Physical Exercise and Psychological Well-Being: A Prognosis for Cost-effectiveness of Corporate Health Care

Abstract: The purpose of this paper is to predict the cost-effectiveness of a preventive health care project based on physical exercise that will take place at Medicon Village, Lund, in the fall of 2016. Data from the Health Survey for England is used to develop an empirical model with individual fixed effects that estimates the relationship between physical exercise and psychological well-being. The frequency of different kinds of physical exercise is used to explain several indicators of psychological well-being. The empirical model is then matched with survey responses collected from Medicon Village employees in order to realistically predict the impact of the project. The results show that the empirical model fits the collected survey data well. Prediction intervals are calculated by inserting survey respondents’ activity levels into the empirical model. This results in estimated levels of psychological well-being. 97.9% of these prediction intervals accurately cover the respondents’ real reported value of given indicators of psychological well-being. The cost-effectiveness of the preventive health care project will differ for every participating individual, due to different base line health statuses and sporting backgrounds, but also for every measure of psychological well-being. Physical exercise also does not impact all the indicators of psychological well-being equally. The model developed in this paper has the ability to take this into account and can predict the cost-effectiveness of the project for any given individual. Three examples of cost-effectiveness estimates based on our survey responses are presented in the results section.