the relevant workers either from survey data or BLS averages. Tsai et al 27 find that the productivity losses to Shell Oil Company alone due to absenteeism effects of obesity were worth $11.2 million per year. This amount includes only the direct productivity costs of absenteeism (that the employee is paid while not at work); it does not account for any secondary effects on training, morale, or other network effects. Trogdon et al 30 provide a range of estimates for nationwide annual productivity losses due to obesity-related absenteeism of between $3.38 billion ($79 per obese individual) and $6.38 billion ($132 per obese individual).

Presenteeism

Obesity could also contribute to productivity loss if obese individuals are less productive while present at the workplace. This may occur as a result of physical and mental health conditions that are more common among obese workers and negatively affect productive ability. Alternatively, a common outside factor may make individuals more likely to both be obese and relatively less productive. The studies reviewed here focus primarily on the magnitude of the presenteeism effect, rather than the mechanism of action.

Studies by Ricci and Chee 31 and Pronk et al 15 both include measures of presenteeism in addition to absenteeism. Ricci and Chee use the Caremark American Productivity Audit, a phone interview that included several questions regarding health-related reduced work performance. Respondents were asked to estimate the average amount of time elapsed between arriving and starting work on days when they were not feeling well, as well as total hours of lost concentration, repeating a job, or feeling fatigued. The authors then look at total lost productive time (LPT) (the sum of absenteeism and presenteeism), and measure the effects of obesity controlling for a list of covariates. In a second stage, the authors add a variable for the number of co-occurring health conditions to test whether the effects of obesity are mediated by overall health status. Finally, they convert LPT into dollars using workers' self-reported wages.

Ricci and Chee find that obese workers are more likely to have positive LPT than their counterparts, and on average have more of it. As also found by Frone, 26 this effect appears to be largely driven by the higher propensity of obese workers to have co-occurring conditions. The monetary value of the cost of excess LPT among obese workers is estimated at $11.7 billion per year. Of the total cost of LPT, two-thirds is attributable to presenteeism and one-third to absenteeism. This finding suggests that while more studies have focused on the costs of absenteeism, presenteeism may present a larger problem in terms of dollars lost. Additional work is needed to clarify the relative magnitudes of these costs.

Pronk et al 15 include outcome variables that measure quality of work performed as well as workplace inter-personal relationships. The only statistically significant presenteeism relationship found with obesity was on inter-personal relationships. However, the study includes physical activity and cardiorespiratory fitness measures as explanatory variables, which are likely to mediate effects of obesity, as shown in other studies.

Disability

In addition to absenteeism and presenteeism, obesity may lead to an increase in disability payments and disability insurance premiums. Such an increase could reflect a loss in productivity beyond what is captured in absenteeism data if recipients are unable to hold a job altogether. Additionally, an increase in the disability rolls represents higher fiscal costs to the federal government.

Burkhauser and Cawley 32 study the effects of obesity both on self-reported work impairment and Social Security Disability Insurance. The authors do parallel analyses in two datasets: the Panel Survey of Income Dynamics and the NLSY. Several econometric specifications are used: two OLS models, one linear and one nonlinear, and an IV model using a sibling's or biological child's weight as an instrument for respondent weight. Potential bias introduced by self-reporting of weight is corrected for. Control variables include education, marital status, race, gender, and children in a household. Results are robust to specification changes for receipt of disability income. For men in the NLSY, being obese raises the probability of receiving disability income by 6.92 percentage points, which is equivalent to losing 15.9 years of education. For women, the increased probability of receiving disability is 5.64 percentage points, which is the equivalent of losing 16.7 years of education. Thus, even after controlling for a list of covariates and endogeneity of weight, the authors find a significant and large effect of obesity on receipt of disability insurance. More research is needed to determine the productivity loss associated with this correlation: to what extent does being on disability decrease employment among recipients?

Premature mortality

Another form of productivity loss associated with obesity is premature mortality or reduction in QALYs. Several studies have found a connection between obesity and mortality. 30 A recent study by Fontaine et al 33 measures years of life lost due to obesity, controlling for demographic and other factors affecting morbidity. The authors determine the distribution of individuals across BMI categories, as well as life expectancy at each age between 18 and 85 years in each BMI category, and calculate years of life lost (YLL) in each category relative to a reference BMI of 24 (the high end of the normal-weight range). In general, YLLs follows a J- or U- shaped distribution across BMI categories. The largest effect of obesity on morbidity was for white men: a white male aged 20 years with a BMI over 45 could be expected to have 13 YLLs, the equivalent of a 22% reduction in remaining life years. Effects for black men and women were much smaller.

