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Obesity is widely recognized as a chronic disease characterized by an elevated risk of adverse health conditions in association with excess body fat accumulation. Obesity prevalence reached epidemic proportions among adults in the developed world during the second half of the 20th century, and it has since become a major public health concern around the world, particularly among children and adolescents. The economics of childhood and adolescent obesity is a multi-faceted field of study that considers the numerous determinants, consequences, and interventions related to obesity in those populations. The central economic framework for studying obesity is a life-cycle decision-making model of health investment. Health-promoting investments, such as nutritional food, healthcare, and physical activity, interact with genetic structure and risky health behaviors, such as unhealthy food consumption, to generate an accumulation or decumulation of excess body fat over time. Childhood and adolescence are the primary phases of physical and cognitive growth, so researchers study how obesity contributes to, and is affected by, the growth processes. The subdiscipline of behavioral economics offers an important complementary perspective on health investment decision processes, particularly for children and adolescents, because health investments and participation in risky health behaviors are not always undertaken rationally or consistently over time. In addition to examining the proximate causes of obesity over the life cycle, economists study obesity’s economic context and resulting economic burden. For example, economists study how educational attainment, income, and labor market features, such as wage and work hours, affect childhood and adolescent obesity in a household. Once obesity has developed, its economic burden is typically measured in terms of excess healthcare costs associated with increased health risks due to higher obesity prevalence, such as earlier onset of, and more severe, diabetes. Obesity among children and adolescents can lead to even higher healthcare costs because of its early influence on the lifetime trajectory of health and its potential disruption of healthy development. The formulation of effective policy responses to the obesity epidemic is informed by economic research. Economists evaluate whether steps to address childhood and adolescent obesity represent investments in health and well-being that yield private and social benefits, and they study whether existing market structures fail to appropriately motivate such investments. Potential policy interventions include taxation of, or restricting access to, obesogenic foods and other products, subsidization of educational programs about healthy foods and physical activity inside and outside of schools, ensuring health insurance coverage for obesity-related preventive and curative healthcare services, and investment in the development of new treatments and medical technologies.

The rise in obesity and other food-related chronic diseases has prompted public-health officials of local communities, national governments, and international institutions to pay attention to the regulation of food supply and consumer behavior. A wide range of policy interventions has been proposed and tested since the early 21st century in various countries. The most prominent are food taxation, health education, nutritional labeling, behavioral interventions at point-of-decision, advertising, and regulations of food quality and trade. While the standard neoclassical approach to consumer rationality provides limited arguments in favor of public regulations, the recent development of behavioral economics research extends the scope of regulation to many marketing practices of the food industry. In addition, behavioral economics provides arguments in favor of taxation, easy-to-use front-of-pack labels, and the use of nudges for altering consumer choices. A selective but careful review of the empirical literature on taxation, labeling, and nudges suggests that a policy mixing these tools may produce some health benefits. More specifically, soft-drink taxation, front-of-pack labeling policies, regulations of marketing practices, and eating nudges based on affect or behavior manipulations are often effective methods for reducing unhealthy eating. The economic research faces important challenges. First, the lack of a proper control group and exogenous sources of variations in policy variables make evaluation very difficult. Identification is challenging as well, with data covering short time periods over which markets are observed around slowly moving equilibria. In addition, truly exogenous supply or demand shocks are rare events. Second, structural models of consumer choices cannot provide accurate assessment of the welfare benefits of public policies because they consider perfectly rational agents and often ignore the dynamic aspects of food decisions, especially consumer concerns over health. Being able to obtain better welfare evaluation of policies is a priority. Third, there is a lack of research on the food industry response to public policies. Some studies implement empirical industrial organization models to infer the industry strategic reactions from market data. A fruitful avenue is to extend this approach to analyze other key dimensions of industrial strategies, especially decisions regarding the nutritional quality of food. Finally, the implementation of nutritional policies yields systemic consequences that may be underestimated. They give rise to conflicts between public health and trade objectives and alter the business models of the food sector. This may greatly limit the external validity of ex-ante empirical approaches. Future works may benefit from household-, firm-, and product-level data collected in rapidly developing economies where food markets are characterized by rapid transitions, the supply is often more volatile, and exogenous shocks occur more frequently.