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The Wealth Distribution and the Demand for Status

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  • Eric R. Young

    (University of Virginia)

Abstract

Standard economic theories of asset markets assume that assets are valued entirely for the consumption streams they can finance. This paper examines the introduction of the demand for status (as a function of wealth) into a model of uninsurable idiosyncratic risk. We find that spirit of capitalism preferences lead to less inequality in wealth and more in consumption. They also imply very different responses to a move from a progressive to a flat income tax; with spirit of capitalism preferences, wealth inequality goes down when the economy moves to a flat tax regime.

Suggested Citation

  • Eric R. Young, 2004. "The Wealth Distribution and the Demand for Status," Macroeconomics 0410008, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0410008
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    Cited by:

    1. Konstantinos Angelopoulos & Spyros Lazarakis & James Malley, 2019. "The Distributional Effects of Peer and Aspirational Pressure," Working Papers 419434468, Lancaster University Management School, Economics Department.
    2. Richard M. H. Suen, 2014. "Time Preference And The Distributions Of Wealth And Income," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 364-381, January.
    3. Li, Fanghui & Wang, Gaowang & Zou, Heng-fu, 2020. "The spirit of capitalism and optimal capital taxation," Economics Letters, Elsevier, vol. 192(C).
    4. Yulei Luo & William T. Smith & Heng-Fu Zou, 2009. "The Spirit of Capitalism, Precautionary Savings, and Consumption," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(2-3), pages 543-554, March.
    5. Edoardo Di Porto & Enrica Maria Martino & Henry Ohlsson, 2021. "Avoiding taxes by transfers within the family," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 1-23, February.
    6. Gaowang Wang & Heng-fu Zou, 2018. "The Effects of Macroeconomic Policies in a Mercantilist Economy," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 13(2), pages 171-195, June.
    7. Gaowang Wang & Heng-fu Zou, 2011. "Foreign Asset Accumulation, Macroeconomic Policies and Mercantilism," CEMA Working Papers 461, China Economics and Management Academy, Central University of Finance and Economics.
    8. Luo, Yulei & Gong, Liutang & Zou, Heng-fu, 2010. "A Note On Entrepreneurial Risk, Capital Market Imperfections, And Heterogeneity," Macroeconomic Dynamics, Cambridge University Press, vol. 14(2), pages 269-284, April.
    9. d’Albis, Hippolyte & Iliopulos, Eleni, 2013. "Collateral constraints and rental markets," Economics Letters, Elsevier, vol. 121(3), pages 436-439.
    10. Francis, Johanna L., 2009. "Wealth and the capitalist spirit," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 394-408, September.
    11. Qichun He & Yulei Luo & Jun Nie & Heng-fu Zou, 2023. "Money, Growth, and Welfare in a Schumpeterian Model with the Spirit of Capitalism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 47, pages 346-372, January.
    12. Tokuoka, Kiichi, 2012. "Is wealth accumulation a luxury good?," Economics Letters, Elsevier, vol. 115(3), pages 523-526.
    13. Yulei Luo & William T. Smith & Heng-fu Zou, 2009. "The Spirit of Capitalism and Excess Smoothness," Annals of Economics and Finance, Society for AEF, vol. 10(2), pages 281-301, November.
    14. Eric R. Young & Ponpoje Porapakkarm, 2008. "Information Heterogeneity in the Macroeconomy," 2008 Meeting Papers 67, Society for Economic Dynamics.
    15. Wang, Gaowang & Zou, Heng-fu, 2020. "Optimal fiscal and monetary policy in economies with capital," MPRA Paper 102753, University Library of Munich, Germany.
    16. Qichun He & Yulei Luo & Jun Nie & Heng-fu Zou, 2023. "Money, Growth, and Welfare in a Schumpeterian Model with the Spirit of Capitalism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 47, pages 346-372, January.
    17. Acedański, Jan, 2017. "Heterogeneous expectations and the distribution of wealth," Journal of Macroeconomics, Elsevier, vol. 53(C), pages 162-175.
    18. repec:hal:pseose:hal-00964867 is not listed on IDEAS
    19. He, Qichun, 2024. "Wealth in the utility function, consumption subsidy, and long-run growth and welfare," Journal of Macroeconomics, Elsevier, vol. 82(C).
    20. Konstantinos Angelopoulos & Spyridon Lazarakis & James Malley, 2019. "The distributional effects of peer and aspirational pressure," Working Papers 2019-06, Business School - Economics, University of Glasgow.
    21. Aristotelis Boukouras, 2016. "Capitalist Spirit and the Markets: Why Income Inequality Matters," Discussion Papers in Economics 16/16, Division of Economics, School of Business, University of Leicester.
    22. Marco Airaudo, 2017. "Complex stock price dynamics under Max Weber’s spirit of capitalism hypothesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(1), pages 47-73, June.
    23. Davoine, Thomas, 2012. "Time constraints, saving and old age," Economics Working Paper Series 1221, University of St. Gallen, School of Economics and Political Science.
    24. Li, Fanghui & Wang, Gaowang, 2019. "The Demand for Status and Optimal Capital Taxation," MPRA Paper 96076, University Library of Munich, Germany.
    25. Suzuki, Tomoya, 2021. "Basic income, wealth inequality and welfare: A proposed case in New Zealand," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 118-128.

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