Money Talks: Why weight-loss drugs will reshape the world

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The economist. So when I went to Denmark in January, it was unusually cold, even for Denmark. It was about minus 10 degrees. I brought my thickest jacket and it still wasn't really enough.

George Abanjo writes about health for the Economist.

Kalundborg's a small town in the centre of Denmark. It's home to around 16,000 people. The high street is like any other high street. Lots of new boutiques opening up, a craft beer shop. But the skyline really is quite unusual because it's dominated by these huge factories.

Many of those factories are owned by the pharmaceutical giant Novo Nordisk, the maker of Ozempic and Wegovy, two groundbreaking weight loss drugs. Novo Nordisk, which has now overtaken LVMH to become Europe's most valuable company, has had so much success making and selling these drugs that it is now driving the Danish economy.

In the first half of 2022 to the first half of 2023, the economy grew by 1.7%. Now, without Novo Nordisk, the country probably would have been in recession. And it's not just growth. So we think that around 3% of Danes are employed by Novo Nordisk or in some way benefiting from the company.

Four in five buyers of these weight loss injections are American, and they might be paying more than $1,000 per month for the treatment.

Another thing that I think is quite incredible is the influence of America. So the Danish kroner is loosely pegged to the euro. And essentially what's happened is that Novo Nordisk pulls in so many dollars that the central bank has had to keep interest rates lower than they would have been to stop the krone rising too much in value against the euro.

Denmark is already reaping huge economic benefits from Ozempic and Wegovy. But a drug designed to reshape people's bodies will have a far wider impact. How will these weight loss drugs reshape society and the global economy as well? You're listening to Money Talks from the Economist, our weekly podcast on the markets, the economy and the world of business. In Washington, D.C. i'm Alice Fulwood.

In London, I'm Tom Lee Devlin.

In Dubai, I'm Mike Bird.

And in today's show, the economic impact of weight loss drugs.

First, we hear about the market for drugs like Wegovy.

And so, for all intents and purposes, for some time, demand is essentially infinite.

Then we find out how that could change the way we see people.

Is there a risk that having obesity could be seen as signaling being lower income?

Finally, we discuss what all this means for the future of weight loss, drugs and the people that take them. Mike, Tom, hello.

Hey, Alice.

Hello, Mike.

You're in Dubai?

Yes. In the same way that some people are eclipse hunters, you know, following the path of eclipses around the world, I'm clearly a flood hunter looking for opportunities to be stuck inside an airport, as I have been over the last few days.

Wait, so what's happened in Dubai?

It rained. It rained. Which is big news in Dubai, actually. No, it rained very heavily. The heaviest it's rained in a very long time. And as it turns out, cities where it doesn't rain don't always have the drainage infrastructure that they might otherwise need.

Did it also flood when you were in Laos, or am I making that up?

No, it didn't flood. It was smog. It was like crop burning smog. So it's like a sort of biblical plagues thing, sort of following me around the world.

All right, well, I'll look forward to enjoying killer locusts or whatever when we're in London together over the summer or whatever it is wonderful. Well, speaking of sort of earth shattering, world changing developments, today, we are discussing something that has taken the US by storm over the last couple of years and that is weight loss drugs. And I wanted to talk about them today because it's, it's not just Denmark's economy, which we heard about in the open of the show, that could see a huge boost from these drugs. According to the World Obesity Federation, which is a research group, the economic cost of obesity worldwide will be two and a half trillion dollars by 2025, which is actually bigger than the size of the British economy.

Right, so this is not just about socialites and Hollywood stars mysteriously shedding a few extra pounds then. It actually has a pretty massive impact potentially on public health and the economy.

Yeah, you've actually touched on sort of both the reasons that I'm fascinated by these drugs. One is all the costs associated with being sort of very obese or overweight. Healthcare costs, difficulty doing certain jobs, things like that. And some of those costs fall on individuals and some of them on society more broadly. Things like sort of higher costs of national healthcare services. And now we have a potential solution to some of those problems and that could have a very significant impact on economies. And the other reason I think this is such an interesting topic is that There is all kinds of social status and signaling tied up with people's weight and their appearance. And we've talked about this on the show before in our Economics of Thinness episode. So I'm sort of fascinated to see what will happen to those signals and preferences over time.

