How long do wealth shocks persist? Less than three generations in England, 1700-2025

Gregory Clark and Neil Cummins

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: What happens across generations to random wealth shocks? Do they endure and even magnify, or do they dissipate? By implication, how much of modern wealth is attributable to events before 1900? This paper uses random shocks to family size in England before 1880, that created wealth shocks for the children, to measure the persistence of random wealth shocks. Fertility for married couples in England before 1880 was not controlled but was a biological lottery. And for richer families, family size strongly influenced child wealth. This paper finds that such biology induced wealth shocks had no impact on descendent wealth by three generations later. Since wealth itself persisted strongly across more than five generations this implies that, in the long run, wealth mainly derives from sources other than wealth inheritance itself. The observed link between nineteenth century wealth and modern wealth does not lie in wealth transmission itself. Instead, wealth persisted because of the inheritance within families of behaviours and abilities associated with wealth accumulation and wealth retention.

JEL-codes: D31 N33 N34 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2025-10
New Economics Papers: this item is included in nep-evo and nep-his
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