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date: 07 February 2023

Religiosity and Developmentfree

Religiosity and Developmentfree

  • Jeanet Sinding BentzenJeanet Sinding BentzenDepartment of Economics, University of Copenhagen

Summary

Economics of religion is the application of economic methods to the study of causes and consequences of religion. Ever since Max Weber set forth his theory of the Protestant ethic, social scientists have compared socioeconomic differences across Protestants and Catholics, Muslims, and Christians, and more recently across different intensities of religiosity. Religiosity refers to an individual’s degree of religious attendance and strength of beliefs. Religiosity rises with a growing demand for religion resulting from adversity and insecurity or a surging supply of religion stemming from increasing numbers of religious organizations, for instance. Religiosity has fallen in some Western countries since the mid-20th century, but has strengthened in several other societies around the world. Religion is a multidimensional concept, and religiosity has multiple impacts on socioeconomic outcomes, depending on the dimension observed. Religion covers public religious activities such as church attendance, which involves exposure to religious doctrines and to fellow believers, potentially strengthening social capital and trust among believers. Religious doctrines teach belief in supernatural beings, but also social views on hard work, refraining from deviant activities, and adherence to traditional norms. These norms and social views are sometimes orthogonal to the general tendency of modernization, and religion may contribute to the rising polarization on social issues regarding abortion, LGBT rights, women, and immigration. These norms and social views are again potentially in conflict with science and innovation, incentivizing some religious authorities to curb scientific progress. Further, religion encompasses private religious activities such as prayer and the particular religious beliefs, which may provide comfort and buffering against stressful events. At the same time, rulers may exploit the existence of belief in higher powers for political purposes. Empirical research supports these predictions. Consequences of higher religiosity include more emphasis on traditional values such as traditional gender norms and attitudes against homosexuality, lower rates of technical education, restrictions on science and democracy, rising polarization and conflict, and lower average incomes. Positive consequences of religiosity include improved health and depression rates, crime reduction, increased happiness, higher prosociality among believers, and consumption and well-being levels that are less sensitive to shocks.

Subjects

  • Economic Development
  • Economic History
  • Health, Education, and Welfare Economics
  • Macroeconomics and Monetary Economics
  • Micro, Behavioral, and Neuro-Economics
  • Public Economics and Policy

Types of Religion vs. Degrees of Religiosity

Since Max Weber (1905) famously argued that capitalism was rooted in the Protestant ethic, the number of studies that incorporate religion to understand socioeconomic differences has surged. Even economists have joined in. While the technology at the time of Max Weber did not allow econometric testing, numerous scholars have put his theory to the test as the econometric technology has become available (see review by Becker et al., 2016). Protestant regions were richer historically and continue to be so today, but it turned out that the reason was probably not that Protestants are more hard working and thrifty, as Weber originally theorized. Instead, Protestant regions may have been richer because Martin Luther initiated a tradition of public education (Becker & Woessmann, 2009) or because the areas that came to be Protestant were already richer for other reasons. While Max Weber’s theory compared socioeconomic outcomes of Protestants and Catholics, other theories emerged to compare, for example, Muslims and Christians (see review by Kuran, 1997, 2018).1

Since then, theories have emerged that compare socioeconomic outcomes based on the degree of religiosity of a society, holding fixed the type of religion to which inhabitants adhere. Religiosity is the degree of religious attendance or the intensity of religious beliefs. An individual’s religiosity level may affect behavior and resulting socioeconomic outcomes as well as the type of religion to which they adhere. For instance, an overly religious Protestant may have more in common with an overly religious Catholic or Muslim than they would with Protestants who are less religious. Studies have documented that higher religiosity levels delay the development of science and lower general incomes, but at the same time, they increase happiness and prosocial behavior among believers.

As a simple illustration of the relation between economic outcomes and religion or religiosity, figure 1 shows the raw cross-country correlation between a widely used measure of economic outcomes, gross domestic product (GDP) per capita, and three dimensions of religion measured using the combined World Values Survey (Inglehart et al., 2014) and European Values Study (EVS, 2011). These are surveys of half a million respondents from across the globe, and are used extensively in socioeconomic research. Potentially consistent with Max Weber’s hypothesis, figure 1a shows that Protestant countries are richer than others. Consistent with most of the literature on Islam and development, figure 1b shows that Muslim countries are poorer than average. The plots also reveal that there are exceptions to these rules. The shares of Protestants and Muslims explain, respectively, a mere 4% and 13% of the variation in GDP per capita. These rather low correlations reflect that many other factors determine cross-country differences in GDP per capita. In addition, Max Weber’s hypothesis was concerned mainly with comparing Protestants and Catholics, and one would not necessarily expect the share of Protestants to matter greatly for global development differences. Consistent with most of the empirical literature, figure 1c shows that countries with higher levels of religiosity are on average poorer than less religious countries. Religiosity is measured as the degree to which respondents in the pooled World Values Survey and European Values Study find God important in their lives.2 This measure explains 34% of the variation in GDP per capita, which has motivated a surge in research attempting to disentangle cause and effect of this relation.3 This article reviews this literature.

Figure 1. Correlations between gross domestic product (GDP) per capita and Protestants, Muslims, and religiosity. (a) GDP per capita and the share of Protestants (%); (b) GDP per capita and the share of Muslims; and (c) GDP per capita and religiosity. Scatterplots and fitted lines across 100 countries. Real GDP per capita was measured in 2015 and is from the Penn World Table 9.1 (Feenstra et al., 2015). The share of Protestants, Muslims, and religiosity are measured in the year 2000 ± approximately 10 years and are from the pooled World Values Survey (Inglehart et al., 2014) and European Values Study (EVS, 2011). Religiosity is measured as the degree to which respondents find God important in their lives. For further details, see the Online Appendix.

The figure claims nothing causal; that is, religion may influence development, but it may also be affected by development. An example of the latter is the secularization hypothesis set forth by prominent scholars such as Marx, Weber, Durkheim, and Freud in the 19th and early 20th centuries. The hypothesis proclaims that religion will die out as societies modernize. However, this has not happened. On the contrary, religiosity is on the rise in many parts of the world. Therefore, there is reason to believe that a significant share of the correlation between development and religiosity visible in figure 1 is due to a causal impact of religiosity on development. The figure also does not claim that religiosity is always negatively associated with development. There are exceptions, as will be evident from the reviewed literature.

