A dynamic microeconomic analysis of the impact of physical activity on cognition among older people

This microeconomic study explores the dynamic relationship between physical activity and cognition, using longitudinal data from 6 waves of the Survey of Health, Ageing and Retirement in Europe (SHARE) between 2004 and 2017. Physical activity has drawn significant attention as a potentially successful action for protecting brain health and cognition in the aging population, but the empirical evidence in observational studies is inconclusive to date. We add to the literature by estimating the effect of physical activity on cognition, tackling many sources of bias, which have previously not been addressed consistently. The challenge in estimating the effect of physical activity on cognition is the dynamics of cognition and the endogeneity of physical activity caused by unobserved heterogeneity, reverse causality and measurement error. To address this endogeneity and at the same time control for lagged cognition, we propose a system - generalized method of moments (GMM) estimator, using lagged levels and differences of the endogenous explanatory variables as instruments, while transforming out the fixed effects. We find that being moderately & vigorously physically active at least once a week increases memory status by 0.282 and 0.552 standard deviations for men and women respectively. We find different effects for varying physical activity intensity.