Groessel et al 34 consider the effects of BMI on quality of life in a longitudinal cohort study of older individuals (mean age 72 years). The authors measure QALYs with a quality of well-being (QWB) scale that rates symptoms and functionality. After controlling for age, sex, smoking and exercise, they compare statistical differences in mean QWB scores between obese and nonobese BMI groups. Obese individuals were found to have 0.046 lower QWB scores on average, which translates into 2.93 million QALYs lost at the national level in the US. This result is equivalent to one QALY lost for every 20 people who live one year with obesity. Both premature mortality and lost QALYs represent important economic impacts of obesity. Further research would be needed to monetize this impact for comparison with other costs.

Health insurance

Though few studies have considered it, another potential economic cost of obesity is a health insurance market externality. Several studies have estimated the portion of health care expenditure on obesity that is paid for by public insurance. 35 However, in addition to the extra medical costs, Bhattacharya and Sood 35 argue that pooled insurance may actually cause a moral hazard that incentivizes overweight and obesity by transferring the economic costs away from the obese to the larger insurance pool. Such a problem could induce additional costs of obesity via welfare loss. The authors note that even if an individual does not consciously choose to consume more calories or exercise less, pooled insurance reduces the price of obesity, and obesity has been shown to be somewhat responsive to price signals (eg, food prices).

In order to determine whether there is a welfare loss caused by this externality, the authors consider two models of health insurance: one in which there is complete, employer-provided, pooled insurance, and another in which premiums are risk adjusted. The difference in utility under the optimal solution in each model is then measured to find welfare loss. After calibrating the model using data from the MEPS, the authors find that there is in fact a welfare loss under pooled insurance. The loss is proportional to the product of the difference in medical expenditures between the obese and nonobese, and the elasticity of body weight to the insurance subsidy provided by pooled insurance. The size of the welfare loss due to the obesity externality in the US is estimated at $150 per capita.

Total indirect costs

Several papers have estimated the total economic cost of obesity, differentiating only between direct and indirect costs. Direct costs include those discussed in the first section of this paper, while indirect costs focus on premature mortality, higher disability insurance premiums, and labor market productivity. Notably, the papers reviewed here provide a reasonably wide range of estimates for the total indirect costs of obesity. However, direct comparison of results across studies is difficult due to such factors as the date of measurement, representativeness of the sample, and scope of measurement. Differences in findings may be due to a confluence of factors in the design of the studies, rather than simply differences in econometric specifications or data sources.

For example, Thompson et al 36 look at the total cost of obesity to US businesses, differentiating between health insurance expenditures and paid sick leave, life insurance, and disability insurance. The study is based on data from the National Health Interview Survey, and BLS and other data representing expenditures of all private-sector US firms. Using age- and sex-specific obesity-attributable expenditures, the authors estimate that total nonmedical costs of obesity among US businesses were $5 billion in 1994. Of that, $2.4 billion was spent on paid sick leave, $1.8 billion on life insurance, and $0.8 billion on disability insurance. The health insurance-related costs of obesity were estimated to be $7.7 billion.

On the other hand, a study by Lightwood et al 22 looks at current and future costs of adolescent overweight. In this case, the indirect costs include work loss due to sick and disability leave, as well as long-term disability, early retirement, and premature mortality. Using employee compensation data, along with information on clinical events related to obesity, diabetes, and CHD, the authors estimate indirect costs due to work absence or reduced work. They project cumulative costs from 2020 to 2050 by making assumptions about productivity growth and trends in obesity. Likewise, the cost of premature mortality is measured using the probability of employment for a given age and gender, varying by BMI, and is projected forward from 2020 to 2050. The cumulative, discounted costs of obesity (including costs due to diabetes and CHD) over that period are estimated at $254 billion, $208 billion of which is due to indirect costs.

These examples illustrate the substantial differences found across studies that provide disaggregated estimates for direct and indirect costs of obesity, as well as absenteeism and other sub-categories of indirect costs. The relative significance of indirect to direct costs varies between 65% and 88% in these two examples, and in the studies discussed above, absenteeism is reported to range from as low as 20% of total indirect costs to as high as 50%. Future research could effectively parse the source of the differences across studies, making results more comparable in order to get a better sense of the total and relative magnitudes of obesity's likely economic impacts.