This article reviews the analytical research on the causes and consequences of religiosity. It does not review research examining the causes and consequences of types of religious affiliation, which is reviewed elsewhere (Becker et al., 2016; Kuran, 1997, 2018).

Why Are Some More Religious Than Others?

Four out of every five people on Earth believe in God. This share varies from 20% in China to 100% of the population in Algeria and Pakistan.4 Social scientists have applied microeconomic theory to explain why some individuals, societies, or groups are more religious than others.5 This work began with the model by Azzi and Ehrenberg (1975), where individuals allocate their time and goods among religious and secular commodities to maximize their lifetime and afterlife utility. Within this framework, reasons for differences in religiosity can be grouped into demand- and supply-side factors (e.g., Finke & Stark, 2005; Iannaccone, 1998). Before explaining these factors, one may conjecture that differences in religiosity arise due to differences in the type of religious affiliation. For instance, Muslims are more religious than Protestants, on average. This does not explain global variation in religiosity: only 3.4% of the total variation in religiosity across the globe can be attributed to individuals’ religious denomination (Bentzen, 2019b). Another conjecture is that religiosity is not always chosen freely as an outcome of supply and demand. Part of the high rate of believers in Pakistan is likely due to fear of being lynched for not believing. Kuran (1995) discussed this at length in the context of Islam, Catholicism, and Judaism. Other factors may explain strengthened religiosity in these instances, such as political legitimacy or free-rider problems. Iannaccone (1992) theorized that the seemingly inefficient prohibitions of some religions may solve free-rider problems of religious participation. The literature on the supply and demand drivers of religiosity is reviewed in this section. The section “Religious and Political Power” returns to the topic of religion as political legitimacy.

Supply-Side Explanations for Religiosity

One supply-side explanation for differences in religiosity is that a rise in the supply of religious suppliers will raise religiosity, simply due to increased access to religion. Alternatively, a larger supply would improve the match-rate between potential follower and religion, thus increasing the likelihood that people take up religion (e.g., Finke & Stark, 2005; Olson, 2011). Bryan et al. (2021) collaborated with an evangelical Protestant antipoverty organization to randomly offer an education program based on theology and values to poor households in the Philippines. In support of the supply-driven explanation of religiosity, the researchers found significant increases in religiosity in areas “treated” with the religious program. However, the effect dissipated 30 months after the program ended, and the only significant impact on religion was a shift in affiliation from Catholicism to Protestantism.

Nunn (2010) found that descendants of people across Africa who experienced greater missionary contact were more likely to identify themselves as Christians in the early 21st century. In a modern Western country, the United States, Bentzen and Sperling (2020) used certain law-changes, the faith-based initiatives, as quasi-exogenous shocks to the supply of religious organizations. The faith-based initiatives were implemented by a small group of powerful conservative-religious evangelicals. Across one million nonprofit organizations, more than 1,000 politicians, and 35,000 survey respondents, Bentzen and Sperling found that the initiatives strengthened religiosity levels among nonprofit organizations and governors and intensified religious beliefs and attendance in general. Those who were already religious became more religious, while the initiatives did not push people without a religion into believing. The rise in religiosity due to the initiatives was twice as large as the average fall in religiosity during the 20-year period of analysis.

Another supply shock to the religious market is increased competition from the secular sector. Putnam (2000) documented a decline in social engagement in the United States in the second half of the 20th century. He pointed to waning church attendance as one reason, since church-related groups constitute the most common type of organization joined by Americans. Among Putnam’s reasons for declining church attendance (and other civic engagement) is the advancement of television and women’s entry into the labor market. His theory is that people attend church less because of the increasing number of alternative opportunities. Exploiting the implementation of blue laws across U.S. states, Gruber and Hungerman (2008) documented that increased secular competition, in the form of shops being allowed open on Sundays, led to falling church attendance.

Other supply-side explanations involve the competition for followers among religious congregations. When the number of religious congregations goes up, the increased competition among them may raise the quality and quantity of the religious services provided. The larger supply in turn would improve the match rate between potential follower and religion, thus increasing the likelihood that people take up religion (e.g., Finke & Stark, 2005; Olson, 2011).

Demand-Side Explanations for Religiosity

Differences in religiosity may also arise from differences in factors affecting the demand for religion. One demand-side theory is the secularization hypothesis, which claims that religion will die out as countries develop. Growing levels of literacy and wider sources of information have strengthened rational belief in scientific knowledge, expert authorities, and technological know-how. While priests, ministers, rabbis, and mullahs were historically regarded as the only source of authority, they now compete with the expertise of professionals and other authorities. Indeed, this secularization has occurred in Western Europe (Norris & Inglehart, 2011). For instance, scholars have documented that falling religiosity follows rising incomes (e.g., Herzer & Strulik, 2017; McCleary & Barro, 2006). Other scholars do not identify this impact of income on religiosity. Across 10 developed, democratic, and Christian countries measured during the period 1925–1990, Franck and Iannaccone (2014) documented that church attendance was indeed declining. However, the fall had not been caused by rising incomes, but rather the increasingly secular contents of school curricula. Becker and Woessmann (2013) noted a negative relation between church attendance and incomes across 175 Prussian counties in 1886–1911. However, they found no Granger-causal impact of initial income on subsequent lower church attendance. Grewal et al. (2019) exogenously induced feelings of economic strain on half of 654 participants in experiments in Tunisia and found that the strained individuals were more likely to support the Islamist party. Grewal et al. proceeded to document that individuals suffering economic strain may vote for Islamists because they believe this to be an intrinsically virtuous act that will be met with divine rewards in the afterlife.

Some research documents that rising incomes may strengthen the role of religion, thus contradicting the secularization hypothesis. Exploiting an exogenous shock to income—a change in the eligibility criteria for a government cash transfer program in Ecuador—in a regression discontinuity approach, Buser (2015) documented that a positive income shock increased churchgoing in Ecuador. The shock raised memberships of evangelical churches, rather than the more widespread Catholic churches. Binzel and Carvalho (2017) pointed out that the Islamic revival in several Muslim societies runs counter to the secularization hypothesis. In sum, evidence for the secularization hypothesis is quite mixed.

