When you wolf down a Whopper or binge a Netflix series, you probably don't think about the long-term health consequences—or who ultimately pays for them.

But SHP’s Sara Singer does. A new study published in the American Journal of Health Promotion by Singer, PhD, MBA, and colleagues at Building H calculates the hidden health costs companies create when their products affect our eating, movement, and lifestyle.

Using a four-step method, the researchers estimated how much three well-known companies—Burger King, Netflix, and the maker of Pokémon GO—may be contributing to or preventing chronic health conditions among American adults. First, they looked at how each company's products affect everyday behavior at a national scale. Then they connected those behaviors to known health risks, estimated how many cases of disease might be linked to each company's influence, and calculated what those cases cost the health-care system each year.

The results were striking. Burger King's meals were associated with an estimated $4.9 billion in annual U.S. health-care costs, while Netflix was linked to $32.4 billion, largely due to extended sedentary behavior. On the positive side, Pokémon Go’s parent company Niantic Labs—whose games encourage outdoor walking—was associated with$322 million in annual health-care savings.

“We knew the adverse health impacts of these companies’ products were large, but understanding how big these impacts really may be shouts the question: ‘Why are we, and not the companies, paying for this?’” said Singer, a professor of health policy and of medicine at the School of Medicine and of business (by courtesy) at the Stanford Graduate School of Business (GSB).

The research demonstrates that it’s possible to measure the broader societal costs—known as economic externalities—of commercial products. As these methods are refined, they could inform public policy, corporate accountability, and consumer awareness.

“Too often we ignore externalities in part because we don’t know how to measure them. We’ve now shown that calculating these sorts of costs—at the level of the individual company—is both feasible and, given the scale of the impact, worthwhile,” said Steve Downs, co-founder of Building H, a nonprofit research group focused on improving product environment to promote health rather than contribute to disease.

Downs lectures in Singer’s Stanford d.school course, Systems Design for Health, in which students explore upstream systems that influence health and then generate ideas for making everyday life healthier on the Stanford campus.

What the Numbers Really Mean

Commercial products and services have a significant impact on health by shaping health behaviors of their users, the researchers write. 

“Products can affect diet, physical activity, sleep and other behaviors, which link to costly chronic conditions such as cardiovascular disease, type 2 diabetes and depression,” they said. “Inspired by an effort to measure the societal impact of individual companies, we developed an approach that could estimate societal costs and benefits resulting from these influences.”

Even a seemingly small impact can add up to enormous costs at a national scale. For example, the researchers found, Netflix's influence on heart disease accounts for less than 2% of all cardiovascular cases, but that small slice still translates to nearly $8 billion in annual health-care costs because heart disease is widespread and expensive to treat.

The numbers become even more striking when compared to the companies' own revenues. The health-care costs potentially linked to Burger King's products equal roughly 45% of the company's annual sales, meaning that for every dollar Burger King earns, society may be spending nearly 50 cents on related health consequences. For Netflix, the estimated health-care costs are nearly double the company's annual revenue.

While the costs due to any one company’s products represent less than 1% of total U.S. health-care spending, the overall costs associated with the products and services of everyday life are much higher. So, this raises an important and contentious question: who should pay for them? Right now, those costs are largely absorbed by individuals, insurers, and taxpayer—not the companies whose products may have contributed to them.

Study Limitations

The researchers acknowledge their methodology has important limitations, including gaps in data about how many people use or consume these products, the complexity of how behaviors interact, and the exclusion of broader costs like lost work productivity. Some health-care cost data were also outdated.

Despite these limitations, the researchers believe their study breaks new ground by offering a replicable method for measuring the hidden societal costs of commercial products. The approach is flexible enough to be applied to virtually any industry and can be improved over time as better data becomes available.

The other authors of the study were Carol Passarelli, MS, DPT, and Inah Golez, MPH, research assistants at Building H; and Evan Cook, MPH, an environmental health specialist at the Ventura County Resource Management Agency.

The research was funded by a National Academy of Medicine Catalyst Award.