Economic Measures | How Much Do Unhealthy Products Cost Society?

Products and services of everyday life shape our behaviors and, therefore, shape our health. Poor diets, not getting enough sleep or enough physical activity, can all lead to chronic illnesses like cardiovascular disease, depression, obesity and type 2 diabetes. The costs from treating these diseases add up – and they’re largely paid by society, not the companies who make the products. These are called “economic externalities” because they represent costs not factored into market pricing and, as a society, we typically ignore them – in part because they’re not easy to measure. But what if we could calculate the amount of societal cost a given company is accountable for?

A new paper from our team demonstrates a new methodology for estimating these costs. “Prototyping a Methodology for Estimating the Economic Externalities Resulting from Commercial Products’ Influence on the Health of Their Users,” from Building H co-founder Steve Downs, our advisor and core collaborator Sara Singer, Carol Passarelli, Inah Golez and Evan Cook, outlines the methodology and reports on the results from prototyping it on three companies: Burger King; Netflix; and Niantic Labs (the original makers of Pokémon GO). Burger King was associated with $4.9 billion in annual costs; Netflix a whopping $32 billion and Niantic came out on the positive side – due to its beneficial influence on physical activity – saving $322 million per year.

We’ve demonstrated that it’s feasible to estimate these costs and – given the magnitude of the estimates we’ve done so far – it’s worthwhile, even important, to do them. We plan to do much more and encourage other researchers to join us – there’s a lot to do!

Find out more about this work, how we did the calculations, and our plans in a new section on our website.