Transportation costs

In addition to its impact on medical spending and productivity, obesity may affect transportation costs. Increases in body weight among Americans mean that more fuel and, potentially, larger vehicles are needed to transport the same number of commuters and travelers each year. This produces a direct cost (in the form of greater spending on fuel), as well as potential indirect costs in the form of greater greenhouse gas emissions. A number of recent papers assess these impacts.

Dannenberg et al 37 provide a direct estimate of the one-year fuel costs for the passenger airline sector that are associated with increased levels of obesity in US adults from 1990 to 2000. Using US Dept of Transportation figures for the fuel needed to transport a given weight of cargo by air, and data on the number of passenger-miles flown, they calculate that weight gain during the 1990s required approximately 350 million extra gal of jet fuel in the year 2000. At a prevailing price of $0.79/gal, they calculate the extra airline fuel cost due to higher obesity to be approximately $275 million in the year 2000 alone.

Jacobson and King 38 use a mathematical model to estimate the additional annual fuel consumption by noncommercial passenger highway travel in the US that is associated with overweight and obesity to be approximately one billion gal. At current US prevailing prices, 39 this represents a cost of $2.7 billion a year. Jacobson and McLay 40 provide a similar annual estimate of the fuel-use impact of obesity in the US. They also estimate that approximately 39 million additional gal of fuel (worth $105 million at current prices) are needed annually in this sector for each 1 lb of additional average passenger weight. Li et al 41 also find evidence that a decrease in average miles per gal (MPG) in the US passenger vehicle fleet may be associated with increased obesity. Although cautious in drawing definitive conclusions, they use sales data from 1999-2005 to estimate that a 10 percentage point increase in overweight/obesity rates reduces average MPG of new vehicles sold by approximately 2.5%.

Michaelowa and Dransfield 42 conduct an Organization for Economic Co-operation and Development (OECD)-wide study of the impact of obesity on greenhouse gas emissions through three channels: higher fuel consumption needed to transport heavier people, greater food production needed to feed a population with higher caloric intake, and higher methane emissions resulting from the greater organic waste generated by a heavier population. They estimate that reduction of average weight by 5 kg across the OECD could reduce CO ₂ emissions from the transportation sector by approximately 10 million T annually. Reduced consumption of energy-rich foods to 1990s levels is estimated to lead to savings of approximately 102 million T. No economic cost estimate is assigned to greenhouse gas emissions due to obesity.

Human capital accumulation

Effects of obesity and overweight on educational attainment - both quantity and quality of schooling - also represent a potential economic impact, one that may become increasingly significant as rates of childhood and adolescent obesity climb. We review four studies in this section that consider the relationship between obesity and human capital accumulation.

Gortmaker et al 43 include a broad set of outcome variables, following a cohort from the NLSY (16 to 24 year-olds) for seven years to determine whether membership in a high-BMI category leads to lower income or educational attainment, more health conditions, or lower self-esteem. Baseline characteristics were measured in 1979, with obesity defined as a BMI over the 95th percentile of the distribution in NHANES, given an individual's age and sex. Self-esteem and intelligence were also measured at baseline. Overall correlations between obesity and the outcome variables were statistically significant and in the expected directions. Once controls were added for baseline characteristics and demographic variables, only select correlations remained significant. Women who had been obese in the baseline survey had significantly fewer years of school completed (0.3 year on average). Likewise, they were less likely to be married, had lower household incomes, and higher rates of poverty. For men, the only statistically significant correlation was for marital status.

Instead of measuring cross-sectional differences in educational attainment as done by Gortmaker et al 43 Kaestner et al 44 look at an NLSY cohort to study the effects of obesity on grade progression and drop-out rates. To do this, the authors measure the change in the highest grade completed by an individual between ages t-1 and t. The study includes respondents aged 14 to 17, and models the effects of obesity on grade progression separately for each age, using three different models. The first model measures the overall correlation, the second controls for a list of covariates including family structure and educational attainment, respondent health, smoking status, alcohol consumption, and region, and the third model instruments weight at age t-1 with weight in the previous year.

The results are mostly not statistically significant, though when they are, the effects are quite large. Fifteen- year-old males in the 90th percentile or above for BMI are 3.3 percentage points more likely to drop out in the following year than their counterparts in the second and third BMI quartiles; 16-year old females in the 90th percentile or above are 12 percentage points less likely to complete a higher grade in the IV model. It is possible that the samples used in this study were simply too small to allow for enough statistical power to pick up any smaller effects of obesity.