Good times. That was my first episode as a co host, Alice.

Yes. Yeah, we really sort of threw you in at the shallow end with a very sort of easy and light hearted topic. But you know, it's great that you stuck around. Now this isn't the first time that people have got excited about weight loss treatments, whether it's sort of drugs or other interventions like gastric band surgery. But this is the first time that a treatment has come to market that both actually appears to work and does not appear to have very major concerns over potential side effects.

So I have to be honest, I'm slightly obsessed with these drugs and the whole debate around them. But they are currently not very cheap, are they?

Yes. This class of Drugs known as GLP1s, are at the moment mostly injection based, are usually taken weekly and prices do range, but the list price is in the US is almost $16,000 a year.

And I mean, that's been incredibly lucrative for the two firms selling these drugs. Right? I mean, a few years ago I certainly had never heard of Novo Nordisk and I'm sure many listeners hadn't either. But now, as we heard at the start of the show, it's Europe's most valuable firm.

Yes, its market cap has almost doubled to 560 billion since the start of last year. And the market value of Eli Lilly, which is the other big company making these drugs, has more than doubled to around $740 billion. All this is driving that one of these firms could become the first trillion dollar pharmaceutical company.

And I guess there's the question of how long that sort of tear can continue because it's effectively a duopoly at the moment. But presumably that can't last forever.

Yeah, this is the healthcare space. So because of patents and approvals and the FDA and everything, it can take a very long time for new entrants to be able to enter the market and start competing. So the sort of normal market forces are somewhat sustained. Spend it in the short to medium term. But to find out how the market could shake out over the long term, I spoke to an expert in healthcare, Michael Nadelkovich. He is an analyst who covers pharmaceutical firms for TD Cowan. Hi Michael, welcome to the show.

Hi Alice, thanks for having me.

So can we start with the Basics. To begin with, how big is the market for these new obesity drugs at the moment?

We took our best stab at forecasting that very number late last year. And the number we came up with was about 40 billion globally for obesity drugs. And that's within the context of a broader market for GLP1s or Incretin, so drugs that work through the same or similar mechanism that are used for the treatment of diabetes, for which overall we think the market globally could be around 100 billion in the year 2030.

Okay, so globally at the moment, about $40 billion are being spent on those drugs. What does that mean in terms of the number of people that are actually taking them in the United States?

As of the end of 2023, which was roughly when we modeled, we have some decent data from third party prescription databases and aggregators that there were probably somewhere between 4 and 5 million people on GLP1 or an incretin at the end of 2023. But that includes people who have diabetes as well as people who are on them for weight loss. Globally, we don't have as good data. Outside the United States, we estimated around 12 million. And then globally in 2030, which is the farthest we forecast, we think it might be around 43 million people who are on one of these drugs, again, both for diabetes and obesity. And in the United States, we think that number could be around 14 or 15 million. So around it tripling.

Okay, and who's making these drugs? Who are the big players here? People have probably heard about Novo Nordisk and Eli Lilly, but are there more people getting into this market?

Yeah, so you name the two major players and as of right now, they are really the only two to speak of. Novo Nordisk was really the tip of the spear and I think could be reasonably credited with creating the obesity marketplace where once there was none. So that 40 billion that we may or may not be right about it, but roughly they have created that marketplace and Lilly was in the right place at the right time and very well prepared to be a fast follower. So Novo Nordisk, Eli Lilly, you mentioned, really the only two players at the moment, and for the foreseeable future, it's really their market to lose now that they've proven the case. And it's very clear that the demand for weight loss drugs is there. And some of these drugs like Novo Zugovy, which launched in June 2021, is already a multi billion dollar product. Now, of course, there are many other market hopefuls. They're probably months to years behind.

Okay, and can we Talk a little bit about pricing and production capacity. I guess of these drugs, you hear a lot about shortages. The drugs are also very expensive. How do you see those dynamics playing out as they sort of become more popular?

