Fat market (3)

# A Market For Fat: The Transfer Machine

What if there were a machine which could transfer kilograms of body fat between people?
Let's stipulate that the machine is cheap to operate, perfectly safe, requires the two people to be within a meter or two, and can instantaneously transfer kilograms of body fat between two people in such a way that the presence & absence is as if they hadn't eaten the equivalent.
(The fat can't simply be dumped into the drain, like a magical liposuction.)
What would happen?

Many people are unhappy with their excessive amount of body fat, as body fat is unattractive and unhealthy, so they would eagerly get rid of it.
Relatively few people are in need of body fat (fat is an important nutrient, the absence of which leads to 'rabbit starvation', and body fat is an important organ and lack of it can cause problems ranging from being more easily injured to infertility in women, but at least in the contemporary USA, lack of body fat is a rare problem outside of bodybuilders & people with eating disorders, and is rare even in Third World countries where obesity is increasingly the threat to poor people), so it would seem supply exceeds demand, requiring a market in body fat.

So probably people would wind up paying other people to take body fat off their (sometimes literal) hands.
But there are limits to transfer as human skin is only so elastic and takes a while to grow (morbidly obese people who lose scores of kilograms often must undergo skin reduction surgery to deal with the loose flaps which can become infected), so transfers will be limited in size (perhaps 10-20kg is the safe upper limit) and will need to be regular & of small size.

The effect on the fitness industry would likely be catastrophic.
Fitness and diets are at present bizarre poor-functioning markets because they can only sell *inputs*; there is no one you can pay to remove 1kg of fat from you, you can only pay for a gym membership or X training sessions or for Y prepared meals or Z diet recipe books, and not only are the average effects of those interventions either unknown or grossly exaggerated, they hide enormous individual variation, rendering rational shopping & comparison futile to a great extent. And despite their inability to deliver, they suck up dozens of billions of dollars in costs a year, and a gym membership can easily cost >\$1k/year.
In contrast, the ability to transfer fat and reliably immediately causing verifiable benefits would immediately attract a large fraction of clientele, destroying much of the demand for fitness/diet services, and such a collapse would have consequences eg inability to pay fixed costs like the primary expense, rent.
Gyms notoriously are designed to be undercapacity, under the assumption that only a small fraction of members will use it heavily (or at all) and the rest cross-subsidize the users, so a shift to only serious gym-users (to people building muscle, and those busy working off fat transfers!) would further damage the economics of many gyms, as serious gym-users will visit more often, use more equipment more heavily, be more demanding, and likely be skewed towards powerlifting/bodybuilding which requires much more space per customer than a bunch of treadmills cheek-by-jowl.
Fitness is a major costly signal at present, signaling a mix of leisure/wealth/self-discipline/low-discount-rates over the long-term, so the collapse of visible fitness (in the form of low body fat percentage) into a simple (and likely cheap) signal of short-term financial wherewithal (as one can impulsively go pay for a large transfer of fat) would force the middle/upper class (the jogging class) into finding new, more costly signals.
Paradoxically, the fact that fat can be transferred and is a cheap signal would result in universal demand from the middle/upper-class, precisely because it would be so easy that there would no longer be plausible excuses for not doing it; maintaining a stable weight is difficult and time-consuming and near impossible for some people, so one can only be blamed somewhat for failing to do so, but with fat transfer, failure to do so could only indicate severe deviancy/deficiency, somewhat like smoking or having yellow teeth or not having a college degree.
So even as fat ceases to be a particularly informative signal, it becomes a mandatory signal, which would induce more demand for transfer.
There would also be effects on the supply end of people: many fitness instructors admit they do it to show off and will sacrifice money for the privilege; so the collapse of the signal will eliminate much of the personnel.

What would replace low body fat as a signal?
Signals are fairly arbitrary so it's hard to be confident, but one natural replacement would be substitution with food.
Food consumption is already heavily moralized (just walk into a Whole Foods to see or consider why nutrition science has such a dismal track record of accurate causal inference) and the increasing signalization ("Instagrammization"?) of gourmet food & restaurants has been noticed by many people; one of the fundamental constraints on consumption of craft beers and "bean to bar" chocolate and steak dinners is, however, fear of weight
Transfer offers a way to lift that constraint *while* simultaneously serving as a minor costly signal of financial status - someone who consumes organic cruelty-free beef regularly while remaining thin is signaling both their sophisticated palate, refined moral sensibilities, and wealth.
Or to put it another way, transfers become the mythical vomitorium enabling wealthy gluttons to purge their food binges.
So trends towards elaborate exhibitionist feasts could be accelerated (incidentally increasing the supply of excess fat).

