From a netfriend:

A friend of mine who works in the Federal Treasury sent me a paper on economic development and religious belief. Looks like believing is good, attending not so …

“for given church attendance, increases in some religious beliefs-notably in hell, heaven, and an after-life-tend to increase economic growth. There is also some indication that the stick represented by the fear of hell is more potent for growth than the carrot from the prospect of heaven. We think that higher church attendance depresses growth because it signifies a larger use of resources by the religion sector … “

Reference and Summary section below:

NBER WORKING PAPER SERIES

RELIGION AND ECONOMIC GROWTH

Robert J. Barro

Rachel M. McCleary

Working Paper 9682

http://www.nber.org/papers/w9682

NATIONAL BUREAU OF ECONOMIC RESEARCH

1050 Massachusetts Avenue

Cambridge, MA 02138

May 2003

Our empirical work used a cross-country panel that includes country level

information on church attendance and religious beliefs. These data derive from

individual information collected in six international surveys between 1981 and 1999.

Although religiosity tends to decline overall with economic development, the partial relations depend on the specific dimensions of development. For example, the measures of religiosity are positively related to education, negatively related to urbanization, and positively related to the presence of children. Increased life expectancy tends to be negatively related with church attendance but positively related to religious beliefs.

The presence of a state religion is positively related to the religiosity measures, probably because of the subsidies that typically flow to the established religions. However, religiosity is negatively associated with government regulation of the religion market and with the religious oppression that accompanied the presence of a Communist government. The elimination of Communist regimes led to a recovery of religiosity in most of these countries during the 1990s. In subsequent work, we plan to clarify these linkages by using Fox and Sandler’s (2003) Religion and State data set to get direct measures of government subsidy and suppression of religion. Greater religious pluralism, measured by the diversity of adherence among major religions, is associated with higher church attendance and beliefs.

Across the religions, attendance at religious services is higher for Catholic than for the other religions, except for Muslim. The beliefs in heaven and hell tend to be highest for Muslim, then Catholic, then the other faiths.

The analysis of the determinants of religiosity allows us to construct a set of instrumental variables to use to estimate the effects of religion on economic growth. The results show that, for given religious beliefs, increases in church attendance tend to reduce economic growth. In contrast, for given church attendance, increases in some religious beliefs-notably in hell, heaven, and an after-life-tend to increase economic growth. There is also some indication that the stick represented by the fear of hell is more potent for growth than the carrot from the prospect of heaven.

We should stress that these patterns of growth effects apply when we control for reverse causation by using the instrumental variables suggested by our analysis of the determinants of religiosity. The instruments are the existence of a state religion, the presence of government regulation of religion, the extent of religious pluralism, and the composition of adherence among the main religions. The results remain intact when we enter the composition of religions directly into the growth equations. Based on the arguable exogeneity of the instrumental variables, we think that our estimates reflect causal influences from religion to economic growth, rather than the reverse.

Our conjecture is that higher religious beliefs stimulate growth because they help to sustain aspects of individual behavior that enhance productivity. In subsequent research, we plan to make these channels explicit by studying the linkages between religious beliefs and specific individual characteristics, such as thrift, work ethic, honesty, and openness to strangers. We will measure these characteristics by using survey responses from the World Values Survey.

We think that higher church attendance depresses growth because it signifies a larger use of resources by the religion sector, and the main output of this sector (the religious beliefs) has already been held constant. The results do not mean that greater church attendance has a net negative influence on growth-this net effect depends on the extent to which a rise in attendance leads to greater beliefs, which encourage growth. Thus, another interesting extension would be to attempt to estimate the influence of church attendance on religious beliefs. We mentioned that church attendance might also measure the social capital built up through organized religion. We also noted that church attendance could proxy for the influence of organized religion on laws and regulations that affect economic behavior. Our results indicate that, for given religious beliefs, the overall effect from greater church attendance is to reduce economic growth. This overall effect combines the resources used up by the religion sector, the social-capital aspect of this sector, and the influence of organized religion on laws and regulations. In subsequent research, we plan to use Fox and Sandler’s (2003) measures of religious based laws and regulations to sort out these effects from organized religion. Our future research plans include an assessment of the effects of religiosity on political and social variables, including democracy, the rule of law, fertility, and health. We will also extend our analysis of religiosity at a country-wide level to the behavior of individuals.