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Wealth and the Capitalist Spirit

Johanna Francis ()

Fordham Economics Discussion Paper Series from Fordham University, Department of Economics

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 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)
Date: 2008
New Economics Papers: this item is included in nep-dge and nep-mac
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Related works:
Journal Article: Wealth and the capitalist spirit (2009) Downloads
Working Paper: Wealth and the Capitalist Spirit (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:frd:wpaper:dp2008-10

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