So I guess important to note that we know the list price for these drugs, but we don't know the net price. So of course, the way, at least in the United States marketplace, the way that it works is that drug companies negotiate rebates and discounts. If you take wegovia as an example, the list price in the United States is, I believe, just a little bit north of $1,300. And so, you know, in our modeling, just as an example, we assume that the net price, so the price that actually accrues to the company's sales is somewhere about half that. So that would be, you know, somewhere in the $700 range, maybe a little bit less, maybe a little bit more. That still means that they're very expensive and probably out of reach of most people. From an out of pocket perspective, in terms of manufacturing, the demand for these drugs, both on diabetes and obesity side, is so large that neither Novo Nordisk nor Eli Lilly has been able to manufacture enough to supply the marketplace. That's been true pretty much since the launch of WeGovy almost three years ago. And so pricing becomes lower on the list of considerations for these companies when they're thinking about how to access the market because they simply can't supply enough anyway. And so they're kind of in an enviable position, at least from the manufacturer's perspective, of being able to control the marketplace to some extent.

Surely these companies are investing heavily in production capacity and you have all of these new players coming into the market as well. So at the moment we hear a lot about shortages. Do you think that that will always be the case?

Pretty much every GLP1 or Incretin is now on the FDA shortage website, which means that to varying extents there's difficulty in getting certain doses of these drugs. So the supply is very, very tight at best and at worst there are full on outages, just as you noted. Both companies also, as you noted, are investing heavily in building out manufacturing capacity. The fruits of that labor are starting to be borne out this year. And so what we anticipate, and this is based primarily on company commentary because there's really no good way to independently verify this. So we're kind of at their mercy to take them at their word. But what they both say is that we should see a slow, steady expansion in supply over the course of the next several months to years. Of course, what we don't know is what the true kind of organic underlying demand is. And so we don't know at what point they would be able to meet that demand, because we don't know what that number is. But it's pretty clear from the early launch dynamics of these products that the demand is vast. And so it's reasonable to assume that it might take at least another year, if not years, before demand just in the United States is met, let alone globally.

And I guess that's just demand at this current price, because one of the things we hear a lot in the US is that insurance companies are unwilling to cover these drugs at current prices. You hear the same from the big national healthcare providers in Europe, I guess. I wonder whether you think we'll get to a scenario where maybe supply is increased enough and prices come down enough that you will get insurance companies and national healthcare providers paying for these things.

To be frank, I'm not sure that we necessarily need significant price concessions to get to that point. If you look at the United States right now, according to Novo Nordisk, about 50 million people have insurance coverage for WeGovy, just as an example, that would be roughly a third or so of the addressable population in terms of people who have obesity or are overweight with a comorbidity but do not have diabetes. That's already probably millions more than they can supply at the moment. But to your point, the health economics of it all are kind of maturing now. And so the more data we get on the health benefits side, the easier it is for payers to make the calculus that covering this drug not only addresses the demand amongst its customers, but may also reduce costs in other columns of its business outside of the United States. You mentioned health outcomes data being important for governments to reimburse. That's true in the big cardiovascular outcomes trial for WeGovy, which is called select, which was positive. And we got data showing that WeGovy reduced your risk of a heart attack, stroke, or dying from a cardiovascular event by about 20%. That is the kind of data that will be convincing to governments outside the United States to suggest that not only might it be cost effective, but at some point it becomes a moral imperative to cover drugs like this, which can save people's lives.

So given all this, the sort of potential, size of the market, the demand we've talked about you mentioned, the companies have gone up in value a lot. Are you still sort of bullish on their potential, or where do you see Things playing out from here we are.

I noted at the beginning of our conversation that we see nothing on the horizon that would derail their momentum. And in sort of a perverse way, the supply constraints for both Novo and Lilly work in their favor. So we really don't know what true underlying demand is right now. So our number is 100 billion in 2030. Right. We could be wrong by multiples to the upside, we could be wrong by multiples to the downside, but we won't really have the information available to us to know whether we're wrong to the upside or the downside. Probably in 2024, potentially not in 2025, because the supply constraints will mask true underlying demand for the foreseeable future. And so, you know, in a strange way, these companies, they can sell every incremental unit that they can produce. And so for all intents and purposes, for some time, demand is essentially infinite.

