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Wealth and the capitalist spirit


  • Francis, Johanna L.


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 Max Weber's [Weber, M. (1905). The Protestant Ethic and the Spirit of Capitalism. Charles Scribners' and Sons (1958 translated edition)] 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.

Suggested Citation

  • Francis, Johanna L., 2009. "Wealth and the capitalist spirit," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 394-408, September.
  • Handle: RePEc:eee:jmacro:v:31:y:2009:i:3:p:394-408

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    References listed on IDEAS

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    Cited by:

    1. Karnizova, Lilia, 2010. "The spirit of capitalism and expectation-driven business cycles," Journal of Monetary Economics, Elsevier, vol. 57(6), pages 739-752, September.
    2. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    3. Michael Kumhof & Romain Rancière & Pablo Winant, 2015. "Inequality, Leverage, and Crises," American Economic Review, American Economic Association, vol. 105(3), pages 1217-1245, March.
    4. Rannenberg, Ansgar, 2017. "The effect of fiscal policy and forward guidance with preferences over wealth," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168070, Verein für Socialpolitik / German Economic Association.
    5. 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.
    6. Pascal Michaillat & Emmanuel Saez, 2015. "The Optimal Use of Government Purchases for Stabilization," NBER Working Papers 21322, National Bureau of Economic Research, Inc.
    7. Tokuoka, Kiichi, 2012. "Is wealth accumulation a luxury good?," Economics Letters, Elsevier, vol. 115(3), pages 523-526.
    8. Mario Amendola & Jean Luc Gaffard & Fabrizio Patriarca, 2015. "Inequality and Growth : the perverse relation between the productivity and the non-productive assets of the economy," Documents de Travail de l'OFCE 2015-28, Observatoire Francais des Conjonctures Economiques (OFCE).
    9. 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.
    10. Sağlam Çağri & Turan Agah & Turan Hamide, 2014. "Saddle-node bifurcations in an optimal growth model with preferences for wealth habit," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 18(2), pages 1-12, April.
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    12. Mario Amendola & Jean-Luc Gaffard & Fabrizio Patriarca, 2017. "Inequality and growth: the perverse relation between the productive and the non-productive assets of the economy," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 531-554, July.
    13. repec:cuf:journl:y:2013:v:14:i:1:n:3:huang is not listed on IDEAS
    14. Thomas Goda, 2014. "Global trends in relative and absolute wealth concentrations," DOCUMENTOS DE TRABAJO CIEF 010897, UNIVERSIDAD EAFIT.
    15. Michael Kumhof & Romain Ranciere & Pablo Winant, 2013. "Inequality, Leverage and Crises; The Case of Endogenous Default," IMF Working Papers 13/249, International Monetary Fund.
    16. Davoine, Thomas, 2012. "Time constraints, saving and old age," Economics Working Paper Series 1221, University of St. Gallen, School of Economics and Political Science.
    17. Emmanuel Saez & Stefanie Stantcheva, 2016. "A Simpler Theory of Optimal Capital Taxation," NBER Working Papers 22664, National Bureau of Economic Research, Inc.

    More about this item


    Capitalist spirit Life cycle Wealth inequality;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - 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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