Patience Capital, Occupational Choice, and the Spirit of Capitalism

Abstract

We model the decision problem of a parent who chooses an occupation and teaches patience to her children. The two choices are linked by a strategic complementarity: patient individuals choose occupations with a steep income profile; a steep income profile, in turn, leads to a strong incentive to invest in patience. In equilibrium, society becomes stratified along occupational lines. The most patient people are those in occupations requiring the most education and experience. The theory can account for the socio-economic transformation that characterized the British Industrial Revolution, when a new class of entrepreneurs rising from the middle classes and imbued with an ethics emphasizing patience and savings proved most capable of profiting from new economic opportunities, and eventually surpassed the pre-industrial elite.