In Poorer Countries, Obesity Can Signal Financial Security

on Jun27
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In the world’s wealthiest countries, the richer people are, the thinner they tend to be.

But in Uganda, one of the poorest nations, where nearly half the people eat fewer calories than they need each day, excess fat is often a sign of wealth and can help get a bank loan, according to a forthcoming article in The American Economic Review.

It’s not surprising that in places where food is scarce, obesity serves as a significant marker of wealth. But what the new study points out is that in poor countries, information is also scarce. And in those situations, loan officers use whatever bits of evidence they can find to help make critical economic decisions.

“Given the scarcity of readily available hard information in poor countries, wealth signals, including obesity, play a crucial role in economic interactions where individuals seek to evaluate someone’s wealth,” said Elisa Macchi, an assistant professor of economics at Brown University.

As part of her research, Ms. Macchi conducted tests with 238 loan officers at 146 financial institutions in the capital city, Kampala. She asked them to review applications from fictionalized potential borrowers whose accompanying photographs were manipulated so they appeared thin or fat.

It is not uncommon in Uganda for people to include a photo of themselves when submitting a loan application, and it can be one nugget of information that a loan officer uses to decide whether to even grant an applicant a first interview, Ms. Macchi said.

She discovered that loan officers were more likely to rate the applicants as more creditworthy and more financially sound when the obese version of the photograph was attached.

“The obesity premium is large, equivalent to the effect of a 60 percent increase in borrower self-reported income in the experiment,” or an additional asset like ownership of a car, the study concluded.

Historically, corpulence was prized in some parts of sub-Saharan Africa. Mauritania was once notorious for the custom of brutally force-feeding young girls to make them more marriageable — a practice referred to as gavage, taken from the French term for force-feeding geese to produce foie gras. Fat was a considered both a sign of family wealth and a cultural ideal.

Lately, obesity has become an increasingly worrisome health risk on the continent, a development that follows the trend in the richest nations, where obesity is often correlated with poverty. The easy availability of cheap, highly processed foods that have little nutritional value allows people to satisfy hunger pangs without promoting overall health.

But at least in the case of loan officers in Uganda, facts ultimately trumped perception. When more solid information was provided — like the loan applicant’s income, collateral and occupation — lenders used it, and the so-called obesity premium fell.

“The good thing is that it’s not that entrenched,” Ms. Macchi said about preconceived notions about wealth and weight. “The moment when we give them the information, then they respond to it.”

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