eligion

[ri-lij-uh n] Show IPA noun 1. a set of beliefs concerning the cause, nature, and purpose ofthe universe, es pecially when considered as the creation of asuperhuman agency or agencies , usually involving devotional andritual observances, and often containing a moral code governingthe conduct of human affairs. 2. a specific fundamental set of beliefs and practices generallyagreed upon by a number of persons or sects: the Christianreligion; the Buddhist religion. 3. the body of persons adhering to a particular set of beliefs andpractices: a wo rld council of religions. 4. the life or state of a monk, nun, etc.: to enter religion. 5. the practice of religious beliefs; ritual observance of faith.

Although Adam Smith delved into religion in his 1776 Wealth of Nations, mainstream economists have historically stayed clear. This has recently changed[i] and as I cycled through the Holy Land back in April with fellow economist & stoker Mike Biggs, we reflected on whether economics can be used to analysis religious activity and, perhaps more interestingly, whether religion can help to explain regional differences in economic development[ii]

Jerusalem: The geographical starting point for any discussion on (monotheistic) religion & economic development Let us start by thinking how we might use economics to consider religion? By applying a basic supply & demand framework to an analysis, we could assume that that people (customers) are just as rational in their choices

about religion as they are about, say, buying a car. "Producers" of religion -- churches, synagogues, and mosques compete for these "customers" by seeking converts, drawing members from other congregations, or combating the pull of secular society.

Selling religion? Ancient (Ahmed in Essna, Egypt was a Muadhin) v modern sales techniques Drawing on the theory of the firm, we might say that there isnt perfect competition rather this is an oligopolisticmarket where the 3 major religions, ignoring the various sub-sectors, control some 90% of the (Western) market, withproduct differentiation a common feature. Of course, when it comes to making religious (& other) choices, people arent necessarily rational but you get the idea! Note that the concept of rationality has also been extended to explain the behaviour of certain suicide bombers[iii].

My tandem parked beneath an (old) poster in the Palestinian West Bank remembering a fighter killed during the 2nd Intifada (2000-2005). Suicide bombings occurred during this time

The second question addressing what religion tells us about economic development is perhaps more contentious. Firstly, whilst it is generally perceived that greater economic development, as measured by growth in per capita GDP is associated with reduced religiosity, measured by participation in organised religion, the direction of causality is not clear cut. Is it that rising incomes lead to a fall in religious participation or that religious participation hinders economic growth. We could use the concept of opportunity cost (of time intensive activities) to think about this. For now, I will defer to the conclusion of the likes of Robert Barro & Rachel McCleary from Harvard (iii) who suggest that economic growth responds positively to the extent of religious beliefs but negatively to participation in organised religion. Why is this? Their first conclusion stems from Max Webers famous thesis in The Protestant Ethic and the Spirit of Capitalism[iv], namely that religious beliefs raise productivity by fostering individual traits such as honesty, work ethic, and thrift. Meanwhile, spending too many resources (time, income & talent) on religious activities reduces those available for (economically) productive activities. However, most of the recent studies concern the relationship between religion & growth in modern history. It occurred to me whilst in Egypt that well organised religion can help to promote strong growth in early stages of development. Egypt was more developed in 1500bc then than Europe 3000 years later. We can still see evidence of their development in the magical tombs & temples we can see today.

The temple of Queen Hatshepsut: she was ahead of her time. salvation

Help me build this Obelix & you will find

Egyptian temples were key centres of economic activity, providing employment for thousands of people & managing the trade & agriculture around them. Whilst atheists might argue that this is an early example of how the political elite used religion to persuade the masses to work for them, it helped create a dynamic civilisation that dominated the region for centuries in ancient times. In more recent centuries, does religion tell us anything about regional differences in development? This is where the debate becomes more controversial! Why was the industrial revolution led from Northern Europe a largely Protestant Christian region and not either the Islamic or more Catholic areas of the (old)world. Was modern capitalism born through the religious ideas of the Reformation? It allowed for the separation of church & state, enabling a greater plurality of religious faiths in society & an atmosphere of good temper and moderation, as Smith put it. Entrepreneurs were able to build enterprises & make money with a clear conscience, whilst the Church encouraged hard work & frugality amongst workers.

Meanwhile the largely Muslim Arab world developed more slowly. Of course, there are many other factors at work but academics argue that religion played a part. For example, Timur Kuran of Duke University[v]highlights that Koranic inheritance law long forbade a father from passing a business on to a favored son but required him to divvy up the legacy among all children (with daughters getting half-portions). That made it harder to set up corporations and stymied economic growth. Another hurdle regularly cited is the traditional prohibition on interest payments.