Michael, thank you so much for joining the show. It's been a real pleasure.

Thanks, Alice. Appreciate the invite.

So, Mike, Tom, what really struck me there was what he was saying about near term demand for these drugs. We really are at the sort of very tip of the Ozempic or Wegovy Spear here. Perhaps 4 or 5 million people are on these drugs in America now, eventually you could imagine that being 150 million. And right now there's basically no shortage of Demand at the $1,300 a month or so list price. The firms are increasing supply, but slowly. And so the status quo around these drugs being exclusive and expensive is probably going to continue for quite a while longer.

I do get a little bit, perhaps not depressed, but certainly disappointed when we hit these sort of manufacturing bottlenecks for something that everyone really wants or a lot of people really want. Because I think we know if it comes down to it, the right combination of investment and permitting and coordination would result in us carpeting the world in these things and an understanding of the sort of improvement that you might have in quality adjusted life years from the sort of widespread use of these drugs at relatively cheap prices. We'd be manufacturing this stuff in the same way that we did with COVID vaccines or in the same way that Chrysler turned out tanks during World War II. And we do seem to get more indications with each passing week about what they might be able to do. The drugs themselves. I see some quite positive research on potential effects on sleep apnea just in the last week. So I know I sound a little bit like an evangelist here, but this feels quite profound and potentially revolutionary. Essentially we solved something, the want of food in a very large portion of the world. And we created this side effect that some people eat too much of it. So we got something 80% right, and there's a 20% drawback. And now we have something that basically fixes the drawback. And I think it's sort of a shame that the consensus is that this has to go slowly.

Yeah, I mean, I think that's right. And I agree that the supply shortage is probably going to take a while to ease, but I do think that there are lots of companies looking at this opportunity and thinking it's. It's massive and we're going to pour money into developing rival candidates as quickly as we can. And obviously that can't happen overnight just because of how drug approvals and the like work. But I think it will maybe happen sooner than some are expecting. I mean, Prozac was massive when it was released, but I think there are now eight drugs in the same class of antidepressant. And I think the second one, after Prozac, came to market only about four or so years later. And there is a possibility, actually, that later drugs as well will be more effective and have fewer side effects, and so they could trounce the offerings that we have today. So I guess the other point here is that if I were an investor trying to value Novo Nordisk or Eli Lilly right now, I'd be somewhat cautious with my assumptions about how long these two firms specifically will be able to control the market for it, at least in the way that they do now.

So we've discussed the impact of Ozempic on the companies, the supply chain constraints, the impact it's had on their valuations. But before we turn to how lower levels of obesity could reshape the economy more broadly, we want to let you know that we've made this episode of Money Talks available to listen to you for free.

To listen every week, you'll need to be a subscriber to become one. Just search Economist Podcasts or click the link in the Show Notes.

Now I want to turn to the impact on the economy and speculate a bit about the long run. What happens when the supply of drugs like Ozempic is plentiful and prices are low. To discuss all of this, I spoke to John Cawley. He's a professor of public policy and economics at Cornell University. Hi, John. Welcome to the show.

Thanks, Alice. I really enjoy being here.

Could we start by talking a bit about your research? You've published a lot of papers looking at the impact of obesity on the economy and the link between people's wages and, and their weight in America. So give us the big picture. What is the impact of obesity on the economy?

