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The Economics of Religion

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The Economics of Religion

A new book explores how faith motivates productivity. June 20, 2019
Economy, finance, and budgets
The Social Order

The Wealth of Religions: The Political Economy of Believing and Belonging, by Rachel M. McCleary and Robert J. Barro (Princeton University Press, 199 pp., $29.95)

In the early twentieth century, sociologist Max Weber set off decades of debate when he proposed that a Protestant ethic emphasizing hard work, thrift, honesty, and deferred gratification ignited the Industrial Revolution in Western Europe. If anything, the debate over what role religion plays in prosperity intensified throughout the century, especially with growing secularization. Disputes flared about whether declining religious adherence resulted in a deterioration of the virtues that Weber identified.

If so, what are the economic consequences of that decline? In The Wealth of Religions, Harvard’s Rachel M. McCleary and Robert J. Barro assert that the economic value of religion is an empirical question that can be studied using modern quantitative analysis of data. Their new book is not, as the title might suggest, an exposé of how the world’s religions accumulate wealth. Rather, it explores to what extent “religious beliefs motivate people to be productive.” A book with chapter headings like “When Saints Come Marching In,” which explores whether the Catholic practice of naming saints makes an effective growth strategy, might not appeal to those interested in life’s deeper questions, but it brings an uncommon perspective to some familiar issues.

Martin Luther helped sow the seeds of prosperity, Weber argued, when he transformed the traditional idea of a Christian calling from taking religious vows to the more modern concept of understanding one’s God-appointed task in life. To follow one’s calling, even as a simple laborer, was a Christian duty. John Calvin took the idea a step further, urging a fuller, disciplined life of hard work that viewed material success as a sign that one might be among the elect, chosen by God for salvation. John Wesley, the founder of Methodism, argued that religion produces “industry and frugality,” which inevitably lead to “riches.” In his own congregation, Wesley witnessed an emphatic upward mobility, leading the famous minister to wonder if his members would become less devout as they grew more successful.

 To explore the impact of these ideas on a twenty-first century world, McCleary and Barro collected decades of information on religious participation in nearly 100 countries. While most surveys measure levels of religiosity by church attendance, the researchers also gathered data on spiritual beliefs about the afterlife, which struck them, not unreasonably, as a strong motivation for living a good, productive life. They found a positive relationship between belief in an afterlife—particularly, it seems, in the idea of hell—and economic growth among churchgoers. In fact, even more than church attendance, faith in an afterlife correlates with economic advancement.

The authors also speculate, based on the work of other researchers, that religious participation enhances educational outcomes, which also play a role in economic success. Martin Luther, for instance, urged widespread education so that ordinary people could read the Bible. Literacy rose rapidly in the parts of Europe that embraced his ideas, significantly increasing what economists today call human capital. Similarly, the emphasis on individual reading of sacred texts, which required literacy, helps explain the economic success of some European and American Jewish communities.

One reason that belief seems to be a more important predictor of economic success than simple church attendance may be the persistence of state religion in the twenty-first century. McCleary and Barro found that 40 percent of the 188 countries they studied still have official state-sponsored religions. These range from England on the one hand—where the Church of England remains in place, though citizens are free to worship elsewhere—to predominantly Muslim countries, 22 of which designate Islam as the official state religion and where, in many cases, the government is a bureaucratic extension of religion. Though church membership is, on average, high in these countries, state-sponsored religions don’t provide an economic advantage for their countries, research shows. The answer to that anomaly may lie in the nature of these institutions. Adam Smith argued that state religions tend to become a refuge for the social and political elite, who use the creed for secular purposes, watering down the spiritual message of most religions and the values they impart—values that, as Weber argued, help drive economic success.

Most organized religions today face the challenge of competing for members in a rapidly secularizing world. Religious leaders have tried various ways to stem the loss of members, from modernizing their liturgies to diminishing the demands they make on congregants. The Catholic Church, McCleary and Barro suggest, has tried something else—canonization. On a trip to Antigua, they noticed an unusual amount of activity at a shrine dedicated to Hermano Pedro, Guatemala’s only Catholic saint. This activity stands in sharp contrast to diminishing enthusiasm for Catholicism in other parts of Latin America, where Pentecostal denominations have grown at Rome’s expense. Wondering whether the Church itself had noticed the same thing, the pair studied patterns of saint-making and found a sharp uptick in the modern era, especially in places where the church faced unusual pressures from other religions. In particular, the Church seems to have hit on a strategy of declaring saints to compete with Protestantism. It may be a lesson that Rome learned centuries ago. Research shows that the probability of German cities shifting away from Catholicism, post-Reformation, was negatively related to the number of saints’ shrines per capita. The fewer saints, the more likely that the populace became Protestant.

One of the most controversial discussions within economics today is about the extent to which culture influences economic growth. Religion isn’t just a component of culture, though: in many parts of the world, it is one of the defining elements of society. In particular, the United States, despite its prosperity, remains a far more religious country than other affluent nations. As McCleary and Barro remind us, there’s more work to do to understand how these two seemingly distant realms interact.

Photo: saiko3p/iStock

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