Does easter contribute to economic growth?

As any Christian will tell you, Jesus was crucified on Good Friday and the 
faithful celebrate his resurrection on Easter Sunday.

Sure, the spike in church attendance on Easter Sunday results, in part, from 
the special pleasure people derive from marking Easter in church. But the 
supply-side product enhancements many churches offer in holy week – special 
choral and flower arrangements and the increased networking opportunities 
that come with a full house – also help to tilt the cost-benefit balance 
towards Easter Sunday attendance.

As a result, religious observance falls below average in the weeks following 
Easter as the semi-regular worshippers who shifted their attendance to holy 
week drop away. If sunny weather increases the value of a walk in the park 
or other competing products on a Sunday, attendance falls even further.

For economists, going to church is just another aspect of rational choice 
that is ripe for examination.

Laurence Iannaccone of George Mason University, author of a comprehensive 
survey of the economics of religion, has his tongue nowhere near his cheek 
as he cites the premise that “individuals allocate their time and goods 
among religious and secular commodities so as to maximise lifetime and 
afterlife utility.”

His musings on the delicate balance between the spiritual and the material 
represent just the tip of the iceberg. While by no means a mainstream branch 
of economics, proponents of the dismal science have examined the 
relationship between the individual and his religion, or lack of it, in 
exhaustive detail.

No question has gone unasked – or unanswered. Why are people religious? What 
determines their choice of religion? Why do fanatical sects develop? And 
what is the effect of church attendance?

Of course, economics does not help in determining whether religious belief 
is well founded but it can explain the links between society and prosperity 
on the one hand, and religion on the other. The results are often 
surprising.

The question of whether religion improves economic performance was first 
examined by Adam Smith as far back as the 18th century. He saw religion as 
providing a constraint to enforce individual morality. Last century, the 
German sociologist Max Weber argued that the Protestant reformation fostered 
the work ethic and thereby ensured the triumph of western European and 
American capitalism in the 19th century. And in the past decade, it has 
become fashionable to blame Islamic teaching for the lack of modernity and 
economic progress in predominantly Muslim countries.
It is all very well to sit around and argue the history, economists say, but 
econometric techniques and the data exist to reach a verdict on these 
competing theories.

The thrust of the findings is that it is very hard to discern a link between 
religion and a country’s economic performance, once the starting position of 
an economy, education levels and other important factors have been taken 
into account. “Backwardness” among Muslim nations, in particular, is a myth. 
Marcus Noland, a senior fellow of the Institute for International Economics, 
found that if you looked at the proportion of a population that was Muslim, 
either across countries or within countries with large regionally 
concentrated Muslim populations, it was almost impossible to find a 
statistically significant negative effect of Islam on economic growth. “If 
anything, Islam promotes growth,” Mr Noland concluded.

A country’s religion, therefore, is not an important determinant of its 
prosperity. Famous economists, however, have lighted on some factors that do 
seem to make a difference. Robert Barro and Rachel McCleary of Harvard 
University found, not surprisingly, that countries with high church 
attendance had high levels of belief in God and hell.

But where two countries had similar levels of church attendance, economic 
performance was superior in the one where belief in hell was stronger. In 
the same vein, countries with high church attendance had a worse economic 
performance than less observant countries with similar levels of belief in 
God or hell. Belief matters more than belonging, they concluded. The threat 
of hell stops people cheating and increases trust, a valuable public good. 
But actually attending church wastes time that could be spent engaging in 
more profitable activities.

Academics have not restricted themselves to studying the causal relationship 
between religion and economic performance. Many studies have set out to 
determine whether richer societies need less religion. The US is a big 
outlier. While religious observance tends to fall in most countries as 
prosperity increases, the US has seen no reduction in church attendance or 
the proportion of clergy in society. Adam Smith in The Wealth of Nations 
(1776) predicted that the vibrancy of the church in a society such as the US 
was inevitable. Competition among different churches would keep the clergy 
on their toes in a country without a single official religion. 
State-sponsored churches, the norm in many European countries, like any 
other monopolist, would get lazy, he argued.

“The teachers of [religion] in the same manner as other teachers, may either 
depend altogether for their subsistence upon the voluntary contributions of 
their hearers; or they may derive it from some other fund to which the law 
of their country may entitle them. Their exertion, their zeal, and industry, 
are likely to be much greater in the former situation than in the latter.”

But it is in their study of individual choice and its relation to religion 
that economists are surest of their ground. Church attendance, it turns out, 
is associated with good outcomes such as less criminality, higher incomes 
and lower divorce rates (so long as you marry someone from the same 
denomination). Nor does a self-selection effect account for the benefits 
derived from religious observance: in other words it does not seem to be 
simply that good people go to church.

The theory of clubs neatly explains the emergence of weird sects. Extreme 
self-sacrifice, whether expressed through an onerous tithe or a drastic 
change in lifestyle, shows a credible pre-commitment to a club and helps to 
screen out potential freeloaders.

Economics, therefore, dictates that before you unquestioningly attend or 
avoid church this Sunday, you should think about your motives. How will your 
actions maximise your utility – and, as you make that judgment, just how far 
into eternity should you be looking?



Pa Che!

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