Wealth and the capitalist spirit

Johanna L. Francis

Journal of Macroeconomics, 2009, vol. 31, issue 3, pages 394-408

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 [Weber, M. (1905). The Protestant Ethic and the Spirit of Capitalism. Charles Scribners' and Sons (1958 translated edition)] 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; inequality (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jmacro:v:31:y:2009:i:3:p:394-408

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