Patience Capital, Occupational Choice, and the Spirit of Capitalism∗

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. ∗The authors would like to thank Daron Acemoglu, Francesco Caselli, Juan-Carlos Cordoba, Nicola Gennaioli, Jean-Laurent Rosenthal, Marı́a Sáez Martı́, Alan Taylor, and seminar participants at the SED Annual Meeting in Florence, the EEA Annual Congress in Madrid, the University of Chicago, the Federal Reserve Bank of Minneapolis, UCLA, USC, Penn State, the Texas Monetary Conference, Stanford, the CEPR Conference on “Institutions, Policies and Economic Growth” in Fontainebleau, the “Workshop on ”Egalitarian Behavior” in Oslo, the CEPR ESSIM conference in Cyprus, the NBER Summer Institute, the Bay Area Population Colloquium, and Arizona State for helpful comments. David Lagakos provided excellent research assistance and Christina Lonnblad provided valuable editorial comments. Financial support by the National Science Foundation (grant SES-0217051), the UCLA Academic Senate, Jan Wallander’s and Tom Hedelius’ Research Foundation, and the Bank of Sweden Tercentenary Foundation is gratefully acknowledged. Doepke: Department of Economics, University of California, Los Angeles, 405 Hilgard Ave, Los Angeles, CA 90095 (e-mail: [email protected]). Zilibotti: IIES, SE 10691 Stockholm, Sweden (e-mail: [email protected]).