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The rise in the rates of obesity among young people and its implications for public heath policy are the focus of an increasing amount of attention of policy makers. One instrument that might be useful in countering this trend comes from an unlikely source: the economics of social networks.
Several recent studies have documented important 'peer effects' in adolescent obesity: simply being part of the same peer group as obese adolescents is a significant factor in explaining weight gain. Could this be used as a basis for policy? Since peer effects work in both directions, social networks might also be used to amplify the effectiveness of a program that reduced obesity. But first, we would need a better understanding of how and why peer effects work.
A recent working paper (pdf) by my Laval colleagues Bernard Fortin and Myra Yazbeck looks at the mechanics behind those peer effects and find evidence that fast food is a plausible culprit. Their approach is to estimate the 'social multiplier' for peer effects of fast food consumption: a value greater than 1 implies a positive spillover effect as others seek to emulate their peers. They find estimates for the 'social multiplier' of around 1.5, which means that the decision of just two teenagers to consume fast food has the effect of inducing a third one to join in - and to suffer the consequences of her peers' decision.
In the language of public economics, this would suggest that fast food has negative externalities: the total social costs are not fully borne by the person who makes the purchase. And as with other activities with negative externalities - including greenhouse gas emissions - the simplest and most efficient solution is to tax it so that the consumer internalises the entire social cost.
The idea of a tax on fast food has already been raised in some policy circles. As we learn more about the causes of adolescent obesity, it may become an idea that will attract more attention.
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