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The economics of religion concerns both the application of the techniques of
economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
to the study of religion and the relationship between
economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
and religious behaviours. 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, an ...
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 o ...
. Religious economics (or theological economics) is a related subject sometimes overlapping or conflated with the economics of religion.


History

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"——� ...
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 ...
'' (1776), stating that religious organisations are subject to market forces,
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, ind ...
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 p ...
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. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
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 i ...
.


Religion and individual behaviour

Research highlights the importance of
religious orthodoxy Orthodoxy (from Greek: ) is adherence to correct or accepted creeds, especially in religion. Orthodoxy within Christianity refers to acceptance of the doctrines defined by various creeds and ecumenical councils in Antiquity, but different Ch ...
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 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 ("def ...
, public goods game, ultimatum game, dictator game 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 mitigates bias but more recent studies utilise field and natural experiments to identify the causal effect of religion.


See also

*
Buddhist economics Buddhist economics is a spiritual and philosophical approach to the study of economics. It examines the psychology of the human mind and the emotions that direct economic activity, in particular concepts such as anxiety, aspirations and self-a ...
*
Sociology of religion Sociology of religion is the study of the beliefs, practices and organizational forms of religion using the tools and methods of the discipline of sociology. This objective investigation may include the use both of quantitative methods (surveys, ...
* Religious economy * Religiosity and intelligence * Wealth and 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"
{{DEFAULTSORT:Economics Of Religion