Sure. So the impacts of obesity on the economy are substantial. And you can divide these impacts into the direct medical care costs and the indirect labor market consequences. And so in terms of the direct medical care costs, obesity is associated with a whole host of chronic diseases. So it's associated for example, with type 2 diabetes, cardiovascular disease, even cancer. And so having excess weight, having extreme obesity, for example, is associated with significantly higher medical care costs. Having obesity, for example, essentially doubles a person's medical care costs on average. And if you have extreme obesity, it can more than triple them. In terms of the indirect labor market consequences, we find that among women in particular, excess weight tends to lower wages. And, and that there's also a rise in absenteeism, people missing work due to health problems. And so having obesity essentially doubles the number of health related work days that people miss because of health issues. And a whole other area is the issue of presenteeism when people are just less productive at work because they're suffering from health conditions like diabetes or cardiovascular problems. And that's something that really there aren't good estimates of. So we don't even know the full consequences of obesity for the economy.

And on that second point you made, the indirect cost of obesity being on the sort of labour market and people's wages, why is it that you think that exists for women in particular? Is it the health dynamics you talked about, or is there something else going on, like potential discrimination against people who are overweight?

Yeah, so it's definitely a very interesting and complicated situation. So I mean, undoubtedly if we're talking about an extreme situation where someone has extreme obesity, they have cardiovascular problems, it wouldn't be surprising if that's going to affect their ability to work in the labor market. But at the same time, women's wages start falling with body mass index, which is your weight for height at a very low level. And so it's not just due to chronic conditions. It does seem like there is discrimination playing a role.

And what is the magnitude of these effects?

Yeah, so in the us the aggregate direct medical care costs of obesity we estimate to be around $300 billion. These numbers get really big. And so it's kind of helpful, I think, to compare them to something. And so the estimated damage of Hurricane Katrina that destroyed much of New Orleans was $125 billion. So the direct medical care costs of obesity are sort of like two to three Hurricane Katrinas hitting the US Every year.

Okay, so the costs are large and there are all of these new drugs on the market and they seem to offer a solution. They have advantages over other technologies like gastric bands that have been around for a while. They are very expensive right now though, sort of maybe around $1,000 a month. So economically, at that price, do you think it's sensible for someone to potentially take these drugs if they are obese?

So one problem is a lot of health insurance plans do not cover these drugs in the US currently. And so if someone has the money and they want to buy these drugs because they value not just the benefits to their health, but also the change in their appearance as an economist, I feel like that's their business. There's no reason for me to intervene and stop a mutually beneficial transaction. But if you're talking about like, is there a business case for health insurance plans to cover these drugs? I mean, currently the market's kind of saying no, because the majority of private health insurance in the US Chooses not to cover them. And part of the reason is, like you said, their cost. So we did some simulations from our medical care cost studies estimating how much could medical care costs fall when you reduce weight by roughly the amount associated with these drugs. And so even for somebody with extreme obesity, like they were starting with a body mass index of 40, even a 20% weight loss would be estimated to reduce annual healthcare costs by about $5,500 a year. And that's not as much as certainly the list price and potentially even the discounted price. But the good news is, is that these prices are going to come down. So now it's not just WeGovy that's approved for weight loss in the U.S. it's also Zep Bound. And so you have two different manufacturers, there's others in the pipeline. There's going to be more competition. And of course in the very long run they'll go generic and then the drugs will be extremely cheap and very widely available.

Yeah, I'd like to ask you about that sort of very long run scenario where these drugs are extremely cheap and very widely available. If we imagine a world in which basically anyone who wants access to these drugs can get them, given the costs you've described about obesity or being overweight, how do you expect people would behave in that world?

The interesting thing is that prior to the development of these GLP1s, development of a safe and effective pill for weight loss was seen as the holy grail in the pharmaceutical Industry, because so many people would demand it and people would stay on it for so long. I mean, there's a billion people in the world who have obesity. In the US, 41.9% of adults have obesity. So potentially there is absolutely an enormous market for them.

And in that world where you have lots and lots of people taking these drugs and perhaps lots of people having a normal BMI or looking certainly sort of thinner than they do now, what do you think might happen to those other labour market costs we discussed for people who remain overweight? Do you think they might be lower if there were fewer of those people, or might those costs be higher?

