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2019 | Book

Advances in the Economics of Religion

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About this book

This edited collection brings together expertise from around the globe to overview and debate key concepts and concerns in the economics of religion. While the economics of religion is a relatively new field of research in economics, economists have made and continue to make important contributions to the understanding of religion. There is much scope for economists to continue to make a significant contribution to debates about religion, including its implications for conflict, political economy, public goods, demography, education, finance, trade and economic growth.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
Over the past 20 years, economists have come to realize that religion is linked inextricably to their subject matter, from fertility choices in the household, to risk-sharing schemes in a village, to large-scale political movements, and to economic growth. A deeper understanding of religion is perhaps now more important than ever before.
Jean-Paul Carvalho, Sriya Iyer, Jared Rubin

Theoretical Advances in the Economics of Religion

Frontmatter
Chapter 2. Religious Clubs: The Strategic Role of Religious Identity
Abstract
Religious identity not only defines group boundaries but also imposes costs on members. We examine the strategic role of costly religious sacrifice and stigma. Strict religious clubs are defined by costly entry requirements and participation rules, including stigmatizing forms of dress, speech, and diet. In the canonical model (Iannaccone, Journal of Political Economy 100(2): 271–291, 1992), these prohibitions and proscriptions are designed to solve incentive problems associated with collective production by (1) screening out non-cooperators and (2) inducing substitution from outside activity to group activity. Recent research identifies four new strategic functions of religious costs: (3) social sorting, (4) esteem maintenance, (5) religious commitment, and (6) cultural resistance. This produces new explanations for exotic religious beliefs, oppositional identity, political mobilization by religious groups, and religious radicalization. All strategic functions of religious identity are examples of the theory of the second best.
Jean-Paul Carvalho
Chapter 3. Spatial Models of Religious Market Competition: A Critical Assessment
Abstract
This chapter critically assesses spatial-location models of religious competition. These models concisely account for several key features of religious markets, are flexible enough to be widely applicable, and generate new insight into our understanding of religious competition. However, the models have ignored other key features of religious markets including cultural transmission of religious values, variation in birth rates across groups, and adaptation by religious suppliers.
Michael McBride
Chapter 4. When Average Is Irrelevant: Computational Modeling of Religious Groups
Abstract
Consider a thought experiment. Two groups are competing for members in a small town religious market. Each of the groups, the Alphas and Omegas, count 100 members on its respective registry, but while the Alphas can boast 90 members in its pews every Sunday, the Omegas must demure to only having 60. Which group is more successful? Which receives more in yearly tithing? Which is more likely to still exist in 20 years?
Michael D. Makowsky
Chapter 5. The Intelligent Design of Religious Beliefs
Abstract
While the economics of religion literature has considered many important aspects of religion (e.g., rituals, sacrifices), there has not been much theoretical research on religious beliefs in this discipline. This chapter aims to consider how religious beliefs are an integral part of religions and how they are connected to other aspects of religion, namely, religious rituals and the way religion affects individuals’ daily life. Moreover, this chapter claims that in many instances religious beliefs are intelligently designed to maximize the probability of survival of religious organizations in the face of events which may contradict some of the beliefs advocated by religions.
Gilat Levy
Chapter 6. Religion and Segregation
Abstract
In recent years economists have started taking an interest in the increasing levels of segregation of Western societies. For example, in the US, since 1970 residential segregation has been on the rise.
Ronny Razin
Chapter 7. Religious and Cultural Leaders
Abstract
This chapter surveys the existing literature on religious and cultural leaders. It discusses potential motivations of a leader and highlights that irrespective of his/her exact motivations, the presence of a leader is crucial for the cultural heterogeneity of a society. The impact of discrimination and government transfers on cultural integration is discussed. Last, the survey examines when religious and cultural leaders emerge.
Anja Prummer
Chapter 8. Intermediated Social Preferences: Altruism in an Algorithmic Era
Abstract
What are the consequences of intermediating moral responsibility through complex organizations or transactions? This chapter examines individual decision-making when choices are known to be obfuscated under randomization. It reports the results of a data entry experiment in an online labor market. Individuals enter data, grade another individual’s work, and decide to split a bonus. However, before they report their decision, they are randomized into settings with different degrees of intermediation. The key finding is that less generosity results when graders are told the split might be implemented by a new procurement algorithm. The asocial treatment results in less generosity relative to those whose decisions are averaged or randomly selected among a set of human graders. These findings relate to “the great transformation” whereby moral mentalities are shaped by modes of (a)social interaction.
Daniel L. Chen

