Occupational Choice and the Spirit of Capitalism

Abstract

The British Industrial Revolution triggered a reversal in the social order whereby the landed elite was replaced by industrial capitalists rising from the middle classes as the economically dominant group. Many observers have linked this transformation to the contrast in values between a hard-working and thrifty middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation in which both the divergence of attitudes across social classes and the ensuing reversal of economic fortunes are equilibrium outcomes. In our theory, parents shape their children's preferences in response to economic incentives. If financial markets are imperfect, this results in the stratification of society along occupational lines. Middle-class families in occupations that require effort, skill, and experience develop patience and work ethic, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific attitudes, which are rooted in the nature of pre-industrial professions, become key determinants of success once industrialization transforms the economic landscape.

Evolution and the growth process: Natural selection of entrepreneurial traits

“…The implications of the proposed theory for the class origin of entrepreneurs during the Industrial Revolution are complementary to those of Doepke and Zilibotti [11, 12]. Their theory suggests that a new class of entrepreneurs rising from the middle classes, imbued with ethics emphasizing patience and savings, proved most capable of profiting from new economic opportunities, and eventually surpassed the pre-industrial elite.…”

The Agricultural Origins of Time Preference

“…3 Bowles (1998), Bisin and Verdier (2000), Galor and Moav (2002), Rapoport and Vidal (2007), Doepke and Zilibotti (2008), and Galor and Michalopoulos (2012) explore additional mechanisms that may govern the evolution of preferences. Moreover, Dohmen et al (2012) establish empirically the presence of intergenerational transmission of risk aversion and trust and the importance of socialization in this transmission process.…”

Introduction: Tastes, Castes and Culture: The Influence of Society on Preferences

“…11 11 Another interesting paper on the importance of endogenous preferences is that by Doepke and Zilibotti (2008). They develop a theory of preference formation that is a key component in explaining the reversal of fortunes between the landowners and the emerging bourgeoisie at the outset of the Industrial Revolution.…”