Education, Healthy Habits, and Inequality

nequality in health outcomes has a strong socio-economic component. We argue that differ- ences in health behaviors across education groups are key to understanding this fact. We start by estimating latent types of lifestyle and their impact on health dynamics by use of data on health behavior and health outcomes in the HRS and the PSID. We find that there is a large gradient in life expectancy across lifestyles (8 years at age 50) and that the higher frequency of health-protective lifestyles among the more educated individuals explains 40% of the education gradient in life expectancy. Next, to understand lifestyle formation and the correlation between education and health behavior choices, we build a life cycle model with idiosyncratic labor mar- ket and health risks. In the model, education and lifestyles are jointly chosen early in life by individuals who are heterogeneous in the utility cost of adopting protective lifestyles and acquir- ing education. Importantly, in our calibration these two early-life investments are complements, which endogeneously generates selection of heterogeneous individuals into each choice. Quanti- tatively, we find that the more educated individuals choose healthier lifestyles partly because of their income advantage, partly because of the higher yield of their health-protective behavior, and partly due to their better selection in terms of costs of adopting healthier behaviors. Finally, we find that the increase in the college wage premium over the last decades has widened the education gradient in lifestyles, resulting in one-year increase in the education gradient of life expectancy across cohorts born in the 1930s and 1970s. Of this increase, 40% is driven by the direct effect of wage changes, while 60% is due to changes in the composition of the shrinking set of high school dropouts.