Economics of Religion

At its most basic level economics is the study of how people get what they want. For this reason, economics can be a tool to investigate the phenomenon of religion. Religion, like national defense or clean air, is a public good. That is, the consumption of one individual does not reduce the amount available to others. In fact, religion may be the ultimate public good in that increased belief in a certain doctrine may actually increase its value.

When looking at religion as a good, we must make some distinctions between it and other products. There is no “correct” way to make a cheeseburger or design a house, but religion inherently claims that there is a right and wrong way to produce it. In fact, all people practice some form of worship, be it the praise of ideas, national figures, or a supreme being. Connected to that is the idea that people believe there are correct and incorrect things to worship. For example, a religion that celebrates the death of soldiers, extreme racism, and overall hatred of society will universally be condemned (like the infamous Westboro Baptist Church). So we may say that it is possible for demand to be flawed. It is possible that people will demand something that will not be beneficial to them or society.

In a market system, product innovations increases quality and competition and improves the quality of life for its consumers, but religious innovation is usually seen as a distraction from the truth. In fact, most biblical churches pursue the doctrine and practices of the first century church. For this reason innovations or improvements are actually seen as distraction from the basic message. It could be suggested that religion is best produced as it was originally produced.

Even with these differences, organized religion is still supplied because there is a demand for spiritual goods. Dr. Michael Maloney divides the benefits into three categories: individual consumption, communal consumption, and reputational enhancement. One “innovation” of the Christian religion has been its increase in administration and paid employees over the last 2000 years. The first century church was mainly produced and consumed by the same people. Much like the persecuted churches of India and China today, it was one of small groups of believers meeting together in private homes. There were not official suppliers of Christianity until centuries later.

The mega-church is an institution that is producing these benefits at low cost using their economies of scale. In some ways the mega-church increases the personal consumption and reputational enhancement of religion, but actually decreases the communal consumption. It is able to increase personal consumption by allowing more people to participate. It offers a low risk environment in which a person can receive instruction and interaction with their religion of choice. It increases reputational enhancement by quite obviously making the consumer be seen by more people. But it decreases communal consumption by the sheer number of people involved. A common occurrence when any group increases in size is its loss of identity. A local organization has much more community than a large national organization. The same can be said for oversized churches.

At its core religion is a way of understanding the world, man, and his place in it, just as economics is. The increasing consumer-based structure of organized religion has led to a higher quantity of attendees, but has most likely resulted in a tradeoff for quality. In one way the increase in the number of people practicing has increased the worth of religion, but the change from layman consumption AND production of religion decreased it worth.

*this was an assignment for Econ 827: Economics of Property Rights