Who would be buyers and sellers?

Rich people tend to be thinner than poor people, but are still far from optimal weights, so the existing SES gradient of fat/health/wealth would probably increase: poor people would become richer but fatter; poor people also have high discount rates and are more impulsive, so while they may be happy to make the deal, the long-term consequences will be bad.
This would be particularly acute for drug addicts, who would be able to score in exchange for 'just' taking another kilogram of fat and, repeatedly doing so, might wind up with hundreds of excess kilograms.
(The money itself will only minimally help health, given existing results on the causal effect of monetary shocks & free health insurance.)
On the positive side, being a fat recipient is the epitome of unskilled labor and provides an additional option of a de facto Basic Income without the draining effect of blood donation.

And since someone always has spare capacity for transfers, there's no reason that fat could not be securitized: personal loans could be collateralized by body weight (someone 10kg underweight could pledge 30kg of fat), agreements to fat transfers could be purchased and bundled together for large-scale fat tranfers or to implement futures (ie pay people for the right for a 1kg transfer, and hold onto it until potentially prices rise in the future and then sell the right to other people at the new price).
Health insurers would crunch the numbers and, moral hazard issues aside, might often conclude that paying for transfers is cheaper than incurring long-term expenses from diabetes or bariatric surgery.
Life insurers, on the other hand, would be less happy, as transfers could result in dramatic decreases in the life expectancy of an insured person right after they subscribe to a policy, and might define transfers as grounds for canceling life insurance policies.

Young people are cash-poor and time-rich, and have high metabolisms, while old people reverse all that (and many an old person has ruefully recalled how they could eat anything when they were young without gaining a gram), so there's a natural set of exchanges there, although it will be limited by the fact that young people will not want to take on *too* much fat because of the impact on personal attractiveness (most valuable when young), and because there are far more old people than young people (young people are really advantaged only adolescence to late 30s, but then they might live another 40 years getting fatter, for net fat years).

There are also large individual differences.
Diet and exercise studies routinely show large differences in individual responses to the interventions with tiny long-term effects, with a small fraction of participants often gaining weight or worsening; forced-feeding and starvation experiments also demonstrate rebound and homeostatic effects. All of this has large genetic contributions.
For this and other reasons, "calories in, calories out" is either false or tautological.
And large people presumably burn more calories as their basal metabolic rate or during exercise than small people, giving them an advantage.
Hence, some people will have large comparative advantages in fat loss because they are large or simply find exercise or dieting relatively easy.
This would form a nice side job for them, or if the price of fat rises high enough, potentially a full-time job.

Indeed, in the extreme case, someone, a "fatpreneur", might be able to stop eating food entirely (perhaps still consuming vitamin pills and a few nutrient-dense foods for essential nutrients) and burn donor fat constantly as their job; 1kg of body fat is ~7000-10,000 (k)cals, with daily caloric needs at 2000 kcal (minus the caloric content of the essential nutrients), so a fatpreneur could live without eating directly on 1-2kg a week, disposing of 52-105kg of fat annually in a steady state.
A fatpreneur likely could accumulate a steady client list and make weekly rounds collecting ~2kg of fat.
(Perhaps we could call this the "gag economy".)
Fatpreneurs could burn even more calories and thus fat if they exercised, but exercise burns relatively small amounts (often <500 kcal per workout, which if done every other day is <1750 kcal or 0.25kg fat/week, increasing annual totals to ~65-118kg) while being exhausting, time-consuming, and unpleasant - which is, after all, a large part of the problem and why there is so much fat, because "you can't outrun your fork" - so it's unclear if exercise would be a good use of their time and worth the extra fat disposal capability.
The fat disposal (and savings on regular food consumption) may be enough on its own, and they are better off pursuing normal employment.
Given only 105kg/year, to earn a modest passive income of \$30k would require fat prices of >\$285/kg (and exercise would add a marginal \$3700).