Greater competition for talk time (Sudan desert) & modern banking systems (Jordan banknotes) in 2012. But has economic development in the Arab world been held up by certain religious traditions? What about the Jewish influence? Although geographically spread out & therefore difficult to quantify the effect of their religiosity on regional growth, Jewish presence in financial services, for example, is well-known. One oftcited reason for this was the condemnation of usury in the early Christian church, leaving a gap in the market for others to offer banking services. With their history of entrepreneurship, geographical mobility & subsequent network across many countries, Jewish financiers were well place to help bank-roll much of the industrial development in Northern Europe during the 19th Century. The most famous of these were of course the Rothschilds still prominent in global banking today[vi]. It seems appropriate, given my journey, to touch on Africa before finishing. David Livingstone, the famous Victorian missionary cum explorer, believed vehemently in African economic development coming through the three Cs: Christianity, Commerce & Colonisation. For the basis of this discussion, it is impossible to determine whether religion has played much of a part in hindering or helping growth in Africa. Certainly, the (European) scramble for Africa in the late 19th century & tensions between Christians & Muslims throughout Africas modern history have proved somewhat of a hindrance to development in general.

A Christian family that I camped with in South Sudan. Their extreme (material) poverty is not quite what Livingstone had in mind 150 years after his death So is it possible to draw any conclusions from this discussion? Firstly (& mainly for students!), it is worth remembering that we can (try to) use economics as a framework to analysis any decision-making process. OK, so it is easier to use it to think about buying a house but social choices such as religion can also be considered. Meanwhile, attempting to isolate the link between religion & regional differences in economic development is challenging given the presence of many other significant variables. It can be argued that the industrial revolution & modern capitalism were conceived out of the reformation in Northern Europe, bank-rolled by a Jewish network of financiers across the old world. But to claim this is mainly due to religious development rather than broader cultural, geographic & other socio-economic factors would require a leap of faith for any economist. Moreover, as Max Weber[vii] went on to do, wed need to broaden the discussion to include the other global religions to answer the question more completely.

[i] Inspired by the work of Nobel Prize winning economist Gary Becker, Laurence R. Iannaccone, Professor of economics at Chapman University is considered one of the pioneers in the field. See also Barro & McCleary, Harvard University (2003), Religion & Economic Growth [ii] In order to keep this blog (relatively) simple, Im going to focus on the Abrahamic religions. Of course, this excludes a large & the fastest growing part of the world economy. Id also like to emphasise that this is meant to stimulate thought amongst students. I accept that I may be making some sweeping generalisations & I hope that I dont cause any offence in what is of course a most sensitive topic!! [iii] See for example Religious Extremism: the good, the bad, and the deadly, Iannaccone &Berman (2005)

[iv] Written in German in 1904 & translated into English in 1930, it is considered a founding text in economic sociology [v] Islam and Mammon: The Economic Predicaments of Islamism, 2004.

[vi] Due to their geographical mobility & link to European Banking families, Jewish Immigrant families also helped finance much of the rapid industrialisation in the US in second half of the 19th Century. Many of the firms still exist in part today Lazard Freres, Goldman Sachs, Salomon Brothers (now Citi), with a notable exception (Lehman Brothers). See for a detailed account of this, see The Course of Modern Jewish History (1959; updated 1990) Howard M. Sachar. [vii] See Weber, The Religion of China: Confucianism and Taoism & The Religion of India: The Sociology of Hinduism and Buddhism

Satan, the great motivator

The curious economic effects of religion
By Michael Fitzgerald November 15, 2009

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What makes economies grow? Its a question that has occupied thinkers for centuries. Most of us would tick off things like education levels, openness to trade, natural resources, and political systems.

