Economics of religion

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The economics of religion concerns both the application of the techniques of economics to the study of religion and the relationship between economic and religious behaviours.[1] Max Weber first identified the relationship between religion and economic behaviour, attributing in 1905 the modern advent of capitalism to the Protestant reformation.[2] Adam Smith laid the foundation for economic analysis for religion in The Wealth of Nations (1776), stating that religious organisations are subject to market forces, incentive and competition problems like any other sector of the economy.[3][need quotation to verify][4] Empirical work examines the causal influence of religion in microeconomics to explain individual behaviour[5] and in the macroeconomic determinants of economic growth.[6] Religious economics (or theological economics) is a related subject sometimes[quantify] overlapping or conflated with the economics of religion.[7]

Religion and economic growth[edit]

The average annual income of countries correlates negatively with national levels of religiosity.[8]

Studies suggests there is a channel from religious behaviours to macroeconomic outcomes of economic growth, crime rates and institutional development.[9] Scholars hypothesise religion impacts economic outcomes through religious doctrines promoting thrift, work ethic, honesty and trust.[10]


The correlation between religion and economic outcomes can be interpreted in two ways: (1) a feature intrinsic to religion which affects growth or (2) a feature correlated to religion but not religion itself which affects growth. Existing cross-country literature is criticised for inability to distinguish between the two explanations, a problem termed endogenity bias. Controlling for country fixed effects mitigates bias but more recent studies utilise field and natural experiments to identify the causal effect of religion.[11]

Religion and individual behaviour[edit]

Research highlights the importance of religious orthodoxy on moral behaviours and versions of the Golden Rule “Do unto others as you would have others do unto you” are common to most major religions.[12] Others argue it promotes cooperation and trust within culturally defined groups or clubs.[13] Studies compare the complementary effects of religious values such as charity, forgiveness, honesty and tolerance and religious social groups where membership instils favouritism or discrimination towards in or outgroup members.[14]


The believing channel of religion behaviours concerns costly effort concerned with divine reputation. Azzi and Ehrenberg (1975) propose individuals allocate time and money to secular and religious institutions to maximise utility in this life and the afterlife.[15] The colonisation of religious minds by the morally concerned supernatural or “Big Gods”[16] diffused behaviours derived from moral instruction.


As Iannaconne (1998) argues "religious behavior is anything but an individual matter".[17] The belonging approach to religion considers the social notion of between and within religious groups. Iannaconne (1998) assigns religion as a 'club good' from a rational choice perspective where costly rituals exclude free-riders from in-group benefits. Field experiments also evidence religious people are more trusting and cooperative with fellow religious adherents. Many experimental studies suggest group belonging has a greater influence on behaviour than belief orthodoxy.[18] As Darwin (1874) among others argue, the promotion of cooperative in-group behaviours is not unique to religious networks.[19]

Experimental economics of religion[edit]

Experimental methods can be applied to isolate the effect of religion on behaviour patterns and to distinguish between believing versus belonging channels. Experimental methods are useful in the economics of religion to standardise measurement and identify causal effect.[20] Methods include looking at religion in various games – Prisoner's dilemma, public goods game, ultimatum game, dictator game and parametric choice. Generally, as Hoffman's (2011) survey few statistically significant results have been identified which commentators attribute to opposing positive versus negative effects between and within individuals.[21]

See also[edit]