Empirical Advances in the Economics of Religion

Frontmatter
Chapter 9. Religion and Demography
Abstract
Religion and demography are a contested space. Every country in the world is interested in how its demographic numbers are changing over time, and yet they are acutely conscious of the rise of religion (Iyer 2016; Lehrer 2009). Whether there were early concerns about a ‘population bomb’ or worries about ‘minority fertility rising’, the subject of religion and fertility has not gone away and indeed seems to reappear in different periods of world history repeatedly. In this chapter, I discuss why we should be interested in the question of religion and demography. I provide an overview of recent trends in the world’s religious demography and then locate this within the historical context of what major world religions continue to think theologically about factors that affect demographic decisions. The focus is on the various mechanisms through which religion might affect fertility behaviour. I then distinguish between the various channels through which religion also affects mortality, especially through its effect on physical and mental health behaviours. I put forward the view that religion continues to have important consequences for fertility and mortality decisions which collectively affect a country’s religious demography overall.
Sriya Iyer
Chapter 10. Economics and Church State Research: Past, Present, Future
Abstract
This chapter concerns scholarship on church/state relations, an area of longstanding interdisciplinary interest. We will discuss past work, some especially interesting recent work, and some recent work looking at especially timely policies, such as school vouchers, and especially noteworthy new data, such as new data based on weekly church bulletins. We will focus on research in the discipline of economics, where work on this topic goes back several centuries.
Daniel Hungerman, Timothy Weninger
Chapter 11. Protestants and Catholics and Educational Investment in Guatemala
Abstract
Recent empirical research on the relation of religion to human capital has focused on the distinction between Mainline Protestantism and Catholicism. Our research emphasizes differential investment in education across types of Protestantism. We apply this framework to Guatemala, a country that was historically dominated by Catholicism but has moved in recent decades toward Protestantism. Our research was motivated by theological differences between Mainline Protestant denominations and premillennialist movements (Evangelical, Pentecostal) that arose at the end of the nineteenth century. These denominations placed less emphasis than Mainline Protestants on investment in education. Consistent with this perspective, literacy is enhanced more by Mainline Protestant schools than by other Protestant schools. Catholic schools have the weakest relation with literacy, likely because the ouster of Catholic orders and schools in the liberal reforms of the 1870s had a lasting influence.
Rachel M. McCleary, Robert J. Barro
Chapter 12. The Religious Factor in Private Education in the United States
Abstract
This chapter provides a brief overview of our theoretical and empirical contributions to understanding the dominant role of the religious factor in private education in the United States. Private, fee-paying education today accounts for 8% of enrollment in primary and secondary schools in the United States, down from a high of 14%, 50 years ago (Fig. 12.1); and about 80% of these private school students attend religious schools, down from almost 90%, 30 years ago (Broughman and Swaim 2013; Fig. 12.2). The low overall rate of private education is largely a consequence of the historically dominant role of local school districts in funding public education in the United States, coupled with socio-economic geographic segregation, which allows for substantial variation in the quality of public schools, and the general absence of tax credits for private school tuition. The further recent decline in private enrollment likely reflects the growth of publicly funded charter schools, as well as court-mandated funding reforms that increased state support for poorer school districts, and a decline in demand for Catholic education.
Danny Cohen-Zada, Moshe Justman
Chapter 13. How Luther’s Quest for Education Changed German Economic History: 9+5 Theses on the Effects of the Protestant Reformation
Abstract
Five hundred years ago, according to legend, Martin Luther nailed his 95 theses on the door of the castle church of Wittenberg—and changed the course of history. Cliometric research over the past years has generated several new insights about the consequences of the Protestant Reformation. One can observe a veritable digitization boom which changed the way researchers approached the analysis of economic history. This boost in historical research with econometric methods has also contributed to the recent growth in research on the economics of religion (see Iyer 2016). Research into the long-run effects of the Reformation benefited particularly from the fact that—in the heartland of the Reformation—the Prussian Statistical Office, and later the Statistical Office of the German Empire, collected vast amounts of census data, ever since the first population census in 1816 (see Becker et al. 2014). Most of this is at the level of counties, some at the more disaggregated city level and some at the more aggregated province level. Using this newly digitized data, researchers have uncovered new insights or given statistical grounding to proposed relationships about the influence Luther had on the course of German economic history.