Another demand-side theory that has received more widespread empirical support is the idea that individuals use their religion to cope with stress, uncertainty, and events that are otherwise difficult to explain. This is termed the religious coping hypothesis (e.g., Pargament, 2001). When asked, religious survey respondents state that one of the main purposes of religion is to provide buffering against life stressors. Examples of religious coping are seeking a closer relationship with God, praying, or finding a reason for the particular adversity by attributing it to an act of God. When adversity hits in the modern world, only some of the few very religious would believe that God was directly responsible. Instead, most people using religion for coping in the 21st century would use it for comfort and support—much like meditation and other recreational activities.

Numerous empirical studies document that individuals hit by adverse events, such as cancer, heart problems, death in close family, alcoholism, divorce, or injury are more religious than others (cf. Ano & Vasconcelles, 2005; Pargament, 2001, for reviews). In addition, prayer is often chosen by hospitalized patients as a coping strategy above seeking information, going to the doctor, or taking prescription drugs (Conway, 1985). This literature faces the challenge that being hit by adverse life events is most likely correlated with unobserved characteristics (such as lifestyle), which in turn may matter for the individual’s inclination to be religious. Norenzayan and Hansen (2006) addressed this in four different controlled experiments of 288 participants from North America by priming half of the participants with thoughts of death, asking questions such as “What will happen to you when you die?” After the experiments, the participants primed with thoughts of death were more likely to reveal beliefs in God and to rank themselves as being more religious.

Exploiting variation in earthquakes and other disasters across the globe as exogenous shocks to adversity, Bentzen (2019a) documented that people become more religious when hit by natural disasters. Using data on more than 400,000 survey respondents in 600 subnational districts in 96 countries, Bentzen documented that respondents hit by natural disasters are more likely to rank themselves as religious, find comfort in God, and to state that God is important in their lives. Religiosity rose nine times more in districts hit by earthquakes compared to those that were spared over the period 1991–2009. This is mainly because believers became more religious. Nonbelievers did not take up religion in the aftermath of disaster. In addition, believers passed on some of this increased religious intensity through generations: Children of immigrants whose parents came from earthquake-prone areas are more religious compared to other children of immigrants. Bentzen also found that the use of religion for coping is not restricted to the poor, but occurs for all income and education groups. Other scholars have similarly found that religiosity is not just for the poor. Binzel and Carvalho (2017) documented that the Islamic revival in Egypt occurred mainly for young, educated, and talented individuals.

While religious coping is a form of psychological insurance provided by religion, the church may also work as a type of physical insurance mechanism. Ager and Ciccone (2018) documented that early 20th-century membership of religious organizations was greater in U.S. counties historically exposed to agricultural risk, which they measured by rainfall variability. The link was stronger in counties that relied more heavily on agriculture and in counties exposed to greater rainfall risk during the growing season, lending credence to the idea that rainfall variability measures agriculture risk. Exploiting an exogenous shock to economic distress, Chen (2010) documented that economic distress strengthened religious intensity during the Indonesian financial crisis, measuring religious intensity by Koran study and sending off one’s children to Islamic school. While standard insurance has to be paid before crisis hits, Chen concluded that religion works as a type of ex post social insurance.

A challenge in this literature is to disentangle the emotional insurance (religious coping) from the more material insurance provided by religion. According to the religious coping theory, people mainly use religion to cope with large, negative, and unpredictable events. Using religion for coping is part of what is termed emotion-focused coping, in which people aim to reduce the emotional distress arising from a situation. When people face perceived negative but predictable events, such as an approaching exam or a job interview, they are more likely to engage in problem-focused coping, where they aim to tackle directly the problem that is causing the stress. Consistent with emotional insurance, Bentzen (2019a) found that religiosity increases more in response to unpredictable disasters (such as earthquakes, tsunamis, and volcanic eruptions), compared to predictable ones (such as tropical storms); earthquakes in areas that are otherwise rarely hit raise religiosity more than earthquakes in areas that are often hit; and larger earthquakes strengthen religiosity more than smaller ones. In addition, the rise in religiosity occurs after removing districts that were physically hit by disaster, which one would not have expected had the effect been physical. Moreover, the intensity of beliefs rise after disaster, while the impact on church attendance is much less robust. The latter is consistent with the work of psychologists who have documented that people use mainly their intrinsic beliefs (strength of beliefs and personal relation to God) when coping emotionally with adversity, rather than their extrinsic religiosity, such as churchgoing (e.g., Pargament, 2001). Conducting experiments among Pentecostals in Ghana, Auriol et al. (2020) found evidence of material and emotional insurance working in parallel. They randomized formal funeral insurance among participants and found that recipients of formal insurance donated less to the church, other charities, and a prayer event. They argued that recipients of formal insurance thus reveal lower needs for material and divine protection, compared to participants who did not receive the formal insurance.

Other disasters, such as wars and conflict, may have similar effects on religiosity. Henrich et al. (2019) found that people exposed to conflict were more likely to participate in religious groups. After the September 11 attacks, nine out of 10 Americans reported that they coped with their distress by turning to their religion (Schuster et al., 2001). The Covid-19 pandemic also strengthened religiosity. Lacking measures of the actual extent of worldwide prayer in real time during the pandemic, Bentzen (2020) used the extent to which people searched the internet for topics related to prayer as a share of their total internet searches. Religious holidays and events that otherwise induce people to pray are clearly visible in the data: Before 2020, the event that topped the statistics in terms of searches for prayer on the internet was Ramadan. In March 2020, Google searches for prayer as a share of all Google searches surpassed all other events, reaching its highest level ever recorded since Google started tracking data on internet searches in 2004. Prayers may be recited from memory or read from a book. In modern times, these books or verses of prayer can be found on the internet. One of the searches that surged the most in March 2020 was “Coronavirus prayer,” which may include prayers that ask God for protection against the coronavirus, prayers to stay strong, or prayers to thank nurses for their efforts.

