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Take the money and run

by Ace Damon
Take the money and run

A LATIN PHRASE loved by every old-fashioned British master was mens sana in corpore sano – a healthy mind in a healthy body. With that, the educator would dispatch some shaky student in a vest and shorts in a five-kilometer race across the country.

Turns out these tutors were involved in something. Higher physical activity is associated with better mental and physical health. And it may also be linked to higher worker productivity and thus faster economic growth. This is the conclusion of a new report from RAND Europe, a think tank commissioned by Vitality, a British health insurer.

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It is reasonably well established that physical activity reduces the risk of heart disease, type 2 diabetes, stroke and some cancers. And a report by the British Physical Activity Guidelines Advisory Committee in 2018 found that practicing about 30 minutes of exercise a day can reduce the likelihood of depression by more than 40 percent. The RAND conducted a workplace survey in seven countries and found that those who reported higher levels of activity (equivalent to 150 minutes per week of moderate exercise or 75 minutes of vigorous exercise) had better mental health on average.

Does that make them better workers? Previous studies have suggested that those who exercise more tend to earn 5-10% more on average. Several factors could explain this, however. Those who participate in team sports can make locker room contacts that help them in their careers. Or it may simply be that the top earners can benefit from sports facilities such as participating in gyms.

The RAND study looks at different measures: absenteeism (when workers take time off due to illness) and presenteeism (when they come to work but are less productive due to illness). The last measure was self-reported by employees, who were asked if their work was adversely affected by health problems. Research suggests that between 3 and 4.5 business days per year are lost as a result of workers being physically inactive. This is between 1.3% and 2% of annual working time. Most of it boiled down to presenteeism.

Another potential gain from improved fitness is reduced healthcare costs. In many countries these would be accumulated for the public sector. But in the United States, where health care is often offered through employment-based schemes, companies can benefit. It is difficult to know what proportion of these costs can be reduced, but RAND estimates that the total US health savings could reach $ 6 billion a year by 2025 (using the same moderate or vigorous exercise targets as before).

This is a rounding error in America's $ 3.5 trillion annual healthcare bill. But with the help of sophisticated econometrics, the authors of the study conclude that if people meet these exercise targets, global GDP could be around 0.17-0.24% higher by 2050. There's nothing to be done. despising in a slow growing world – although the uncertainties involved in forecasting over such long periods mean that these estimates must be treated with extreme caution.

How to encourage workers to become more active? Incentives are useful, but only if they have conditions; Giving all employees a subsidized gym does not seem to work. Another RAND Europe study examined a program in which workers received an Apple watch, payable in installments at a discounted price – but only to those who agreed to monitor their physical activity. The monthly payments depended on how much exercise they took. If they met their goals, they ended up paying 10% of the watch's list price; those who did not exercise paid the full blow.

This approach takes advantage of a behavioral bias known as loss aversion – people are eager to avoid paying more. On average, scheme participants performed 30% more exercises than before.

The problem is that many people are too optimistic about their health, underestimating the risks they face. This means that participation in workplace exercise schemes tends to be low, about 7% in the sample studied by RAND.

Companies are not the only ones that can encourage a healthier lifestyle; friends and family will probably be more important. But companies can play a bigger role. If RAND is right, this can bring financial benefits. Company directors may still like a tailored saying: mens sana in corporate sano.

Clarification (November 8, 2019): The RAND Europe study involved an ongoing program in which Apple watches were given to workers rather than an experiment. We updated the text accordingly.

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