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Wealth and the Capitalist Spirit

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  • Johanna Francis

    (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.

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Bibliographic Info

Paper provided by Fordham University, Department of Economics in its series Fordham Economics Discussion Paper Series with number dp2008-10.

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Date of creation: 2008
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Handle: RePEc:frd:wpaper:dp2008-10

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Web page: http://www.fordham.edu/economics/
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Keywords: capitalist spirit; life cycle; wealth;

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Citations

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Cited by:
  1. Tokuoka, Kiichi, 2012. "Is wealth accumulation a luxury good?," Economics Letters, Elsevier, vol. 115(3), pages 523-526.
  2. Jizheng Huang & Heng-fu Zou, 2011. "Asset pricing and the Modigliani-Miller theorem with the spirit of capitalism," CEMA Working Papers 456, China Economics and Management Academy, Central University of Finance and Economics.
  3. repec:cuf:journl:y:2013:v:14:i:1:n:3:huang is not listed on IDEAS
  4. Davoine, Thomas, 2012. "Time constraints, saving and old age," Economics Working Paper Series 1221, University of St. Gallen, School of Economics and Political Science.
  5. Karnizova, Lilia, 2010. "The spirit of capitalism and expectation-driven business cycles," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 739-752, September.
  6. Jizheng Huang & Heng-fu Zou, 2013. "Asset Pricing, Capital Structure and the Spirit of Capitalism in a Production Economy," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 367-384, November.
  7. Thomas Goda, 2014. "Global trends in relative and absolute wealth concentrations," DOCUMENTOS DE TRABAJO CIEF 010897, UNIVERSIDAD EAFIT.
  8. Michael Kumhof & Romain Ranciere & Pablo Winant, 2013. "Inequality, Leverage and Crises: The Case of Endogenous Default," IMF Working Papers 13/249, International Monetary Fund.
  9. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.

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