Monday, February 25, 2008

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


  1. Interesting stuff. The Presbyterian inside me certainly loves the idea of putting religion an economics together. A few problems came to my mind as I read, see what you think.

    If religion is a unified system of beliefs, and religion is a public good, then doesn't this mean all beliefs are public goods? Is belief that world is flat a public good? Belief in the existence of UFO's? Belief that Cuba was behind the JFK assassination?

    There is "no correct way to make a cheesburger or a house?" What about a cheeseburger with poison in it? Or a waffle - is that just a different way to make a cheesburger? Or a house with no roof - is that really a house?

    Do all people really worship something? Isn't there a difference in praising a leader and worshiping him or her? I agree that everyone serves something or someone, but does everyone really worship something? I guess that leads back to what exactly you mean by worship here.

    Is it possible for the Westboro church's belief system to be "universally condemned" if they themselves don't actually condemn it? Couldn't we say that really there is no wrong way to make a religion, so long as it doesn't infringe on somebody else's freedom? Isn't that what this country holds?

    Is religious innovation a distraction from the truth? Why? The fact that we have hymnals now and praise bands now - these are innovations, but do they really distract from the truth? How about the use of different forms of media as teaching/preaching tools? Alternately, what about all of the books that help interpret the Bible in different ways. None of these books, or even these ideas reflect how the ideas in the Bible were originally produced. Are they therefore distractions?

  2. Great comments Justin, let me see if I can clarify some stuff:

    "doesn't this mean all beliefs are public goods?" -- In the sense that the more people that believe them, the more valuable they are then yes.

    "What about a cheeseburger with poison in it?" -- Great point. I guess I was trying to express that just because people believe it doesn't make it a good product, but I see your point.

    "guess that leads back to what exactly you mean by worship here" -- Yeah I would say all people worship something. For most people it is probably their comfort, or their happiness, or maybe the approval of others. I guess the eternal struggle of a Christian is trying to only worship Christ.

    "Is it possible for the Westboro church's belief system to be "universally condemned" if they themselves don't actually condemn it?" -- I feel like that’s a technicality. Universally we can agree that a poisoned cheeseburger is bad, but there is probably someone who is suicidal that would disagree.

    "Is religious innovation a distraction from the truth? Why?" -- the examples you gave were a little more focused on the innovations of delivering the same message. I was more referring to innovation as a change in ideas. For example making religion less doctrinal and more emotional, claiming that the Bible is not the word of God, pursuing the social gospel without the actual gospel.


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.