Lifestyle Behaviors and Wealth-Health Gaps in Germany

71 Pages Posted: 24 Mar 2022 Last revised: 2 May 2023

See all articles by Lukas Mahler

Lukas Mahler

University of Mannheim

Minchul Yum

University of Southampton; CEPR

Multiple version iconThere are 2 versions of this paper

Date Written: April 27, 2023


We document significant gaps in wealth across health status over the life cycle in Germany---a country with a universal healthcare system and negligible out-of-pocket medical expenses. To investigate the underlying sources of these wealth-health gaps, we build a heterogeneous-agent life-cycle model in which health and wealth evolve endogenously. In the model, agents exert efforts to lead a healthy lifestyle, which helps maintain good health status in the future. Effort choices, or lifestyle behaviors, are subject to adjustment costs to capture their habitual nature in the data. We find that our estimated model generates the great majority of the empirical wealth gaps by health and quantify the role of earnings and savings channels through which health affects these gaps. We show that variations in individual health efforts account for around a quarter of the model-generated wealth gaps by health, illustrating their role as an amplification mechanism behind the gaps.

Funding Information: Financial support from the German Science Foundation through CRC TR 224 (Project A3) is gratefully acknowledged.

Declaration of Interests: None to declare.

Keywords: Health Inequality, Wealth Inequality, Healthy Lifestyle, Germany

JEL Classification: E2, D3, I1

Suggested Citation

Mahler, Lukas and Yum, Minchul, Lifestyle Behaviors and Wealth-Health Gaps in Germany (April 27, 2023). Available at SSRN: or

Lukas Mahler

University of Mannheim ( email )

D7, 27
Mannheim, 68131

Minchul Yum (Contact Author)

University of Southampton ( email )

United Kingdom

CEPR ( email )

United Kingdom

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