  1. ^ McCleary, Rachel M. (2011). The Oxford Handbook of the Economics of Religion. Oxford University Press. ISBN 9780199781287.
  2. ^ Weber, Max (2012) [1905]. The Protestant Ethic and the Spirit of Capitalism. Courier Corporation. ISBN 9780486122373.
  3. ^ Smith, Adam (1776). The Wealth of Nations. London: Methuen & Co. p. 749.
  4. ^ Compare: Smith, Adam (1776). "Book V: Of the Revenue of the Sovereign or Commonwealth; Chapter 1: Of the Expences of the Sovereign or Commonwealth". An Inquiry Into the Nature and Causes of the Wealth of Nations. 2. London: Whitestone. p. 406-407. Retrieved 10 October 2020. The revenue of every established church [...] is a branch [...] of the general revenues of the state, which is thus diverted to purpose very different from the defence of the state. The tythe, for example, is a real land-tax [...]. The more of this fund that is given to the church, the less, it is evident, can be spared to the state. [...] all other things being supposed equal, the richer the church, the poorer must necessarily be, either the sovereign on the one hand, or the people on the other [...].
  5. ^ Stark, Rodney; Finke, Roger (August 2000). Acts of Faith: Explaining the Human Side of Religion. ISBN 9780520222021.
  6. ^ Barro, Robert J.; McCleary, Rachel M. (2003). "Religion and Economic Growth across Countries". American Sociological Review. 68 (5): 760–781. doi:10.2307/1519761. JSTOR 1519761.
  7. ^ For example, the Journal of Markets & Morality of the Acton Institute for the Study of Religion and Liberty and Faith & Economics of the Association of Christian Economists.
       • Paul Oslington, ed., 2003. Economics and Religion, Elgar, v. 2, part II, Economics of Religion, scrollable table of contents, 10 of 41 papers, 1939–2002.
       • Patrick J. Welch and J.J. Mueller, 2001. "The Relationship of Religion to Economics," Review of Social Economy, 59(2). pp. 185–202. Abstract.
       • Paul Oslington, 2000. "A Theological Economics," International Journal of Social Economics, 27(1), pp.\ 32–44.
       • Paul Oslington, ed., 2003. Economics and Religion, v. 1, Historical Relationships, table of contents, pp. v–vi with links via upper right-arrow to Introduction and first 11 of 17 papers, 1939–2002.
       • Paul Oslington, ed., 2003. Economics and Religion, v. 2, part I, Religious Economics and its Critics, scrollable table of contents, 14 papers, 1939–2002.
       • A.M.C. Waterman, 2002. "Economics as Theology: Adam Smith's Wealth of Nations," Southern Economic Journal, 68(4), p pp. 907–921. Reprinted in Paul Oslington, ed., 2003. Economics and Religion, v. 1, pp. 321336.
       • Thomas Nixon Carver, 1908. "The Economic Basis of the Problem of Evil," Harvard Theological Review, 1(1), pp. 97111.
       • _____, 1912. The Religion Worth Having. Chapter links.
       • Mahmoud A. El-Gamal, 2006. Islamic Finance: Law, Economics, and Practice. Cambridge. Description and chapter titles.
  8. ^ WIN-Gallup. "Global Index of religion and atheism" (PDF). Archived from the original (PDF) on 16 October 2012. Retrieved 21 October 2012.
  9. ^ Guiso, Luigi; Sapienza, Paola; Zingales, Luigi (1 January 2003). "People's opium? Religion and economic attitudes". Journal of Monetary Economics. 50 (1): 225–282. CiteSeerX doi:10.1016/S0304-3932(02)00202-7. ISSN 0304-3932. S2CID 157112771.
  10. ^ Barro, Robert J.; McCleary, Rachel M. (2003). "Religion and Economic Growth across Countries". American Sociological Review. 68 (5): 760–781. doi:10.2307/1519761. JSTOR 1519761.
  11. ^ Iyer, Sriya (June 2016). "The New Economics of Religion" (PDF). Journal of Economic Literature. 54 (2): 395–441. doi:10.1257/jel.54.2.395. S2CID 38991072.
  12. ^ Batson, Charles Daniel; Schoenrade, Patricia; Ventis, W. Larry (1993). Religion and the Individual: A Social-Psychological Perspective. Oxford University Press. ISBN 9780195062083.
  13. ^ Iannaccone, Laurence R. (1998). "Introduction to the Economics of Religion". Journal of Economic Literature. 36 (3): 1465–1495. JSTOR 2564806.
  14. ^ Ruffle, Bradley J.; Sosis, Richard (1 June 2006). "Cooperation and the in-group-out-group bias: A field test on Israeli kibbutz members and city residents". Journal of Economic Behavior & Organization. 60 (2): 147–163. CiteSeerX doi:10.1016/j.jebo.2004.07.007. ISSN 0167-2681.
  15. ^ Azzi, Corry; Ehrenberg, Ronald (February 1975). "Household Allocation of Time and Church Attendance". Journal of Political Economy. 83 (1): 27–56. doi:10.1086/260305. hdl:1813/75631. ISSN 0022-3808. S2CID 153985044.
  16. ^ Norenzayan, Ara (2013). Big Gods: How Religion Transformed Cooperation and Conflict. Princeton University Press. ISBN 978-1400848324.
  17. ^ Iannaccone, Laurence R. (1998). "Introduction to the Economics of Religion". Journal of Economic Literature. 36 (3): 1465–1495. JSTOR 2564806.
  18. ^ Hougland, James G.; Wood, James R. (1980). "Control in Organizations and the Commitment of Members". Social Forces. 59 (1): 85–105. doi:10.2307/2577834. JSTOR 2577834.
  19. ^ Becker, Penny Edgell; Dhingra, Pawan H. (2001). "Religious Involvement and Volunteering: Implications for Civil Society". Sociology of Religion. 62 (3): 315–335. doi:10.2307/3712353. JSTOR 3712353.
  20. ^ Hoffmann, Robert (January 2012). "The Experimental Economics of Religion". Journal of Economic Surveys. 27 (5): no. CiteSeerX doi:10.1111/j.1467-6419.2011.00716.x. ISSN 0950-0804. S2CID 145765803.
  21. ^ Obadia, Lionel; Wood, Donald C. (2011). Economics of Religion: Anthropological Approaches. Emerald Group Publishing. ISBN 9781780522296.

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