25. Religiosity and Economic Performance: The Role of Personal Liberties

This direction of causality has been the focus of numerous theories. Of particular relevance is the secularization hypothesis that states that economic growth decreases religious beliefs and participation in religious services and reduces the influence of religious institutions on politics and governance. Marx (1843, 1976) viewed religion as resulting from poverty, the opiate of the have-nots. Solt et al. (2011) have obtained empirical evidence supporting Marx’s view: inequality breeds religiosity.

This hypothesis has been examined in numerous papers (see Grier 1997, Ekelund et al. 2006, and Delacroix and Nielsen 2001) obtaining mixed results. More recently, Cantoni (2015) has used a “natural experiment”—the forced imposition of religious denominations as a consequence of the Peace of Augsburg (1555)—to investigate the differences in growth patterns across the Protestant and Catholic parts of the Holy Roman Empire, finding no positive effect of Protestantism on economic growth over the very long run (1300–1900).

The findings by Barro and McCleary are based on cross-country regressions and they are subject to numerous criticisms. See Durlauf et al. (2012) for a critique.

The mechanism explored in the literature is typically based on the assumption that religious individuals value relatively more religious than economic activities. This takes different specifications. Iannaccone (1992) initiated a stream of papers in which this lower relative valuation of material benefits is introduced by assuming that the utility from consumption of material goods is subject to some sort of “psychological tax”. This makes individuals to devote more time and effort to religious activities. A complementary explanation, also due to Iannaccone (1992, 1998), follows from the view of religious practice as a problem of demand for a “club good”. In this case, members of a religious club experience an externality because their individual enjoyment depends on the intensity of commitment of the other members. Hence, it may be in the interest of the club members to impose highly restrictive rules of behavior in order to leave out the individuals with lower levels of religiosity. These restrictions would be geared toward making more attractive the allocation of time to religious activities, at the expense of productive activities. Besides Iannaccone, Berman (2000) and Carvalho and Koyama (2016), among others, also argue that religions strategically induce individuals to participate in costly rituals and hence reduce their material productivity.

The partial lifting of the legal caps often finds an active opposition of religious and conservative groups. In many countries religious organizations advocate the tightening of laws regulating such personal liberties. In some cases violence is being used toward those that exercise such liberties, as, for example, in what is now defined as “anti-abortion terrorism”. See the statistics for the US gathered by the National Abortion Federation (NAF).

The analysis is robust to the externality arising instead from the actual practice of wider liberties by some individuals in society. It is also robust to considering different values for religious and secular individuals.

If the opposite holds, then the implications are reversed.

Data from rounds 2002, 2004, 2006, 2008, 2010, and 2012 are employed for all countries available (at most 34, including Turkey and Israel).

Notice, however, that hoursworked is an imperfect measure of the willingness to work, as it reflects attitudes toward effort as well as the characteristics of the environment (i.e., rigidity of the labor market). To address this issue, ELMa also consider a variable that reports the number of hours that the respondent would like to work (desiredhours ).

Religious intensity is computed as the average of three variables: (1) the respondent’s monthly frequency of praying, (2) the self-reported degree of religiosity, and (3) the respondent’s monthly frequency of attendance of religious services.

These additional controls are: whether the respondent lives with a partner (cohab), years of completed education (eduyrs), a subjective measure of own’s health ( health), whether there are children in the household (children), the size of the household (hhsize), and a measure of partner’s education (edu-ptnr).

We define three age brackets: from 18 to 35, from 36 to 60, and from 60 onwards. The results are robust to changes in the definition of the brackets.

We construct the instrument for the interaction term of religious intensity and liberties simply by replacing rel _INT by rel \(_{\text{INT}}^{\text{IV}}\) in the product.