Modeling Religion Through Economics

In most social sciences, religion has been viewed as a fleeting force in everyday life. In the view of Sociology, religion is a tie to a primitive past, and as people become more educated, religion disappears. In Political Science, religion is seen as a deteriorating force as countries develop into more democratic societies with higher levels of self-expression and belief. Yet both of these disciplines contradict increasing data from the developed world. In fact, in the U.S. alone, 43% of Americans identify as religious, and 33% identify as spiritual. According to a Harvard Economic Study, despite Sociology’s view of religion and education, religious attendance has been shown to increase sharply alongside education. 

Shockingly, these trends have been predicted since the 1970s by economic scholars such as Laurence Iannaccone and Eli Berman. These scholars have helped to create a more objective molding of religious behavior, helping other social sciences explain the puzzling force religion still holds in everyday life.

The Economics of Religion presumes that all behaviors fall into two markets: Secular and Religious Markets, with the purpose of secular behavior benefiting this life and religious behavior benefiting the afterlife. Any time spent on prayer, practice, or church attendance benefits your religious output, whereas any secular behavior, such as working or shopping, benefits your material output. As many would expect, this model predicts the inverse relationship between religious and secular behavior. Instead, as secular opportunity increases, religious output decreases. However, the model also shows that the marginal product of labor for religious activity does not decrease with age. These two statements coincide with Edward Glaser’s paper published in 2001, showing that religious attendance increases with age and education. Still, the intensity of religious output decreases as secular opportunities become more accessible over time (i.e., wage raises). 

The Economics of Religion objectively approaches religious behavior. It recognizes that religion is a part of some people’s lives and takes no stance on whether or not this choice is valid, delusional, or incorrect. Other economists, such as Eli Berman, have used this model to explain the puzzling increase in Jewish Ultra-Orthodox religiosity despite nominal wage increases and how religious groups attain power in the government to subsidize their religious behavior

It is essential to recognize that economics is not just about money, taxes, and labor markets; the discipline can help explain many seemingly unintuitive behaviors like religious activity that act similarly to the supply and demand of substitute goods. Economists’ use of game theory has also been beneficial in explaining how churches, sects, and extremist groups interact in a large religious market, similar to firm behavior in a market with monopolistic competition.

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