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Wealth and the Capitalist Spirit

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Author Info
Johanna Francis (Fordham University, Department of Economics)

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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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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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Related research
Keywords: capitalist spirit; life cycle; wealth;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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