Sascha O. Becker, Ludger Woessmann
Chapter 14. Hindu-Muslim Violence in India: A Postscript from the Twenty-First Century
Abstract
The importance of religious conflict today can hardly be overstated. The appalling situation in Syria—stemming from the activism of the Islamic State (ISIS)—is just one cruel reminder of the utter devastation that religious extremism can wreak. The tragic humanitarian crisis in Myanmar involving the displacement of the Rohingya Muslims has strong religious overtones, as do the attacks on Muslims and Christians by Buddhist nationalist groups in Sri Lanka.
Anirban Mitra, Debraj Ray
Chapter 15. Religion and Conflict: A Quantitative Approach
Abstract
This chapter surveys the literature on the economics of religion, with a particular emphasis on its association with conflict. There is a long tradition of work on the relationship between conflict and ethnic diversity culminating with Horowitz’s seminal Ethnic Groups in Conflict. The effect of religion on conflict has generated less attention. Recently there have been several reviews of the topic. See, for instance, Iyer (2016), Finke (2013), or Silvestri and Mayall (2015). However, prior to 2000, few attempts tried to include religion and culture into the larger body of research and theory on social conflict. Samuel P. Huntington’s “Clash of Civilizations” (1996) thesis is the basic reference of this literature, the same way as Weber’s classic The Protestant Ethics and the Spirit of Capitalism (1905) is the focal point of the empirical study of the relationship between religion and economic development. Borrowing partly from an idea put forward by British-American historian, Bernard Lewis (1990), Huntington became the most prominent voice claiming that religious and cultural identities would be the main driver of international conflict in the new world order following the end of the Cold War. At the core of Huntington’s clashing civilizations lay religion. He argued that the civilization of Western Christianity is different from that of Eastern Orthodox Christianity; Eastern Christianity is distinct from Islam; Islam represents a fundamentally distinct civilization from Hindu; and so forth. The “clash of civilizations” occurs at two levels. One level points to the civilization divides across countries and regions, the other refers to the “fault lines between civilizations” within countries or territories. Thus, the civilizational fault line(s) within countries leads to conflicts just as they do across countries. Huntington recognizes that the argument is over-simplified, yet he concludes that “countries with similar cultures are coming together” while “countries with different cultures are coming apart.” He argues that civilizations compete on the international scene and that this competition can turn into violent conflict, most importantly because of the different religions that have formed these civilizations. In other words, civilization fault lines are a source of conflict; civilization homogeneity is a source of unity and peace (Huntington 1996).
José G. Montalvo, Marta Reynal-Querol
Chapter 16. Why Are Some Societies More Religious Than Others?
Abstract
The world of today sees vast differences in religiosity. The most religious countries are Algeria and Pakistan, where 100% of the population believe in God.
Jeanet Sinding Bentzen
Chapter 17. Socioeconomic Inequality Across Religious Groups: Self-Selection or Religion-Induced Human Capital Accumulation? The Case of Egypt
Abstract
Socioeconomic inequality across religious groups, such as between Protestants and Catholics in Western Europe, Hindus and Muslims in India, Jews and non-Jews in the US and Europe, has been the subject of a voluminous literature in social sciences and, more recently, economics. Perhaps the most well-known explanation of the phenomenon dates back to Max Weber (1930 [1905]), who traced the Protestant-Catholic socioeconomic gap to Protestantism’s culture of work ethic and individualism. Extending his thesis to Asia, Weber hypothesized in a similar vein that Asiatic religions such as Hinduism and Buddhism were less conducive to capitalism. The more recent economics of religion literature, while acknowledging the potential endogeneity of religion, attempted to disentangle the causal impact of religious beliefs on socioeconomic outcomes, first in cross-country regressions (Barro and McCleary 2003) and then in single-country studies (Borooah and Iyer 2005; Becker and Woessmann 2009; Chaudhary and Rubin 2011). A common narrative in the latter line of literature is that some religions put more emphasis than others on the accumulation of human capital.
Mohamed Saleh
Chapter 18. Religion and the European Union
Abstract
We review a recent literature on cultural differences across Euro member states. We point out that this literature fails to address cultural differences between Protestants and Catholics, which is likely a major underlying reason for cross-country differences. We argue that confessional culture explains why Catholic countries tend to have weaker institutions but are more open to economic and political integration. European Union (EU) policies after the economic crisis looked clumsy and failed to address all concerns, but were viable, caused only a manageable amount of serious backlash, and tied in well with Europe’s cultural diversity, also providing scope for learning and adaption.
Benito Arruñada, Matthias Krapf