Fatpreneurs will be rare, precisely because so many people find mere normal weight maintenance impossible in the modern environment, and we shouldn't forget that "food is not about calories": at all levels of American society, food is a luxury and a religion, it is not about mere sustenance.
This can be seen in the levels of expenditure - Americans often eat out, spend considerable money on luxuries like alcohol or tobacco or meat among the poor or homeless, these make up a large fraction of expenditures, and this is true worldwide even among the most impoverished Third World countries whose people earn <\$2/day, alcohol or other drugs like [khat](!Wikipedia) will be major expenditures, and in general spend several hundred dollars a month on food despite a nutritious diet being doable for ~\$2/day ("Dantzig's diet problem" is a classic optimization challenge, with one of the more recent attempts being [Garille & Gass 2001](https://pubsonline.informs.org/doi/pdf/10.1287/opre.49.1.1.11187 "Stigler's Diet Problem Revisited"), finding some possible diets costing annually \$412/\$354/\$651/\$535 -  vastly smaller than actual American per capita food expenditures of [\$4,576 in 2014](https://www.ers.usda.gov/data-products/food-expenditures.aspx)).
Eating food and meals is a beloved luxury people will pay thousands of dollars for, and even people using meal-replacement methods like Soylent find themselves missing food psychologically; so it is highly unrealistic to imagine that more than a small percentage of people would become fatpreneurs unless fat prices were at least \$40/kg ($\frac{4576}{118}=39$) and probably much higher than that would be necessary.

The fatpreneur's problem immediately suggests another consequence: increase in the demand for stimulants and appetitive suppressants like modafinil, nicotine, amphetamines, or ephedrine.
(This doesn't include the more extreme options which people might be incentivized to use, such as [2,4-Dinitrophenol](!Wikipedia) or [clenbuterol](!Wikipedia).)
They're already popular for the ability to increase motivation for work or study, but with a market for fat, their use can now outright pay for themselves.
A year's supply of ephedrine or modafinil might run ~\$200 in bulk, so only a small total fat loss is necessary to make their use profitable solely via weight loss.
Generalizing wildly from modafinil & ephedrine, standard stimulants might cause 0.25kg/month weight loss or 3kg/year, so any fat price >\$66/kg would make a number of stimulants profitable.
It's also often noted that quitting smoking leads to weight gains on the order of 2-5kg as nicotine is no longer suppressing the appetite or smoking substituting for snacking, so a negative consequence is that this will further discourage smokers from quitting as the side-effects of quitting become more financially salient.

What about international trade with Third World countries, exporting the body fat?
International trade doesn't seem as promising as it might because simple scarcity of calories long ago stopped being the fundamental cause of hunger and malnutrition.
Food in bulk, like rice, is incredibly cheap.
Where starvation and mass famine exists, it is solely a political phenomenon: the "Maduro diet" stops at the borders of Venezuela, and somehow the clouds causing torrential floods in North Korea never manage to pass the DMZ.
Poor countries struggle with bad politics/laws/governments, micronutrients like iodine, logistics barriers to distributing existing food, and issues like that - not lack of calories _per se_.
For these problems, sending hundreds of thousands of impoverished villagers to the USA or bringing fat Americans to them are either illegal, ineffective, or infeasible.
It makes no sense to spend hundreds or thousands of dollars on bribes & passports, then the plane ticket, to fly someone halfway across the world to load up on fat equivalent to a few hundred dollars of food at most (and the equivalent of low-quality food at that, without any micronutrients), and fly them back.
It would make more sense to do as an adjunct to tourism, or as a kind of "medical tourism" in its own right, to let tourists get rid of the kilograms at a discount (and let them gorge on the cruise ship buffets without guilt).
But like medical tourism presently, it would probably be a minor phenomenon.

What would be a reasonable market-clearing price?
At the moment, there is a huge oversupply of American fat.
As noted, the other end is limited - even an exercising fatpreneur can optimistically only burn 105kg of fat per year.
A series of [Gallup polls](https://news.gallup.com/poll/222578/americans-weigh-shun-overweight-label.aspx) ending 2017 asks American adults (>18yo) about total & 'ideal' weight, finding an average difference of 7.25kg; this is based on self-reports, so the reported total weights are likely convenient underestimates of their true weight, their 'ideal' weight is probably still far from medically optimal, and Gallup notes that the 'ideal' weight is gradually increasing over time indicating what one might call "normalization of deviance" (ie Americans are so fat they are ignorant of or in denial about how fat they are).
Once population-scale changes had occurred, expectations would probably reset and many more kilograms would become excess.
Anyway, this gives a ballpark: with ~234 million Americans over 18 ([as of 2010, anyway, close enough](https://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf)), that implies there's >1.7 billion kilograms (or >18 trillion kcal) of unwanted fat.
To clear the backlog in 1 year would require >1.6m fatpreneurs.
1.6m is an enormous number but perhaps not unreasonable - if there are 234m adult Americans, then only ~1% need to be freaks willing to give up food and live off burning fat, and it's never a good idea to bet against ">1% of the population being _X_" even where _X_ is something very weird (eg that appears to be roughly [the percentage of Americans convinced the Earth is flat](https://today.yougov.com/topics/philosophy/articles-reports/2018/04/02/most-flat-earthers-consider-themselves-religious)).