Yeah, it's a really interesting question and it raises issues about what does the signal of having obesity mean in a world where it's very easy to achieve weight loss? Buy a drug that's cheap and widely available in this scenario. Right. And I think in the shorter term, the issue is more serious, because in the shorter term, where these drugs are really only available to people who can pay for them out of pocket, or have really high quality health insurance, which tends to be correlated with a person's income, there's a potential problem of worsening health equity, because then being able to lose weight is something very correlated with a person's income. And thus is there a risk that having obesity could be seen as signaling being lower income?

One of the questions I'm most curious about is what the ideal body shape might be in the world that we are discussing, because beauty standards have not always been the same, right? You had these sort of Rubenesque portraits of women who were much more overweight than the sort of beauty ideal. Now, that existed a couple of hundred years ago, and in that time food scarcity existed, it was harder to be fat and that was high value. Now it's hard to be thin and that's high value. I guess I have no idea what body shape would be desirable in a world in which it's potentially easy to be either. Do you think people would strive to be unique in some other way by being very strong or fit? What do you think might happen?

Yeah, it's a really interesting question. And so of course this is speculation, but you're right. So if you look back at like the Stone Age, we find these fertility symbols where it's a woman who has, like extreme obesity, and like you said at that time, it would signal healthiness. And so what you raise is an interesting question, is could it evolve further where if in the future we have widely available and very cheap medications that can Help you lose weight. Is there a different signal again of having weight where maybe it signals that you are comfortable with who you are or you're the type of person who doesn't take medications for cosmetic reasons? You know, could there be some sort of virtue signaling that arises from that yet? We don't know. It'll be really interesting to see how these drugs shape not just the economy, but society.

Well, John, that was fascinating. Thank you so much.

Thanks so much for having me.

So, Tom, Mike, what do you think? Should we be prescribing weight loss drugs for everyone?

Yeah, I mean, it's a fascinating question, actually. Historically there's been some stigma around weight loss treatment. So Medicare, which for non American listeners is the country's health insurance program for people aged over 65, is actually banned by law from covering weight loss drugs. And I suppose maybe part of the concern there is just handing out weight loss drugs to anyone who puts on too many pounds could incentivise people to make bad choices. But there are lots of reasons actually why people end up being overweight or obese. There's often a strong element of a genetic lottery to it. You know, their metabolism is slower, they don't feel satiated as quickly. And importantly, that does end up costing the health system a decent amount of money down the line, not to mention the toll it takes on the individuals. So I guess to your question, Alice, I think widening out access to this as quickly as possible is a good thing. And I think the cost of this will eventually come down by a lot. But I certainly don't think people should be rushing out to cancel their gym membership.

Yeah, I basically think this stuff should be in the water supply at this point. I'm a believer. I don't think I've actually ever said this, but I thought the most interesting bit of what we just heard was actually one of the host questions rather than the answers. But Alex, I love what you said about size and status there. And you don't even have to go back to Rubens, right, Because you have lots of cultures globally today where food abundance is extremely recent and being bigger is still a sign of prosperity. And it is going to create some really weird circumstances where potentially we'll have a problem in the short term in that essentially, to put it crudely, being a beast becomes a wholly poor person thing, both on a national basis and an international basis. You're going to see countries with much lower GDP per capita that are potentially much fatter than richer ones, which is going to be weird. I mean, it's not universally the case that that's not true now, but it's going to be even more so if this becomes a sort of widespread and everyday health treatment. I will also say as an aside from the beginning that it is very funny that this has messed up Denmark's external balances so much. One analysis said that it's basically turned an entire country, albeit a small one, into a company town. It's so important that it's keeping Danish interest rates lower than they would otherwise have been to keep the Danish currency from depreciating too much, particularly against the euro. So it's one company that's turned Denmark into a sort of second Switzerland. And yeah, yeah, if you can't see the fun in that, then maybe you're not a financial journalist.

