We consider the covariance structure of health. Agents report their health status on the basis of a latent health stock that is determined by permanent and transitory shocks, and time invariant fixed effects. At age 25, permanent * Address: 2424 Maile Way; Saunders Hall 533; Honolulu, HI 96822. E-Mail: halli-day@hawaii.edu. Tele: (808) 956-8615. † I would like to thank participants at the following conferences: "Understanding Ageing" held at Oxford in April of . I am especially indebted to Jim

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... eckman and to the editor of this journal and two anonymous referees for helping to clarify many points. Finally, I would like to thank PSID and the NIH for funding my travel to Ann Arbor and the Maui High Performance Computing Center which I used briefly. Working Paper No. 11-7 shocks account for 5% to 10% of the variation in health. At age 60, this percentage rise to between 60% and 80%. We document a gradient in which permanent shocks matter less for college-educated people and for women. JEL Code: I1, C5