Wealth and the Capitalist Spirit

Johanna Francis

MPRA Paper from University Library of Munich, Germany

Abstract: The wealth distribution in the U.S. is more unequal, or skewed to the right, 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 some individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist-spirit preferences in the standard 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 (search for similar items in EconPapers)
Date: 2007-08-15
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)
Working Paper: Wealth and the Capitalist Spirit (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5985

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