In addition to educational attainment and grade progression, obesity has also been shown to correlate with school attendance. The impact of school attendance on human capital and productivity is likely to operate through its effect on educational attainment; attendance could also affect productivity via associated parental work absenteeism. Geier et al 45 study the effects of overweight and obesity on school attendance, and find that days missed from school are significantly higher for obese children than their normal-weight counterparts. The authors sample just over 1,000 students in nine inner-city Philadelphia schools; they measure their weight and height during a school year, and record their absences. Demographic data on age, race, and sex are included, in addition to the fraction of a school body on free or reduced school lunch. Controlling for covariates, the authors find that while normal-weight children missed between 10.1 and 10.5 days of school over the year on average, obese children missed between 11.7 and 12.2; the difference in means is statistically significant.

Finally, measures of academic performance can provide an estimate of the relationship between obesity and the quality of education, potentially affecting human capital accumulation independently of educational attainment. Sabia 46 measures the effect of adolescent obesity on grade point average (GPA). The author uses data from the NLSY and includes respondents aged 14 to 17 who were not pregnant at the time of the survey. GPA is measured by combining self-reported grades received in English/language arts and Math. Obesity is defined using BMI, weight controlling for height, and self-reported perception of obesity. Control variables included level of exercise, region, intelligence scores, parental involvement (eg, Parent-Teacher Association participation), family background, religion, sexual behavior, alcohol consumption, and age. The econometric specifications include one linear model, another with dummy variables for obesity, a third that uses a parent's self-reported weight as an instrument for the child's, and a fixed effects model. However, alternative specifications do not have large effects on the major results.

There is a consistent negative relationship between weight and GPA among females, though the magnitude is not very large. The point estimate for white females from the OLS regressions suggests that a 50% increase in BMI would lead to a 6.6% decline in GPA, and a 50 lb weight gain would lead to a 0.17 point decline in GPA. Obese white females had a 0.182 point lower GPA on average relative to their nonobese counterparts. Sabia notes that while the size of the weight gains discussed is large, even a 0.2 point drop in GPA translates to a drop of eight percentiles. The results for nonwhite females are roughly similar in size and significance, with an even lower relative mean GPA among the obese group. Among males, the only significant correlation is for nonwhites: the individuals in the obese group had a 0.18 point lower mean GPA than those in the nonobese group.

The studies reviewed here provide statistical evidence of a potential link between obesity and the educational experience of students. Further research is needed in this area to clarify this relationship and identify potential mechanisms of action.

Discussion

The research on the economic impact of obesity reviewed above covers a broad range of potential costs. summarizes some of the key costs identified. Substantial differences in methodology, scope, and data sources often make comparison between the studies reviewed difficult, and the depth of research varies widely across the four impact areas. In addition, this literature does not directly address policy choices for reducing obesity nor the likely aggregate economic impact associated with such changes. Nevertheless, several broad conclusions emerge from our review.

Table 1

Cost category

Sub-categories

Key results, and range of estimates

Relative costs

Total costs

Total nondollar amounts

Direct medical spending
Relative medical costs for overweight (vs normal weight)

Relative medical costs for obese (vs Normal weight)

Annual direct costs of childhood obesity

US-wide annual cost of "excess" medical spending attributable to overweight/obesity

$86-$147 billion (total) 16
$640 million
(women 40-65 only) 9

Relative risk ratio of having 'high-absenteeism'

1.24-1.53 times higher 28, 30

National costs of annual absenteeism from obesity

$3.38-$6.38 billion or $79-$132 per obese person; 29, 30
$57,000 per employee 28 (1998 USD)
$8 billion (2002 USD) 31

Presenteeism
National annual costs of presenteeism from obesity

Relative productivity loss due to obesity

1.5% higher 30

Disability
Relative risk ratio of receiving disability income support

5.64-6.92 percentage points higher 32

Premature mortality
Years of life lost due to obesity

1-13 years per obese person 33

QALYs lost due to obesity

2.93 million QALYs total in US in 2004 34

National annual indirect costs of obesity

$5 (1994 USD) -$66 billion 31, 36

Transportation costs
Annual excess jet fuel use attributable to obesity

$742 million (2010 USD)

350 million gal 37

Annual excess fuel use by noncommercial passenger highway vehicles attributable to obesity

$2.53-2.7 billion (2010 USD)