In sum, modernization has reduced religiosity in many places, led to changes in actual religious practice, and increased demands for reinterpreting religion, but 84% of the world population still believes in God, meaning that modernization has far from wiped out religion. Further, religiosity is on the rise in many societies, such as the Islamic revival in the Muslim world, the evangelical revival sweeping through Latin America, the continued high church attendance in the United States, the emergence of New Age spiritualism in the Western world in the 1970s, and the upsurge of ethnoreligious conflict in international affairs (Norris & Inglehart, 2011). Shocks to insecurity, uncertainty, and the supply of religion may be responsible for some of these revivals.

Socioeconomic Consequences of Religiosity

Religiosity potentially shapes societal structures or individual behavior so decidedly that differences in socioeconomic outcomes can be detected at the society level. To illustrate the relative size of the potential impact of religiosity, one can compare the correlation between religiosity and GDP per capita from figure 1c with another factor documented to be of great importance for differences in development. In 1993, Douglas North won the Nobel Prize for his work on the inclusion of institutions in economics research (North, 1991). Since then, numerous papers have confirmed econometrically that the quality of institutions—property rights institutions in particular—matters for economic development (e.g., Acemoglu et al., 2001). The raw cross-country correlation between a measure of the quality of property rights institutions and GDP per capita is 0.67. The raw correlation between religiosity and GDP per capita amounts to 80% of that.6 Again, these are mere correlations and causality could run both ways. However, if religiosity is not much more affected by income than institutional quality is, and if omitted factors do not explain the religiosity–GDP correlation more than the institutions–GDP correlation—which seems plausible—then these numbers illustrate that differences in religiosity across societies are potentially as important for understanding socioeconomic global differences as differences in institutional quality are.

A common tendency described in existing empirical research is that religiosity deters the development of science, innovation, technical education, and democracy; promotes certain conservative social views, such as traditional gender roles and attitudes against homosexuals; and increases polarization. The more positive effects of religiosity include fostering nondeviant behavior, granting stress relief, lowering depression risk, and enhancing prosociality and trust among believers. These diverging consequences arise due to the multidimensional nature of religion; each dimension may have substantially different effects on outcomes. The dimensions and consequences most rigorously documented in the literature can be summarized as follows: Religion consists of religious beliefs and activities, including public and private activities. Private religious activities and beliefs encompass activities such as prayer and personal religious beliefs, which may again affect behavior and provide comfort and buffering against stressful events (as discussed in the section on demand). At the same time, the existence of religious beliefs may be exploited by rulers or parents for power purposes (divine legitimacy).

Public religious activities encompass, for instance, church attendance, which involves not only exposure to religious doctrines but also socializing with fellow believers and potential material aid from the church. Religious doctrines teach beliefs in supernatural beings as well as social views on hard work, refraining from deviant activities, and adherence to traditional norms, for instance. These doctrines may influence individual behavior and institutions directly. Gathering with fellow believers in church potentially strengthens social capital and trust among believers, but it also may influence attitudes toward those who are not part of the group. Furthermore, religion encompasses a worldview that may be orthogonal to modern development, thus instigating restrictions on science and innovation in some instances and potentially increasing polarization.

The review in this section is divided into six groups of outcomes based on the different dimensions of religion: a set of traditional values, a worldview threatened by science, a power tool for rulers, a mechanism for comfort and coping, an alternative to government redistribution, a transmitter of prosocial values, and a reason for conflict and polarization. Some studies document positive effects, some negative, and a third group shows both. To set the stage, this review starts with the latter.

Dual Effects of Religiosity

An influential study by Barro and McCleary (2003) combined measures of religiosity from the World Values Survey with GDP per capita and other measures of economic outcomes. To obtain exogenous variation in religiosity, they used instruments such as state regulation of religion, adherence shares for the major religions, and a religious pluralism index. Across up to 59 countries, they documented correlations similar to those in figure 1; GDP per capita is lower in countries with higher church attendance and in countries with more intense religious beliefs, measured by beliefs in heaven or hell. However, for given levels of church attendance, intensified religious beliefs increase economic development, whereas for given levels of religious beliefs, additional church attendance continues to decrease economic development. The authors theorize that religious beliefs sustain aspects of individual attitudes and behavior that enhance productivity, while additional church attendance signifies a larger use of resources by the religion sector, which may dampen growth. A later econometric scrutiny of this research by Durlauf et al. (2012) could not replicate the positive effects of religious beliefs on growth, and only a slight negative effect of church attendance survived replication.

Campante and Yanagizawa-Drott (2015) studied one specific religious practice: the observance of Ramadan. To obtain exogenous variation in the intensity of fasting during Ramadan, Campante and Yanagizawa-Drott exploited the variation in the length of daily fasting due to the interaction between the rotating Islamic calendar and a country’s latitude. They found that longer fasting not only depresses production and thus economic growth but also increases happiness and life satisfaction. To explain why Ramadan fasting can increase happiness of practitioners, despite making them poorer, Campante and Yanagizawa-Drott referred to the club good model of religious practice by Iannaccone (1992). This model shows that costly religious practices may work as a mechanism for screening out individuals who are less committed to exerting effort within the community and reduce the threat of free-riding. Consistent with the model, Campante and Yanagizawa-Drott found that the less religious lower their religious engagement in response to intensified Ramadan fasting, while the more religious increase their religious engagement.

Across Indonesian villages, Bryan et al. (2021) documented that exogenously induced higher Protestant religiosity increased household income by 9.2% but had no statistically significant effect on total labor supply, consumption of a subset of goods, food security, or life satisfaction; and it decreased perceptions of relative economic status within a community by 0.11 points on a 10-point scale. Bryan et al. further documented that the rise in income is due to increased grit, rather than social capital, locus of control, optimism, or self-control. These results may support Weber’s hypothesis of a Protestant work ethic.

Guiso et al. (2003) focused on the impact of religious beliefs and attendance on individual attitudes using the World Values Survey. To account for the endogeneity issue that national institutions may influence religiosity and attitudes simultaneously, they include country fixed effects, thus exploiting within-country variation. To remove part of the simultaneous impact of unobserved factors on religiosity and attitudes, they focused on religious upbringing. For given levels of income, education, and religious activity, Guiso et al. found that religious individuals are less likely to break the law, more likely to believe market outcomes are fair, and more likely to trust the government. In addition, trust toward others rises with religious participation, but not with religious upbringing. Being raised religiously increases intolerance toward other races, immigrants, and working women. Active churchgoers are not more intolerant toward immigrants than the rest of the population (but not less either), and they are less sympathetic to women’s rights. This may be explained by trust rising within the religious group as exposure to fellow believers rises, but at the same time a stronger sense of belonging to the group may reduce trust toward those on the outside. This is the classic in-group-out-group bias found in many social phenomena (see review by Hewstone et al., 2002). The section on trust returns to this literature.

