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The Spirit of Capitalism and Asset Pricing: An Empirical Investigation

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  • Zhang Qiang

    (University of Memphis)

Abstract

We extend and test two models of asset pricing that feature status-seeking through accumulation of not only financial and real assets but also human capital. We use weak-identification robust tests to confront these models with U.S. aggregate data. Contrary to previous results, we find that the spirit of capitalism hypothesis, modeled as either direct preference for wealth or pursuit of relative wealth status, is rejected. Therefore, adding status motive alone to an otherwise standard model may not be sufficient to resolve the equity premium puzzle.

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  • Zhang Qiang, 2006. "The Spirit of Capitalism and Asset Pricing: An Empirical Investigation," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(3), pages 1-25, November.
    • Handle: RePEc:bpj:bejmac:v:topics.6:y:2006:i:3:n:1
    DOI: 10.2202/1534-5998.1418
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    Cited by:

    1. Smoluk, H.J. & Voyer, John, 2014. "The spirit of capitalism among the income classes," Review of Financial Economics, Elsevier, vol. 23(1), pages 1-9.
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    3. H.J. Smoluk & John Voyer, 2014. "The spirit of capitalism among the income classes," Review of Financial Economics, John Wiley & Sons, vol. 23(1), pages 1-9, January.
    4. Yuanping Wang & Yingjie Niu & Siwen Gong, 2022. "Robust consumption policy with the desire for wealth accumulation," Review of Economics of the Household, Springer, vol. 20(3), pages 993-1025, September.
    5. Dreyer, Johannes K. & Schneider, Johannes & Smith, William T., 2013. "Saving-based asset-pricing," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3704-3715.

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