938 million-1 billion gal 38, 40

Additional fuel required in noncommerical passenger highway sector PER LB of avg passenger weight increase

$105 million per LB (2010 USD)

39 million gal 40

Environmental costs
OECD-wide CO ₂ emissions from transportation PER 5KG average weight per person

10 million T 42

Human capital accumulation costs
Highest grade completed

0.1-0.3 fewer grades completed 43, 44

Days absent from school

1.2-2.1 more days absent from school 45

First, the direct medical costs associated with obesity are substantial. The literature reviewed in this paper gives a wide range of estimates for these costs, reflecting differences in methodology, definitions of weight categories, age groups studied, and data sources. However, all the studies reviewed find significant costs. Relative medical spending for the obese may be as much as 100% higher than for healthy weight adults, and nationwide "excess" medical spending may amount to as much as $147 billion annually for adults and $14.3 billion annually for children. The estimates of direct costs reviewed here may generally be conservative - they often rely on self-reported data (which tend to show a downward bias in BMI), and focus on a set of obesity-related diseases more narrow than the full set identified in the medical literature. Medical costs appear to have increased dramatically over the last decade 16 and may continue to grow with future increases in rates of overweight and obesity in US adults and children, perhaps substantially. 47

Second, significant productivity costs are linked with obesity. Productivity effects may fall into at least four different categories (absenteeism, presenteeism, disability, and premature mortality). Several of the studies reviewed focus on only a subset of these effects, and there is extensive variation in cost estimates. These factors make comparisons between the studies, as well as between medical and productivity costs, difficult. However, total productivity costs are likely substantial, perhaps as high as $66 billion annually for the US.

Third, important additional economic impacts of obesity can be found in the form of transportation costs and human capital accumulation costs. The studies reviewed in the final two sections of our paper suggest that these effects may be significant, but further work is needed to explore their full extent and assign consistent economic cost to them.

The overall economic impact of obesity in the US appears to be substantial. Although a comprehensive aggregation across the different categories of literature is an important goal for future research, simple addition of key effects identified in this review would suggest total annual economic costs associated with obesity in excess of $215 billion. The magnitude of this impact, and the potential for high future impact identified by several studies, 16, 21, 47 underscore the importance of the obesity epidemic as a focus for policy and a topic for future research.

Footnotes

a A rapidly growing body of research has arisen to evaluate potential costs and benefits of specific interventions. Integration of this research into a broader macroeconomic framework would allow careful assessment of the net economic impact associated with obesity reduction.
Disclosure
The authors report no conflicts of interest in this work.

References

12. Wassertheil-Smoller S. The case for nutritional intervention. In: Wassertheil-Smoller S, Alderman MH, Wylie-Rosette J, editors. Cardiovascular Health and Risk Management: The Role of Nutrition and Medication in Clinical Practice. Littleton, MA: PSG Publishing; 1989. pp. 16-45.

17. Thorpe KE, Florence CS, Howard DH, Joski P. The impact of obesity on rising medical spending. Health Aff (Millwood) 2004:W4-w480. Suppl Web Exclusives.

26. Frone MR. Obesity and absenteeism among US workers: do physical health and mental health explain the relation? J Workplace Behav Health. 2007;22(4):65-79.

38. Jacobson SH, King DM. Measuring the potential for automobile fuel savings in the US: the impact of obesity. Transport Res D-TR E. 2009;14(1):6-13.

40. Jacobson SH, McLay LA. The economic impact of obesity on automobile fuel consumption. Eng Econ. 2006;51:307-323.

42. Michaelowa A, Dransfield B. 2006. Greenhouse gas benefits of fighting obesity. Ecolog Econ. 2008;66(2-3):298-308.

44. Kaestner R, Grossman M, Yarnoff B. Effects of weight on adolescent educational attainment. 2009. May, [Accessed May 26, 2010]. Available from: http://www.nber.org/papers/w14994.pdf.

46. Sabia JJ. The effect of body weight on adolescent academic performance. Southern Econ J. 2007;73(4):871-900.

# data[].attributes.attachment_link.title
The economic impact of obesity in the United States

# data[].attributes.attachment_link.description
Over the past several decades, obesity has grown into a major global epidemic. In the United States (US), more than two-thirds of adults are now overweight and one-third is obese. In this article, we provide an overview of the state of research on the ...

# data[].attributes.body
My gold medal in Math olympic when I was in grade 11

# data[].attributes.body
I like the background wallpaper