In general, the literature documents the duality that religiosity dampens economic growth and also increases happiness, trust among believers, and refraining from deviant activities. However, higher Protestant religiosity may be beneficial to growth due to emphasis on hard work.

Religiosity and Traditional Social Views

An extensive body of work in sociology, social psychology, anthropology, and theology suggests that religion has functioned as one of the most important agencies of socialization in determining social norms and moral values with regard to gender (in)equality in all societies (Inglehart & Norris, 2003). Exploiting the faith-based initiatives as quasi-exogenous shocks to conservative-religious views in the United States, Bentzen and Sperling (2020) documented that the initiatives raised skepticism toward homosexual sex relations, working women, science, and abortion; strengthened conservatism more generally; and reinforced preferences for Bible prayer in public schools and altruism. Bentzen and Sperling documented that the change in social views affected changes in actual outcomes, such as introducing bans on gay marriages and rising gender gaps in income and education. Across survey respondents in Africa, Ananyev and Poyker (2021) documented that antigay sentiment rises with proximity to historic Christian missions. The authors showed that the findings were unlikely to be caused by missions being located in otherwise intolerant areas, but instead are caused by religious conversion.

That religious individuals are more likely to hold traditional views is not surprising when considering the content of most religious texts and institutions. Written texts and institutions often reflect the society in which they emerged. The same is true for religious texts and institutions. While few secular laws go much further back than a hundred years, the major religions of the modern world emerged thousands of years ago, and so did their associated texts and institutions. For instance, the Bible and the Quran reflect a set of values that is more traditional than most secular contemporary books. Alas, Jesus was particularly inclusive toward women of his time and so were Islamic inheritance systems, but, compared to modern views on women, the social views reflected in the Bible and the Quran are much more traditional (Kloppenborg & Hanegraaff, 1995; Sharma & Young, 1999). This explains why individuals who are more religious adhere to values that are more traditional. This reasoning extends to religions based on oral traditions that are shared across generations.

Religiosity, Science, and Innovation

The link between religiosity and skepticism toward science may be understood by viewing religion as a worldview occasionally threatened by new discoveries. Bénabou et al. (2020) developed a theoretical model illustrating the nexus between religiosity, politics, and science, where the recurrent arrival of scientific discoveries generate productivity gains, but at the same time erode religious beliefs by contradicting aspects of the doctrine. Examples abound of conflicts between religion and science, from the trial of Galileo in 1633 to President George W. Bush’s restrictions on federal funding for embryonic stem-cell research. Using various measures of religiosity from the combined World Values Survey and European Values Study, Benabou et al. uncovered evidence of countries that are more religious having fewer patents per capita, even after controlling for GDP per capita, education, major religions, and other potentially important confounders. They documented similar patterns across U.S. states. The researchers acknowledged that causality may run both ways: Rising religiosity may tighten bans on science, which may in turn strengthen religion and raise religiosity.

Squicciarini (2020) documented that more religious areas across 2,000 French metropolitan areas in the late 19th century were less likely to introduce new technical curriculum in schools, thus forgoing skills essential for the second industrial revolution in France. The Catholic Church promoted a conservative, antiscientific program and hindered the introduction of technical curriculum while pushing for religious education. To alleviate endogeneity concerns, Squicciarini exploited variation within French departments, added controls for a host of confounders, and used exogenous variation in Catholic religiosity due to earlier plague outbreaks. She also documented that technical education was not essential for development before the second revolution.

More generally, Cantoni and Yuchtman (2013) argued that the introduction of a new, productive form of human capital, such as the emergence of modern science, depends on whether the government or the Church see the new knowledge as threatening to their position of power. Cantoni and Yuchtman developed a model through which they interpreted two historic cases: The introduction of Roman law in medieval Europe and Western science in late imperial China. In medieval Europe, the states and the Church found individuals trained in Roman law valuable, whereas the elites in late 19th-century China felt threatened by the introduction of Western science and instead continued to base their selection criteria of civil servants on their knowledge of Confucian classics. The authors extended their arguments to the Muslim world. Islamic elites who controlled educational institutions in the Middle Ages initially promoted the study of logic and science, because the gains from spreading these skills (more converts to Islam) outweighed the drawbacks (potential criticism of the established religious elites). This period of elite support for scientific study saw the flourishing of Islamic society. However, as Islam succeeded in conquering and converting the vast majority of populations in the Middle East, the gains to elites from people’s investments in the study of logic and science fell relative to the costs, and elites moved to prevent the further study of these subjects. Unsurprisingly, with elites preventing the study of science, Islam fell behind, ceding its scientific preeminence to Europe.

Chaney (2016) provided econometric support for these arguments. He linked the decline in scientific and technological production in the Muslim world in the late Middle Ages to the extensive spread of madrasas, educational centers where Islamic law was taught. Using data on book production during the period 800–1800, Chaney documented a sharply rising trend in the proportion of religious and derivative books written, accompanied by a drop in original and scientific-technical books. Chaney ruled out that rising religiosity of the population explained his results. Instead, he linked the rise in religious books to a surge in political power of religious leaders who ensured that madrasas became the dominant establishments of learning, forcing increasing numbers of scholars to affiliate themselves with them. Religious leaders may have worked to limit the study of scientific topics because they believed that the unrestricted study of science led Muslims to embrace rationalistic interpretations of Islam and to disregard their teachings.

In sum, the reviewed studies document the tendency of religious leaders to curb the development of science across religious denominations and time periods.

Religious and Political Power

The evidence provided by Chaney (2016) is consistent with a conceptual framework in which religious leaders derive rents from their control over beliefs and work to restrict access to alternative worldviews unless otherwise constrained. This power of religious leaders may have extended well into political spheres. Chaney (2013) documented a rise in the political power of religious leaders during periods of economic downturn. Exploiting data on centuries of Nile flood data, Chaney found that Egypt’s highest ranked religious authority was less likely to be replaced and that construction of religious structures surged relative to secular structures in periods with abnormally high or low Nile floods. The explanation is not rising religiosity among the populace. Instead, the most likely reason is that the political power of the religious authority rose during these periods of unrest, since the religious authority had the power to coordinate revolts.

