Religion and Economic Growth

"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 heaven, hell, and an afterlife -- tend to increase economic growth."

Some researchers argue that explanations for economic growth should be broadened to include cultural determinants. Culture may influence economic outcomes by affecting such personal traits as honesty, thrift, willingness to work hard, and openness to strangers. Although religion is an important dimension of culture, economists to date have paid little attention to its role in economic growth.

But in Religion and Economic Growth (NBER Working Paper No. 9682), authors Robert Barro and Rachel McCleary analyze the influences of religious participation and beliefs on a country?s rate of economic progress. The authors use six international surveys conducted between 1981 and 1999 to measure religiosity -- church attendance and religious beliefs -- for 59 countries. There is more information available about rich countries than poor ones and about countries that are primarily Christian. Barro and McCleary consider first how religiosity responds to economic development, government influences on religion, and the composition of religious adherence. They find that their measures of religiosity are positively related to education, negatively related to urbanization, and positively related to the presence of children. Overall, religiosity tends to decline with economic development.

The presence of a state religion is positively related to religiosity, probably because of the subsidies that flow to established religions in those countries. However, religiosity declines with greater government regulation of religion and with the religious oppression associated with Communism. Greater diversity of religions -- that is, religious pluralism -- is associated with higher church attendance and stronger religious beliefs. Countries in the sample that had low levels of pluralism include some that are predominantly Catholic (Spain, Italy, Portugal, Belgium, Ireland, and much of Latin America), as well as Protestant Scandinavia, Orthodox Greece, and Muslim Pakistan and Turkey. Countries studied that exhibit high levels of pluralism include the United States, Germany, the Netherlands, Switzerland, Australia, Malaysia, Singapore, and South Africa.

The authors turn next to the assessment of how differences in religiosity affect economic growth. 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 heaven, hell, and an afterlife -- tend to increase economic growth. In other words, economic growth depends mainly on the extent of believing relative to belonging. The authors also find some indication that the fear of hell is more potent for economic growth than the prospect of heaven. Their statistical analysis allows them to argue that these estimates reflect causal influences from religion to economic growth and not the reverse.

Barro and McCleary suggest that higher rates of religious beliefs stimulate growth because they help to sustain aspects of individual behavior that enhance productivity. They believe that higher church attendance depresses growth because it signifies a greater use of resources by the religion sector. However, that suppression of growth is tempered by the extent to which church attendance leads to greater religious beliefs, which in turn encourages economic growth.