Once the backlog is cleared, what might the steady state look like? (Since as a starting point, we can assume people won't change their habits.)
Fat accumulates over a lifetime, as the obesity crisis is considered to start in childhood with obese children, so that 7.25kg difference appears to accumulate slowly over several decades; if it takes 20 or 30 years, that implies an annual permanent gain of ~0.24kg, so over that ~234m Americans, there's on the order of 5.85m kg to dispose of per year, equivalent to 560k fatpreneurs.
So both the stock and flow of fat are enormous.

For perspective, a gym membership is typically >\$700 and members are typically still not at the ideal weight; reportedly, around [57m Americans in 2016](http://www.clubindustry.com/studies/ihrsa-reports-57-million-health-club-members-276-billion-industry-revenue-2016) were members of a health club, which is difficult to reconcile with that 7.25kg gap and the overall USA obesity crisis, if gyms were all that effective.
Even if we imagine that the entire gap is erased by the gym membership, as an upper bound on the value of the gym membership, that implies a willingness-to-pay of >$100/kg and possibly much more.
Then there is the large time consumption (at 3 gym visits a week, 1.5 hours per visit to allow for travel/shower/overhead, and minimum wage, the time alone exceeds the membership costs), and then there is the sheer unpleasantness of exercise.
For example, at \$550/kg, the cost of erasing the fat gap would roughly equal the cost of LASIK, a highly popular elective surgery which merely removes glasses - how much more would people pay to be thin...?
An even more striking survey claims that, going beyond gym memberships, general fitness spending has reached [\$1860/year](https://moneyish.com/ish/this-is-the-insane-amount-millennials-are-spending-on-fitness/) for the average American adult (again, without success), giving >\$256/kg.

So the fat market could, if necessary, easily support prices of several hundred dollars per kilogram, and make stimulants & fatpreneurs profitable.
Given the extremely large stock & flow of excess fat, the rarity of people gifted in weight maintenance, the high utility placed on eating, the induced demand from signaling/arms races, increases in fat flow from being able to trade money for risk-free food consumption, and revealed preferences from current fitness expenditures versus efficacy, I expect that market-clearing prices would wind up being quite high and definitely >\$100, and >\$1000 doesn't strike me as an absurd price.
At \$500, an average individual would need to spend \$3.6k (so somewhat less than LASIK) to eliminate their gap, and the whole stock would require total payments of \$850b to clear, with recurring annual costs of ~\$3b. All doable.

More generally, what happens once fat has a clearcut price?
The effects on food are ambiguous. On the one hand, by providing an option for avoiding the most negative consequence of food consumption, demand for food would increase in general (and particularly for the rich); but, on the other hand, people love bundling & illusions of freeness ("\$0 is different") and fixate on clear prices (eg the obsession with gas prices while ignoring mileage).
So though the option should make food in effect cheaper, even if the net price is reduced, food will *feel* much more expensive when anyone can calculate that at \$500/kg or \$5/100 kcal ($100 \cdot \frac{500}{10000}$), a Big Mac's 563 kcal for \$3.99 means it costs approximately 7 times ($\frac{\frac{563}{100} \cdot 5}{3.99}=7.06$) as much in fat reduction as it does to buy.
(Of course, this was *always* true - everything one eats above maintenance costs a ton of effort in dieting/exercise to get rid of, hence those not-so-amusing comparisons about how "it takes 10 marathons to burn the calories in a single bag of M&Ms" - but there was never any easy way to connect a given caloric value to a total cost. It's much simpler to just remember "each 100 kcal costs \$5".)
So perhaps the signaling demands and the price illusion effect will largely wind up canceling each other out.

Finally, what are the effects on health?
That depends on what the net effect is.
If fatpreneurs and other fat burning outlets are insufficient to produce net decreases in excess fat due to equivalents of risk homeostasis, then societal utility will increase but it won't be accompanied by health benefits.
If they are, the life expectancy benefits could be considerable: moderate obesity correlates with life expectancy reductions on the order of a year or two, which is consistent with one meta-analysis of RCTs of weight loss - eg [Kritchevsky et al 2015](http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0121993 "Intentional Weight Loss and All-Cause Mortality: A Meta-Analysis of Randomized Clinical Trials") finds a RR of 0.85 from a mean weight loss of 5.5kg after 2 years, which RR, if permanent & maintained, would translate to, given American mortality curves, +1.4 years life expectancy.
Assuming half the adult US population needs weight loss and gets 1.4 years from transferring their full gap, that could translate to 160 million man-years.

Overall, thinking about it, I get the impression that a market for fat would not change society all that much, but exaggerate existing trends and correlations, and the benefits would probably far exceed the costs.