Across 122 medieval Italian cities observed yearly during the period 1100–1300, Belloc et al. (2016) showed that the occurrence of an earthquake retarded transition from feudal authoritarianism to a communal civic system and intensified the construction and ornamentation of religious buildings, but only in cities where the political and religious leader was the same person. Earthquakes did not influence democratic institutions or the construction of religious buildings in cities where political and religious powers were distinct. Belloc et al. argued that earthquakes are a shock to people’s religious beliefs, in line with the religious coping hypothesis. The resulting strengthened authority of religious leaders reduced the likelihood of transition to democratic leadership.

Scholars have singled out religious institutions in general as an explanation for the divergence between the Middle East and the West (Kuran, 2012; Rubin, 2017). For instance, religious legitimization has been important for political authorities throughout time, permitting them to extract more from the populace, discouraging revolt, and enabling access to property rights assignment (Platteau, 2008; Rubin, 2017). Across 176 countries and 1,265 ethnographic societies, Bentzen and Gokmen (2020) documented that current state laws are more likely to be founded on religious doctrines in countries with a history of Big Gods. Big Gods were gods believed to worry about the morality of the human race, interfere in human affairs, and punish misconduct if necessary (e.g., Norenzayan, 2013). Thus, beliefs in Big Gods were particularly useful for power legitimization, meaning that rulers could convince the populace that their laws came from God, for instance. Before the emergence of Big Gods, most societies adhered to animistic belief systems in which objects were believed to have spirits that did not interfere with humans. Bentzen and Gokmen documented that societies that relied on religious legitimization in the past tend to be more religious and less likely to have developed democracy. To establish causality, Bentzen and Gokmen exploited exogenous variation in the incentives to use religion for power legitimization based on types of agriculture suitability.

Taken together, the studies reveal that religion worked as an effective tool for power legitimization in the past, which continues to influence current institutions.

Well-Being, Religious Buffering, and Health

While the reviewed studies thus far have documented rather negative effects of religiosity, several studies have found that religious activities and beliefs are positively correlated with subjective well-being (Clark & Lelkes, 2005; Ellison, 1991; Luttmer, 2005). Some have even documented causal effects of religiosity on happiness and life satisfaction (e.g., Campante & Yanagizawa-Drott, 2015).

One explanation for the rising well-being is that religion dampens the impact of negative shocks. The degree of religiosity may alter the value that individuals attach to shocks (religious coping) or, alternatively, religious organizations may provide social capital in the shape of friendship and social networks, which may help buffer against shocks. In addition, religious organizations may provide direct consumption insurance in the form of material aid for those in need, much like welfare provision, which is discussed further in the section on redistribution.

In cross-sectional European data, Clark and Lelkes (2005) noted that religious individuals have more stable levels of life satisfaction and suffer less psychological harm from unemployment than nonreligious individuals do. This impact of religiosity on attitudes feeds through to behavior. In particular, individuals who are more religious are less likely to actively search for a job when unemployed than are the nonreligious. Across American survey respondents, Dehejia et al. (2007) documented that religiously active individuals are better able to insure their consumption and happiness against income shocks. Religious activity is measured by contributions to religious organizations or regular church attendance. In particular, religious participation reduces the impact of income changes on consumption by roughly 40%.

A host of evidence from psychology suggests that religiosity can be helpful for those facing stressful life events. Smith et al. (2003) conducted a meta-analysis of 147 studies (N = 98,975) and found that greater religiosity is mildly associated with fewer depressive symptoms. In another extensive review, Pargament (2002) concluded that 75% of the studies reviewed find at least a partial positive effect of religiosity on well-being, particularly in high-loss situations, such as bereavement. Religiosity has no impact on well-being in lower-loss situations, such as job loss or marital problems.

A problem in this literature is whether religiosity causes better mental health. Lang et al. (2015) primed subjects in an experiment on Mauritians with anxiety by having them plan for the next natural disaster. The researchers measured heightened stress levels for the subjects as a result, but these stress levels were significantly lower for the subjects who were allowed to perform their usual religious rituals than for subjects who were asked to sit and relax in a nonreligious space. Fruehwirth et al. (2019) exploited within-school variation in U.S. adolescents’ peers to deal with selection into religiosity. They found that religiosity causally reduces depression, primarily because religiosity buffers against stressors in ways that school activities and friendship do not. Vail et al. (2010) argued that, compared to secular beliefs, religious beliefs are particularly useful for mitigating death anxiety, as they are all-encompassing, rely on concepts that are not easily disconfirmed, and promise literal immortality.

There is some evidence that religiosity contributes to better health by helping individuals to control adverse health behaviors, such as drinking, smoking, or drug use. Historically, organized religion has been a fundamental institution in the promotion of codes of ethics and adherence to such codes (Lipford et al., 1993). Across U.S. states, Lipford et al. found that states with higher church attendance have lower rates of murder, crime, illegitimate births, abortion, and divorce rates. Across two different surveys of young American men, Freeman (1986) documented that those reporting more churchgoing are significantly less likely to engage in illegal activities, drug use, and alcohol consumption. They are also marginally more likely to attend school, but not more likely to be employed or earn higher wages. These studies, though, are merely correlational and may indicate that some individuals choose to become religious and at the same time—but unrelated to choice of religion—choose to attend school instead of engaging in deviant activities. Gruber and Hungerman (2008) documented that the exogenously induced fall in religious participation due to the blue laws increased drinking and drug use. These positive effects on well-being and health may spill into positive effects of religiosity on socioeconomic outcomes in some cases. For instance, Gruber (2005) used local ancestral mix as an instrument for current religious participation and found that religious participation in the United States increases education, income, and marriage rates and decreases disability and divorce rates.

