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More than 200 years ago, economist Adam Smith tackled the subject of religion in his 1776 classic The Wealth of Nations.

Comparing religious institutions to secular businesses, he argued that both face market forces such as competition, monopoly and government regulation.

But for two centuries, economists have virtually ignored the role faith plays in the economy.

"Economists in general are very agnostic about what people value," said Laurence R. Iannaccone, an economist at George Mason University in Fairfax, Va., and the head of the Association for the Study of Religion, Economics and Culture. "Most people think it's all about earning money."

But just as politicians increasingly recognize religion's powerful role in public life, so too are economists. A recent batch of scholarship has examined everything from the impact of religion on educational achievement to its effect on a country's wealth.

"Even the Bible uses a lot of very commerce oriented language to talk about the value of being part of the kingdom of God," Iannaccone said.

Many scholars in this field apply a "rational choice" model to the study of religion, which considers religious behavior a choice people make between alternative ways to spend their time and resources.

For example, a person may choose to spend Sunday in a church or at the mall.

"They are taking the premise that we are economic beings," said Millsaps College religious studies professor Darby Ray. "And asking how is it that religion gets shaped by our decisions as consumers."

Iannaccone (pronounced YAWN-uh-cone-ee) said the biggest single insight that comes out of the economic study of religion is that religious behavior is much more rational and understandable than psychologists and sociologists have led people to believe.

As such, in a 1998 paper published in the Journal of Economic Literature, Iannaccone wrote that Americans have access to "an immense market of more than 1,500 denominational alternatives" and often shop for the house of worship that best meets their needs.

"Evangelical Christianity in the United States looks like a classic free market," he said. "If you look closely enough, they're constantly trying to find better ways to 'sell' their product."

# Total church contributions in the United States have remained around 1 percent of Gross National Product since 1955.

# Rates of religious belief and activity do not decline with a rise in income and educational achievement.

# Style of religion varies with income and education. Theologically conservative denominations (typically labeled "fundamentalist" or "Pentecostal") draw a disproportionate share of members from among poorer, less educated and minority groups.

# Throughout the world, fast growing religions tend to be strict and theologically conservative.

# Members of liberal Protestant denominations (including some Episcopal, Methodist and Presbyterian churches) contribute 1.5 percent of their income to their churches.

# Members of conservative Protestant denominations such as Southern Baptists and Assemblies of God contribute 2 to 4 percent of their income.

# Mormons contribute an average 6 percent of their income to their churches.

# Blacks attend church more than whites and their rates of giving are somewhat higher.

# For the past 150 years, approximately 1.2 per 1,000 people in the United States have been employed as clergy.

Source: "Introduction to the Economics of Religion," by Laurence R. Iannaccone (Journal of Economic Literature, 1998).

Burgeoning field

Iannaccone studied under University of Chicago economist Gary S. Becker, who won the 1992 Nobel Prize for applying economics to the study of social issues such as crime, racial discrimination and the family.

For years, his colleagues considered his intellectual interests too far out of the mainstream.

But by the 1990s, interest in the interdisciplinary study began to pick up. And by 2004 Iannaccone kicked off an organization dedicated to the economics of religion.

The association's fall 2004 conference drew 55 research papers on topics ranging from fertility and religion to the economic consequences of religious freedom.

And another academic think tank called the Religion, Political Economy and Society Project formed three years ago at Harvard University's Weatherhead Center for International Affairs.

Headed by Harvard professor Rachel McCleary, the group takes an interdisciplinary approach to religion.

"One obvious objection we get is you can't quantify religion," McCleary said.

But she and other scholars have found that analyzing data about religious behavior can lead to conclusions about the economy.

For example, in a recent study, McCleary and husband Robert J. Barro, a Harvard economist, teamed to investigate how religious beliefs and practices affected a country's economic growth rate.

They looked at data amassed from six international surveys of 59 countries. The polls tabulated information including attendance at religious services and beliefs in heaven and hell.

The couple then examined how the data correlated to the countries' economic growth rate.

Countries with higher rates of religious belief than participation showed higher levels of economic productivity.

In other words, holding religious beliefs was good for the economy, provided people didn't spend too much time at their local houses of worship.

"If you keep going, the benefits are diminishing and costs are rising," McCleary said.

That's because if people spend too much time in worship, they'll have less time for work, furthering their education or other productive activities.

Examples of countries with higher levels of religious belief than practice are Japan, Britain and Scandinavian countries — which performed better economically than other countries studied.

On the flip side, India and some Latin American countries showed high levels of religious practice and lower economic growth rates.

The United States is an anomaly because it's a rich country with high rates of religious belief and practice.

"For us what's special about religion is beliefs and their influence on character," Barro said. "Not how it provides a social network."

Another finding in Barro and McCleary's study showed that belief in the afterlife — particularly hell — correlated positively with economic growth.

Or, the fear of eternal damnation motivated people to work hard and act ethically.

"We thought about that in terms of the carrot and the stick," Barro said.

Barro said he's interested in how religious beliefs affect traits such as honesty, thrift and openness to strangers.

And Barro and McCleary's work picks up on that of 19th century sociologist Max Weber, who wrote that the Protestant work ethic explained why predominantly Protestant countries did better economically.

Weber hypothesized that the Protestant Reformation created new values of individualism and linked salvation to a life of discipline and good works. He claimed thrift and dedication to one's work — which created greater productivity — was higher in Protestant communities.

Though scholars increasingly look at religion in economic terms, Iannaccone said more work still needs to be done to study the effect religion has on the economy.

"We really haven't done enough work yet to know which religions are most conducive to economic growth or how much religion really matters at all," he said.

Ray at Millsaps College said the economic study of religion has merits — and limitations.

"Religion many times is rooted in profound experiences of forgiveness, gratitude, mercy, redemption," said Ray, who directs the college's Faith and Work Initiative. "Those kinds of experiences cannot be reduced to rational choices and cost-benefit analysis."

Iannaccone acknowledges the boundaries of his work.

"I'm absolutely not claiming that economics or psychology or sociology tell us everything there is to know about religion," he said. "The deepest truths are completely beyond the realm of normal scientific inquiry."

# Visit the Association for the Study of Religion, Economics and Culture at gunston.doit.gmu.edu/liannacc/ERel.

# Visit The Religion, Political Economy and Society Project at Harvard University's Weatherhead Center for International Affairs at www.wcfia.harvard.edu/religion.

By Jean Gordon, jmgordon@clarionledger.com
The Clarion Ledger www.clarionledger.com
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