Advances in Religion and Political Economy

Frontmatter
Chapter 19. The Political and Economic Consequences of Religious Legitimacy
Abstract
This essay assesses the political and economic consequences of religious legitimacy. I employ the framework proposed in Rubin (2017) to shed light on why religious legitimacy might matter for political and economic outcomes and how it affects economies differently from other mechanisms that rulers use to stay in power. I proceed to provide some historical support for the framework before concluding with some speculative thoughts on the role of religious legitimacy on economic outcomes in the twenty-first century.
Jared Rubin
Chapter 20. Religious Legitimacy and the Joint Evolution of Culture and Institutions
Abstract
Religious legitimacy is becoming a central concept in historical economics, in comparative studies of the political economy of preindustrial societies in particular. In this short chapter, we provide some preliminary insights on the emergence of religious legitimacy in the context of the general theory of the evolution of institutions and culture. We show that it is the interaction of institutions and culture that is responsible for the most relevant implications of religious legitimacy in terms of economic growth and prosperity.
Alberto Bisin, Avner Seror, Thierry Verdier
Chapter 21. Strategic Interactions Between Religion and Politics: The Case of Islam
Abstract
To what extent and in what sense is Islam responsible for the problems encountered by the countries in which it dominates? Foremost among such problems are high political instability and the postponement or reversal of social reforms conducive to long-term development: reform of the family code and measures to improve women’s status, or modernization of school curricula and measures to minimize rote learning of religious and other texts, for example, clearly involve high costs in terms of growth opportunities foregone. How to explain the simultaneous presence of these two problems is the question addressed in this chapter. Our central argument rests on two propositions. First, we disagree with the essentialist view according to which Islam is a major obstacle to modern development because it has always been associated with a merging of religion and the state, or a fusion between the spiritual and political spheres of life. Second, we reckon that Islam possesses a special feature in the form of a highly decentralized structure. It makes politics comparatively unstable yet, by buying off religious clerics, autocratic rulers can mitigate instability at the cost of fewer institutional reforms. Radicalization of the clerics nevertheless makes this co-option strategy more costly.
Jean-Philippe Platteau
Chapter 22. State and Religion: An Economic Approach
Abstract
State and religion, two of the oldest institutions known to mankind, have historically had a complex relationship with each other. At times rulers have suppressed religion altogether, at others they have treated religion as independent of the state, and at still others they have preferred one religion over others or even endorsed one as the official religion. A survey of 177 countries in the year 2008 reveals a similar diversity of attitudes. There were 16 countries in the survey (9%) which exhibited a hostile attitude toward religion; 43 countries (24%) had a neutral attitude; 77 countries (44%) clearly favored certain religions; and 41 countries (23%) endorsed one or more religions as the official state religion.
Metin M. Coşgel, Thomas J. Miceli
Chapter 23. A Great Academic Re-awakening: The Return to a Political Economy of Religion
Abstract
Ever since the dawn of civilization, human beings have been mixing religion and politics. And irrespective of various attempts to “separate church and state” or “secularize” society by confining matters of spiritual belief to the private sphere, the realms of religion and politics have remained intertwined and will, in all likelihood, continue to be. Indeed, speaking of “separate realms” may be misleading given that people with religious convictions take their beliefs and values into the political arena as a way of informing their choices and behavior. Political authorities, irrespective of their own faith, must factor the existence of people with religious beliefs. Even self-proclaimed atheistic rulers such as Vladimir Lenin and Josef Stalin had to devise policies of how to deal with the remnants of the Orthodox Church that they could not extinguish. Even in North Korea, history’s most-recent paragon of secular totalitarianism, President Kim Jong-Un must repeatedly enforce restrictions on Christians who refuse to vanish. Religion and politics will continue to mix and it behooves social scientists to understand why and how.