I hope we have some listeners that aren't financial journalists that are just normal people, you know, but maybe, maybe they all are just like us. I really liked the clarity that John was able to give us around why insurance firms and healthcare providers are sort of not necessarily covering this drug yet. So yes, there are savings on healthcare costs be made from losing weight if someone is obese, but those savings are only about half the list price of drugs like Ozempic and WeGovy, at least according to sort of the calculations that he gave us. I guess that also gives us the sort of rough back of the envelope figure for the value that people perceive in losing weight for other reasons. Right. Not just saving money on healthcare, things like better mobility or the value of looking a certain way. If people are willing to pay the list price at the moment, those dynamics must be making up the sort of other half of the calculation. There's still, and this is probably no surprise, but the bit I'm most fascinated about in all this is what it will do to the way in which society perceives fat people and body standards. And thank you Mike, for also finding that question interesting. I do think John and what Mike said is exactly right about the short term. Right now only the wealthy could afford these drugs and that is really reinforcing the existing relationship that exists, which seems to be sort of especially pertinent for women around thinness being associated with wealth. But I'm so sort of fascinated by that question that we got to discuss at the end there. Beauty standards and the value derived from them are always defined essentially in opposition to what is easy for the masses to attain. If it's easy or much easier to be thin, I find it almost impossible to think that won't lead to a very different world. Than the one we live in now. And I'm sort of fascinated to see how that plays out.

Yeah, I suppose it would have been really, really difficult for people to imagine the situation that we have now if you told them sort of three or four hundred years ago that this would be the setup and that thinness would be attractive precisely because poorer people were often not thin. So it's really difficult for us to then imagine what it might be in the future that people try to define themselves against in terms of framing themselves as more attractive than the median person. It is really, really difficult to imagine. But in a world where you can freely modify your body in that way, I guess it does become much more difficult.

Well, with that, why don't we pivot to our stats of the week? Who wants to go first?

I am happy to kick us off. My stat of the week is 1000 terawatt hours. That is the amount of electricity that the International Energy Agency expects that data centers will be consuming by 2026, which is around what Japan consumes annually, according to the Financial Times, where I got this statistic. And this is becoming a big topic of debate at the moment, AI is leading to huge investments in data centers, which is starting to have a pretty meaningful impact on aggregate electricity demand. So there's a very interesting trade off that I think the world is going to run up against in the coming years between its ambition to phase out the use of fossil fuels and its desire to harness this technology as quickly as it can.

I did enjoy that you gave us a benchmark for how many terawatt hours. That is because as we've discussed before on the show, units of energy consumption, very hard to know what they mean.

I appreciate you not going for 60,000 terawatt minutes, Tom. My stat of the week, or rather my two stats, are 20.8 and 17.3. They are percentages and they are the market shares of smartphones shipped in the first quarter of this year. The 20.8% belongs to Samsung and the 17.3% belongs to Apple. So yeah, the Korean smartphone maker pipping out the American competitor, which is quite interesting. Apple usually leads. It's also a really strong quarter for Xiaomi. So whether you're seeing a little bit more international competition in smartphone sales, I guess we'll have to watch out for future quarters data.

Do we have any idea why everyone's suddenly gone off iPhones?

Good question. I don't like iPhones. I've never owned one.

Mike is using all of his influencer clout.

Looking forward to A tedious exchange of emails with an Apple PR later.

Well, my stat of the week this week is between 100 million and $200 million. And this is what an analyst at Wells Fargo estimates that Costco shoppers are spending on physical gold bars. You can buy these on the Costco website and occasionally in store. They launched these in August of last year and they basically have immediately sold out every time they have put more up for sale. And it turns out that $200 million a month is half as much as the Chinese central bank spent on gold in March.

I will, I will say that 100 to 200 million is a stat that you could drive a barn door through. Like, that's an absolutely enormous gap. Why don't you just say between 0 and 200 million?

Well, that is probably all we have time for. And if you are interested in hearing more on this topic, do check out our Economics of Thinness episode from January 2023. But all that's left to do for today's show is to thank Michael Nadalkovich and John Cawley.

And thank you for listening to Money Talks.

You can always write to us.

And@podcastseconomist.com Today's show was produced by Dan Asher.

Our sound engineer is Johnny Allen, and.

The executive producer is Hannah Mourinho.

I'm Alice Hallward.

I'm Mike Bird.

I'm Tom Lee Devlin.

And this is the economist.