Socio-economic status, health and lifestyle.

The role of lifestyle in mediating the relationship between socio-economic characteristics and health has been discussed extensively in the epidemiological and economic literatures. Previous analyses have not considered a formal framework incorporating unobservable heterogeneity. In this paper, we develop a simple economic model in which health is determined (partially) by lifestyle, which depends on preferences, budget and time constraints and unobservable characteristics. We estimate a recursive empirical specification consisting of a health production function and reduced forms for the lifestyle equations using Maximum Simulated Likelihood (MSL) for a multivariate probit (MVP) model with discrete indicators of lifestyle choices and self-assessed health (SAH) on British panel data from the 1984 and 1991 Health and Lifestyle Survey (HALS). We find that sleeping well, exercising, and not smoking in 1984 have dramatic positive effects on the probability of reporting excellent or good SAH in 1991, and that these effects are much larger having accounted for endogeneity. The failure of epidemiological analyses to account for unobserved heterogeneity can explain their low estimates of the relevance of lifestyle in the socio-economic status-health relationship. Indicators for prudent alcohol consumption and eating breakfast in 1984 are not found to be statistically significant determinants of SAH in 1991.