Anthony Gill
Chapter 24. The State, Toleration, and Religious Freedom
Abstract
This chapter offers a novel account of the rise of religious freedom. Religious and political power have been bound together since prehistory. As a consequence, there was an absence of religious freedom throughout most of history. Even when religious dissidents were not being persecuted for their beliefs, religious practice was not free. We investigate the motivations that led some states to persecute individuals for their religious beliefs and other states to abstain from persecution. We argue that the rise of modern states—states capable of enforcing general rules and the rule of law—made possible religious peace and the eventual rise of religious and other liberal freedoms.
Noel Johnson, Mark Koyama
Chapter 25. Religiosity and Economic Performance: The Role of Personal Liberties
Abstract
What is the effect of religion on economic outcomes? Religion is a complex social phenomenon affecting individual choice and behavior through numerous channels. This contribution summarizes some of these effects. We focus on the causality direction from religiosity to economic performance, therefore skipping the potential influence that the economic environment and personal realizations can have on religious beliefs.
Laura Mayoral, Joan Esteban
Chapter 26. Causes and Consequences of Monotheism in the Supply of Religion
Abstract
Human history is a testament to the strong complementarities between political and religious authority in conferring upon sovereignties the legitimacy to sustain, expand, and prolong their political rule. From Charles V, who was crowned Holy Roman Emperor by Pope Clement VII in Bologna as the last emperor to receive a papal coronation, to Yavuz Sultan Selim, who conquered Mecca in 1517 to enshrine the Ottoman Sultanate with the title of Sunni Caliph, all the way to contemporary nation-states such as Iran and Saudi Arabia that are ruled by sharia law, we have countless historical examples of ecclesiastical and secular political authority being combined to bolster the sovereign legitimacy necessary for social and political order.
Murat Iyigun
Chapter 27. Religion, Political Power and Human Capital Formation: Evidence from Islamic History
Abstract
This chapter links the rise and subsequent decline of scientific output in the medieval Islamic world to institutional changes. The rise of secular bureaucratic institutions stimulated scientific output, whereas the collapse of these bureaucratic structures—and the concomitant rise in the political power of religious leaders—suppressed it. The chapter concludes that secular state capacity can help encourage scientific development by constraining rent-seeking religious elements within civil society.
Eric Chaney
Chapter 28. Islam, Trade, and Innovation
Abstract
This chapter provides a discussion on the pervasiveness of innovation, or the lack thereof, at different points of history in the Muslim world. The idea put forth is the interconnection of innovation with trade, and the puzzle is the interruption of the former despite the continuation of the latter in the contemporary world. The first step is to present a brief overview of core Islamic principles that encourage trade but discourage innovation by the inclusion of property right matters in Islamic law. We then look at the historical contribution of trade in uniting the Muslim world and initially triggering innovation and achieving the Islamic Golden Age. Finally, the chapter suggests reasons why innovation eventually came to a halt in Islamic lands, including political economy arguments, tolerance, diversity, and institutions.
Alireza Naghavi
Backmatter
Metadata
Title
Advances in the Economics of Religion
Editors
Dr. Jean-Paul Carvalho
Sriya Iyer
Jared Rubin
Copyright Year
2019
Electronic ISBN
978-3-319-98848-1
Print ISBN
978-3-319-98847-4
DOI
https://doi.org/10.1007/978-3-319-98848-1