Wealth and the Capitalist Spirit
Johanna Francis ()
Fordham Economics Discussion Paper Series from Fordham University, Department of Economics
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 MaxWeber'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 (search for similar items in EconPapers)
JEL-codes: D31 E21 J23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: Wealth and the capitalist spirit (2009)
Working Paper: Wealth and the Capitalist Spirit (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:frd:wpaper:dp2008-10
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