Some studies have documented that religious participation has no impact on happiness or may have negative health effects. Across survey respondents in the United States, Bentzen and Sperling (2020) found that faith-based initiatives did not raise happiness, life satisfaction, or other well-being measures, even though they increased religious participation and strengthened beliefs substantially. This could be due to the negative effects on attitudes against homosexuals and women or increased polarization. Bryan et al. (2021) documented no impact on life satisfaction and lower perceived economic status for Indonesian villages that were exogenously treated with religious missions, despite increased religiosity and income. Several studies have exploited the intertemporal variations in Ramadan fasting across countries and document that individuals whose mothers fasted while they were in utero have shorter lives, worse health, less mental acuity, lower educational achievement, and weaker performance in the labor market (Kuran, 2018).

In sum, religiosity provides stress relief in the face of adversity, reduces deviant behavior, and increases happiness, although the latter conclusion is still mainly based on correlational studies.

Religiosity and Redistribution

The use of religion for coping with adversity (emotionally or materially) would explain another phenomenon documented in the literature: Higher religiosity is associated with less public spending and lower individual preferences for redistribution. Across individuals and countries, Scheve and Stasavage (2006) documented that countries with populations that are more religious have lower public spending and that individuals who describe themselves as being religious systematically prefer lower levels of government spending on unemployment insurance, health insurance, and retirement benefits when compared to individuals who are more secular.

Instead of the emotional insurance potentially offered by religion, Huber and Stanig (2011) argued that the material aid granted by some religious organizations makes religious individuals less willing to pay extra for government-provided insurance. They are already insured through their religion. Programs provided by religious organizations include soup kitchens, emergency shelters, various forms of counseling, medical care, substance abuse treatment, employment training, housing assistance, private religious schools, and daycare centers.

Benabou and Tirole (2006) offered a slightly different explanation for the impact of religiosity on preferences for redistribution. Social ethnographies and experiments by psychologists demonstrate individuals’ recurrent struggle with cognitive dissonance as they seek to maintain, and pass on to their children, a view of the world where effort ultimately pays off and everyone gets their just desserts. Individuals with imperfect willpower or divergent parent-child preferences may find it useful to maintain a belief that the world is just (in the sense that effort is rewarded), even when faced with contrary evidence. Benabou and Tirole developed a model showing that beliefs in an afterlife in which rewards and punishments are tied to effort may settle the struggle with cognitive dissonance.

All three explanations—religion as psychological aid, material aid, or a means to solve cognitive dissonance—point in the same direction: On average, the religious prefer less redistribution.

Prosociality and Trust

Beliefs in divine reward and punishment may induce individuals to behave less opportunistically and more cooperatively by solving free-riding problems among coreligionists (Levy & Razin, 2012; Norenzayan, 2013). Numerous studies have found that religious individuals are more prosocial, measured by self-reported charitable giving, voluntarism (Bottan & Perez-Truglia, 2015; Putnam & Campbell, 2012), and willingness to cooperate with fellow believers in experiments (Norenzayan et al., 2016). Bottan and Perez-Truglia (2015) found that falling religious participation reduces charitable giving, exploiting U.S. Catholic clergy abuse scandals for exogenous variation in religious participation.

Other studies have found associations between religious commitment and prosocial behavior, especially when secular institutions are weak, reputational concerns are heightened, and the targets of prosociality are coreligionists (Norenzayan et al., 2016). Experiments confirm the causal direction from religiosity to prosociality: Reminding subjects of their religion reduces cheating, curbs selfish behavior, increases fairness toward strangers, and promotes cooperation in anonymous settings.

The concept of religion facilitating prosociality may help explain the puzzle of how humans evolved from living in small-scale tribal societies to large-scale anonymous societies (Norenzayan et al., 2016). Before modern policing institutions, such large-scale cooperation would be subject to free-riding problems, intensifying as groups expand. Norenzayan et al. developed the theory that the emergence of religions based on Big Gods solved the free-riding problem, as potential free-riders would fear the wrath of their Big Gods and refrain from free-riding. Historical evidence suggests that larger societies were more likely to rely on a belief system including Big Gods, as opposed to smaller societies that were more likely to be based on animistic beliefs (e.g., Wright, 2010). Norenzayan et al. reviewed this literature, combined it with the experimental evidence suggesting that religion supports prosocial behavior, and argued that causality likely runs from the evolution of Big Gods to the emergence of large-scale societies.7 Ethnographic evidence suggests that the Big Gods in these larger societies become increasingly concerned with violations of group-beneficial norms, such as prohibiting theft from coreligionists, as the size of societies rises (Norenzayan et al., 2016).

Clingingsmith et al. (2009) studied the impact of the Hajj pilgrimage to Mecca, a central practice of Islam. Exploiting a lottery used by Pakistan to allocate visas for the pilgrimage, Clingingsmith et al. found that participation in the Hajj strengthens belief in equality and harmony among ethnic groups, favorable attitudes toward women, and tolerance toward non-Muslims. These changes are likely due to exposure to and interaction with Hajjis from around the world.

Other studies document negative effects of religiosity or religious practice on trust and cooperation. Campante and Yanagizawa-Drott (2015) showed that exogenously induced intensified Ramadan fasting reduces average trust. The authors argued that the declining trust could result from less religious individuals shifting away from religious engagement as Ramadan fasting becomes too costly for them, thus forgoing the beneficial social capital of religion. Gershman (2016) studied the impact on trust of a religious belief that does not have an in-group of coreligionists; witchcraft beliefs. Across survey respondents in 19 countries in sub-Saharan Africa, across preindustrial societies outside Africa, and across second-generation immigrants in Europe, Gershman concluded that witchcraft beliefs reduce trust and other measures of social capital. Individuals in these societies live in constant fear of bewitchment and witchcraft accusations, thus reducing their trust in fellow cohabitants. Across 111 countries and 43 U.S. states, Berggren and Bjørnskov (2011) found that survey respondents are less trusting within societies that are more religious. Bentzen and Sperling (2020) found that faith-based initiatives do not increase trust, despite strengthening the faith and religious attendance rates of the American people. If anything, the share of respondents who think others can be trusted falls with the initiatives. The explanation may be the rising religious polarization in the aftermath of the initiatives, which is discussed further in the section on polarization.

