Wealth and the Capitalist Spirit

Fordham University Department of Economics Discussion Paper No. 2008-10

33 Pages Posted: 13 Jun 2008

Date Written: June 2008

Abstract

The wealth distribution in the U.S. is more unequal than either the income or earnings distribution, a fact current models of saving behavior have difficulty explaining. Using Max Weber's (1905) idea that individuals may have a 'capitalist spirit', I construct and simulate a model where individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist-spirit preferences in a simple life cycle model, with no other modifications, generates a skewness of wealth consistent with that observed in the U.S. economy. Furthermore, capitalist-spirit preferences provide a way to generate decreasing risk aversion with increases in wealth without resorting to idiosyncratic rates of time preference.

Keywords: capitalist spirit, life cycle, wealth

JEL Classification: D31, E21, J23

Suggested Citation

Francis, Johanna, Wealth and the Capitalist Spirit (June 2008). Fordham University Department of Economics Discussion Paper No. 2008-10, Available at SSRN: https://ssrn.com/abstract=1144342 or http://dx.doi.org/10.2139/ssrn.1144342

Johanna Francis (Contact Author)

Fordham University ( email )

113 West 60th Street
New York, NY 10023
United States

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