Heres one you might not have considered: hell. A pair of Harvard researchers recently examined 40 years of data from dozens of countries, trying to sort out the economic impact of religious beliefs or practices. They found that religion has a measurable effect on developing economies - and the most powerful influence relates to how strongly people believe in hell. That hell could matter to economic growth might seem surprising, since you cant prove it exists, let alone quantify it. It stands as one of the more intriguing findings in a growing body of recent research exploring how religion might influence the wealth and prosperity of societies. In recent years, Italian economists have presented findings that religion can boost

GDP by increasing trust within a society; researchers in the United States showed that religion reduces corruption and increases respect for law in ways that boost overall economic growth. A number of researchers have documented how merchants used religious backgrounds to establish one anothers reliability. The notion that religion influences economies has a long history, but the specifics have been vexingly difficult to pin down. Today, as researchers start to answer the question more definitively with the tools of modern economics, whats emerging is a clearer picture of how nations prosperity can depend, in part, on seemingly abstract concerns like theology - and sometimes on quite nuanced points of belief or religious fervor. The work is preliminary, but offers the hope of useful findings. Knowing exactly how and when God influences mammon could lead to smarter forms of economic development in emerging nations, and could add to our understanding of how culture shapes wealth and poverty. And it stands as part of a larger movement in economics, in which the field is looking beyond purely material explanations to a broader engagement with human culture, psychology, and even our angels and demons.

In a sense, religion and economics long have been intertwined. There are more verses on money and finance in the Bible than there are verses on prayer. The New Testament stakes out clear if seemingly contradictory positions: on the one hand is the admonition that a rich person has little chance of getting into heaven; on the other is the parable of the talents, which praises the servant who got the biggest return on his money. Islam, to this day, outlaws the charging of interest; Buddhism instructs its followers to abjure desire for material goods. On a larger scale, religious denominations affect economics by creating bonds of trust and shared commitment among small groups, both necessary qualities for lending and trade. In the Middle Ages, studies show, monk-run estates outperformed those that used serfs, thanks to religiously inspired cooperation and frugality. The Quakers of 18th-century Britain, renowned for their scrupulous honesty, came to dominate British finance. Ultraorthodox Jews similarly dominate New Yorks diamond trade because of levels of trust based on religion. Modern religious kibbutzim on average outperform their secular rivals, in part because of trust built through engaging in communal religious rituals.Continued... But the ways that religions can influence entire economies - and the extent to which they do - are less clear. In 1905, Max Weber, a German sociologist who studied religions, identified what he called the Protestant work ethic as the driving force behind modern capitalism in the West. But by the middle of the 20th century, most sociologists had dismissed Webers

thesis as based on bad theology and bad statistics. Modern economists havent looked much at the question, in part because its difficult to quantify something like religious belief, or to compare statistics on religious beliefs across countries. Scientists also find it hard to prove that religion, or any aspect of culture, causes economic behaviors.

But over the last several decades, better sets of statistics on religion have become available, and improvements in computing power and mathematical techniques have made it easier for economists to run very large statistical analyses, with hundreds of variables. Among the most provocative findings have come from Robert Barro, a renowned economist at Harvard, and his wife, Rachel McCleary, a researcher at Harvards Taubman Center. McCleary, the daughter of a Methodist missionary, felt that she had seen religion change peoples economic behavior, and wondered why economists didnt look at it as a potential factor in economic development. Barro found the idea intriguing. The two collected data from 59 countries where a majority of the population followed one of the four major religions, Christianity, Islam, Hinduism, or Buddhism. They ran this data which covered slices of years from 1981 to 2000, measuring things like levels of belief in God, afterlife beliefs, and worship attendance - through statistical models. Their results show a strong correlation between economic growth and certain shifts in beliefs, though only in developing countries. Most strikingly, if belief in hell jumps up sharply while actual church attendance stays flat, it correlates with economic growth. Belief in heaven also has a similar effect, though less pronounced. Mere belief in God has no effect one way or the other. Meanwhile, if church attendance actually rises, it slows growth in developing economies. McCleary says this makes sense from a strictly economic standpoint - as economies develop and people can earn more money, their time becomes more valuable. For economic growth, she says, What you want is to have people have their children grow up in a faith, but then they should become productive members of society. They shouldnt be spending all their time in religious services. After Barro and McClearys initial work was published in 2003, other economists started looking more seriously at the impact of religious beliefs. Researchers based at the New University of Lisbon and the University of Illinois used a model that showed European

industrial development between 1645 and 1850 took place roughly 35 years earlier in Protestant countries than Catholic ones. (The researchers posited that Protestant beliefs in economic success as a sign one might get to heaven inspired people to work harder and invest.) The German economist Sascha O. Becker looked at Prussias economic development and found that, at least for Germany, Weber was right about the Protestant work ethic: Protestants were more likely to be entrepreneurs than Catholics, and more likely to create bigger firms. (Becker argues the cause isnt religious belief itself, but an accidental offshoot of Protestants needing to be literate enough to read the Bible.)Continued...