Sunday, November 16, 2003
The Economics of god
The Economist analyzes a very interesting paper by Robert Barro and Rachel McCleary titled Religion and Economic Growth. Taking a cue from the work of Gary Becker (economic efficiency of human decisions) and Max Weber (protestant work ethic), the authors try to establish whether a connection exists between religiosity of a nation and its economic performance.
They have collected data from surveys of religious belief for 59 countries in the 1980s and 1990s—whether people say they believe in God, heaven and hell, and whether they attend services at least once a month—and have tried to tease out whether these have any direct effect on GDP growth.
This is not easy, because in theory the causal arrow could run either from religion to economic growth or in the other direction. On the one hand, adherence to religion might foster behaviour that helps a nation to become rich. The Protestant ethic emphasised thrift and willingness to work hard. Honesty might generate trust. Openness to strangers could lead to openness to trade and immigration. On the other hand, economic growth might bring about changes in a country's religiosity. As European countries have become richer during this century, fewer people have gone to church. In America, however, the downward trend has stopped, or even gone into reverse, in recent decades and Americans are far more religious than Europeans. It is also thought that church attendance declines as people become better educated and as they move from the country to the city. Both these shifts tend to accompany economic growth.
The most striking conclusion, though, is that belief in the afterlife, heaven and hell are good for economic growth. Of these, fear of hell is by far the most powerful, but all three indicators have a bigger impact on economic performance than merely turning up for church. The authors surmise, therefore, that religion works via belief, not practice.
They find that church-going, after a certain point, is (in an economic sense, anyway) a waste of time. They argue that higher church attendance uses up time and resources, and eventually runs into diminishing returns. The “religion sector”, as they call it, can consume more than it yields.
The Economist is not biting.
All this is intriguing, but does religion make much difference? Japan, where there are many sects but little fear of hell, has grown far faster since the second world war than the Catholic Philippines. Officially atheist China is growing at a cracking pace. Presumably, what your religion is matters as much as whether you are religious: has anyone theorised about a Catholic work ethic? And if religion does have an effect, is a 20-year period long enough to find it?
They have collected data from surveys of religious belief for 59 countries in the 1980s and 1990s—whether people say they believe in God, heaven and hell, and whether they attend services at least once a month—and have tried to tease out whether these have any direct effect on GDP growth.
This is not easy, because in theory the causal arrow could run either from religion to economic growth or in the other direction. On the one hand, adherence to religion might foster behaviour that helps a nation to become rich. The Protestant ethic emphasised thrift and willingness to work hard. Honesty might generate trust. Openness to strangers could lead to openness to trade and immigration. On the other hand, economic growth might bring about changes in a country's religiosity. As European countries have become richer during this century, fewer people have gone to church. In America, however, the downward trend has stopped, or even gone into reverse, in recent decades and Americans are far more religious than Europeans. It is also thought that church attendance declines as people become better educated and as they move from the country to the city. Both these shifts tend to accompany economic growth.
The most striking conclusion, though, is that belief in the afterlife, heaven and hell are good for economic growth. Of these, fear of hell is by far the most powerful, but all three indicators have a bigger impact on economic performance than merely turning up for church. The authors surmise, therefore, that religion works via belief, not practice.
They find that church-going, after a certain point, is (in an economic sense, anyway) a waste of time. They argue that higher church attendance uses up time and resources, and eventually runs into diminishing returns. The “religion sector”, as they call it, can consume more than it yields.
The Economist is not biting.
All this is intriguing, but does religion make much difference? Japan, where there are many sects but little fear of hell, has grown far faster since the second world war than the Catholic Philippines. Officially atheist China is growing at a cracking pace. Presumably, what your religion is matters as much as whether you are religious: has anyone theorised about a Catholic work ethic? And if religion does have an effect, is a 20-year period long enough to find it?
