How a race to the bottom can make you fat

This article measures the effect of fiscal competition on obesity rates in the United States through education and health spending. We hypothesize that fiscal competition to attract firms results in lower business tax revenues and higher public infrastructure spending which crowds out education and health spending leading to an increase in obesity rates. We empirically test this hypothesis. We find that there is significant fiscal competition to attract firms. Next, we show that when business tax revenues are lowered and public infrastructure spending favouring businesses increased, public health and education spending declines and obesity rates significantly increase. Thus, fiscal competition significantly contributes to obesity rates through the education and health spending channel.