The economics of religion concerns both the application of the techniques of

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

to the study of religion and the relationship between

economic An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

and

religious behaviour Religious behaviours are behaviours motivated by religious beliefs. Religious actions are also called 'ritual' and religious avoidances are called taboos or ritual prohibitions. Actions The two best known religious actions are prayer and sa ...

s. Contemporary writers on the subject trace it back to

Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...

(1776). Empirical work examines the causal influence of religion in

microeconomics Microeconomics is a branch of mainstream economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics fo ...

to explain individual behaviour and in the

macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...

determinants of

economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...

. Religious economics (or theological economics) is a related subject sometimes overlapping or conflated with the economics of religion.

History

laid a foundation for economic analysis for religion in ''

The Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus'' of the Scottish economist and moral philosopher Adam Smith. First published in 1 ...

'' (1776), stating that religious organisations are subject to

market forces In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering ...

incentive In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...

and

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indivi ...

problems like any other sector of the economy.

Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas profo ...

later identified a relationship between religion and economic behaviour, attributing in 1905 the modern advent of

capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...

to the

Protestant reformation The Reformation (alternatively named the Protestant Reformation or the European Reformation) was a major movement within Western Christianity in 16th-century Europe that posed a religious and political challenge to the Catholic Church and in ...

Religion and individual behaviour

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. Others argue it promotes cooperation and trust within culturally defined groups or

clubs Club may refer to: Arts, entertainment, and media * ''Club'' (magazine) * Club, a ''Yie Ar Kung-Fu'' character * Clubs (suit), a suit of playing cards * Club music * "Club", by Kelsea Ballerini from the album ''kelsea'' Brands and enterprises ...

. 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.

Believing

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. The colonisation of religious minds by the morally concerned supernatural or “Big Gods” diffused behaviours derived from moral instruction.

Belonging

The belonging approach to religion considers the social notion of between and within religious groups. Iannaconne (1998) assigns religion as a '

club good Club may refer to: Arts, entertainment, and media * ''Club'' (magazine) * Club, a '' Yie Ar Kung-Fu'' character * Clubs (suit), a suit of playing cards * Club music * "Club", by Kelsea Ballerini from the album ''kelsea'' Brands and enterprises ...

' from a

rational choice Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory originated in the eighteenth century and can be traced back to political economist and philosopher, Adam Smith. The theory postula ...

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. As Darwin (1874) among others argue, the promotion of cooperative in-group behaviours is not unique to religious networks.

Experimental economics of religion

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. Methods include looking at religion in various games –

Prisoner's dilemma The Prisoner's Dilemma is an example of a game analyzed in game theory. It is also a thought experiment that challenges two completely rational agents to a dilemma: cooperate with their partner for mutual reward, or betray their partner ("defe ...

public goods game The public goods game is a standard of experimental economics. In the basic game, subjects secretly choose how many of their private tokens to put into a public pot. The tokens in this pot are multiplied by a factor (greater than one and less tha ...

ultimatum game The ultimatum game is a game that has become a popular instrument of economic experiments. An early description is by Nobel laureate John Harsanyi in 1961. One player, the proposer, is endowed with a sum of money. The proposer is tasked with s ...

dictator game The dictator game is a popular experimental instrument in social psychology and economics, a derivative of the ultimatum game. The term "game" is a misnomer because it captures a decision by a single player: to send money to another or not. Thus, ...

and parametric choice. Generally, as Hoffman's (2011) survey shows, few statistically significant results have been identified which commentators attribute to opposing positive versus negative effects between and within individuals.

Religion and economic growth

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

Historical aspects

Religion can have long-lasting effects on a society and its economy. For instance, municipalities of Spain with a history of a stronger inquisitorial presence show lower economic performance and educational attainment today. Similarly, protestantism in Germany has long affected education and thus economic performance. In 1816, school attendance was about 50% in catholic regions while it was about 66% in protestant regions.

Criticisms

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 endogeneity bias. Controlling for country

fixed effects In statistics, a fixed effects model is a statistical model in which the model parameters are fixed or non-random quantities. This is in contrast to random effects models and mixed models in which all or some of the model parameters are random va ...

mitigates bias but more recent studies utilise field and natural experiments to identify the causal effect of religion.

References

External links

Economics of Religion Gateway:
"What is the economic study of religion?" from th

* ttps://web.archive.org/web/20110726031920/http://www.ener-online.org/about.html European Network on the Economics of Religion
"Economists Are Getting Religion,"
''Business Week''
"The economics of religion"
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