These diverging effects on trust may be explained by in-group-out-group bias, which refers to the tendency to evaluate one’s own group or its members (the in-group) more favorably than groups to which one does not belong (the out-group). Consistent with this, Berggren and Bjørnskov (2011) documented that the negative effect of religiosity on trust is stronger in societies with larger religious diversity where the in-group-out-group bias may be larger. In experiments, Ruffle and Sosis (2006) noted that Israeli kibbutz members are more cooperative toward anonymous kibbutz members than they are toward anonymous general city residents. When paired with city residents, kibbutz members’ observed levels of cooperation are identical to those of city residents. Ruffle and Sosis documented that self-selection rather than kibbutz socialization largely accounts for the extent to which kibbutz members are cooperative.

On average, the religious are more trusting and prosocial toward coreligionists when compared to nonbelievers. This may be due to the fear of God, socialization within the religious community, or self-selection into religion. Some evidence suggests that the religious are less trusting toward those from other religions and those without a religion.

Polarization and Conflict

Religious polarization is rising across the globe, meaning that the less religious are increasingly leaving religion and the faith of the more religious is strengthening (Putnam & Campbell, 2012). This may help explain the rise in general polarization, since some social views differ greatly across the religious and nonreligious. As the main catalyst of rising religious polarization, Putnam and Campbell point to the sexual libertine 1960s inducing a growing number of Americans, especially young citizens, to leave religion on the one hand. On the other hand, conservative religion—particularly evangelicalism—entered the political arena as a counterreaction to liberal tendencies. Consistent with this idea, Bentzen and Sperling (2020) documented that rising evangelical influence (measured by the faith-based initiatives) raised religiosity and strengthened Republicans’ conservative-religious social views on matters concerning homosexuals, women, and abortion, while leading to more liberal social views on these matters among Democrats.

Seeing religion as a club good may further our understanding of the potential contribution of religion toward polarization. As documented by Campante and Yanagizawa-Drott, intensified Ramadan fasting reduced the intensity of practice by the less religious and increased practice by the more religious. Likewise, shocks such as earthquakes or faith-based initiatives strengthened religiosity for the religious, but did not raise religiosity of the less religious or convince atheists to start believing. The general trend in most Western societies is toward secularization, which means that policies that raise religiosity for some will lead to rising religious polarization, potentially contributing to rising polarization in general.

Religious and ethnic polarization may induce conflict and hamper cross-country economic development (Montalvo & Reynal-Querol, 2003, 2005). In a survey of 8,140 Indonesian households, Chen (2007) documented that social violence after the Indonesian financial crisis rose more in areas that were highly religious. Participation in religious social activities was associated with more social violence than nonreligious participation. Chen points to ideological extremism as a reason. Carvalho and Koyama (2016) noted that a liberal reform movement developed in response to emancipation in Germany, while ultra-Orthodox Judaism emerged in Eastern Europe. To explain, they developed a theoretical model in which religious organizations choose between a relatively affluent community that expends relatively little on religion and a poorer society that devotes a larger amount of time and effort to religious activity.

Carvalho (2020) reviewed the literature on the link between religiosity and terrorism and pointed to three groups of explanations for terrorism. In one view, religious ideology is a direct cause of terrorism. In another, religion is incidental; that is, remove religion and terrorism would take place under a different guise. In a third, deadly organizations and ideologies can piggyback on religious institutions, using them for recruitment and incubation of more extreme groups because religion gives utility to large numbers of people.

In sum, the literature linking religiosity to polarization and conflict is still young, but results so far reveal rising polarization and conflict due to religiosity.

Concluding Remarks on the Causes and Consequences of Religiosity

Religion does not seem to be on its way out. Modernization is reducing religiosity for some, but more than four out of every five people on Earth still believe in God. Religiosity is even on the rise in many societies, potentially due to an increasing number of religious organizations, a surging need for religion due to soaring insecurity and adversity, or rulers using religion for power purposes. Shocks such as earthquakes or religious law changes tend to strengthen religion for the religious, but they have no impact on religiosity for the less religious, thus contributing to rising polarization.

Religion is a multidimensional concept and so are its effects on socioeconomic outcomes. Emphasizing hard work and refraining from deviant activities, religiosity may increase grit and improve health. Gathering with fellow believers in church may strengthen social capital, happiness, and trust among believers. On the one hand, private religious activities such as prayer and personal religious beliefs affect behavior and provide comfort and buffering against stressful events. On the other hand, emphasis on traditional norms increases gender inequality and attitudes against homosexuals. Some religious beliefs are orthogonal to science and innovation, which has resulted in acts of the church to curb the development of science. Furthermore, religion has historically been exploited by rulers for power purposes, slowing the development of democracy as a result. Finally, the religious and nonreligious across the globe are polarizing on issues such as abortion, LGBT rights, and immigration, which in turn contributes to political polarization and conflict.

Acknowledgments

I am grateful for comments on this chapter by Sriya Iyer, Timur Kuran, and two anonymous referees.

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Notes

  • 1. Much less research has been conducted on the economics of Hinduism, Buddhism, Jainism, or Sikhism (Iyer, 2016).

  • 2. The same picture emerges when using alternative measures of religiosity (cf. Online Appendix). There is a tendency that rising religiosity is associated with larger falls in GDP per capita among the higher levels of religiosity, while religiosity correlates less with GDP per capita for lower levels of religiosity.

  • 3. Chen and Hungerman (2014) pointed out that there had been a sixfold increase in the number of economics papers published in this area in the previous decade.

  • 4. Source: The pooled World Values Survey (Inglehart et al., 2014) and European Values Study (EVS, 2011) 2004–2014.

  • 5. See reviews by Iannaccone (1998) and Iyer (2016).

  • 6. The measure of the quality of property rights institutions is the Freedom House indicator of property rights institutions. Religiosity is measured using the same measure as in figure 1: the importance of God in peoples’ lives. The correlation coefficients are calculated across 100 countries with information on GDP per capita, property rights institutions, and religiosity. There is reason to believe that religiosity even explains an important part of differences in institutions, explored further in sections “Religious and Political Power,” “Religiosity and Redistribution,” and “Polarization and Conflict.”

  • 7. Whitehouse et al. (2019) documented that the causality also runs from large societies to the emergence of Big Gods, but Beheim et al. (2019) showed that this direction of causality vanishes if one treats missing values correctly.