I\’ll just say up front that there\’s no perfect way to find a pure causal effect from religion to economic outcomes. Instead, like a lot of social science issues, one instead tries to tackle the question from a variety of angles in specific research studies, and then see what overall pattern starts to emerge. Thus, the array of examples also gives a sense of how the minds of social scientists work. For example, here are some of the examples and approaches discussed by Hungerman:
Matching people who are equivalent in the non-religious variables we can observe
Dehejia, DeLeire, and Luttmer examine whether religious individuals’ consumption and self-reported wellbeing appear to be relatively less sensitive to income shocks—that is, whether religion helps “insure” people against negative shocks. … [T]he authors use a variety of methods, such as applying a procedure that matches each religious person in a sample to an observationally similar nonreligious person, so that the final data sample contains a similar distribution of observable characteristics across religious and nonreligious individuals. They find that religiosity does indeed insure against negative shocks.
Looking at whether more of your neighbors share your religious tradition
Gruber proposes a creative strategy: using variation in the ethnic composition of one’s community to study the impact of religion. Put simply, an American of Italian ancestry may not make much of a distinction between living in a neighborhood full of Swedish individuals versus a neighborhood full of Polish individuals—except that the latter group, like Italians, are Catholic. If living side-by-side with ethnicities that share your religious tradition makes you more religious, but otherwise doesn’t affect your wellbeing, than we can use ethnic composition to learn about the causal effects of religion.
Gruber finds, again, that religiosity leads to better outcomes for a number of economic indicators.
Especially noteworthy is a study by the economists Jane Fruehwirth, Sriya Iyer, and Anwen Zhang. In an approach similar to Gruber’s, they exploit variation in the religiosity of peers across cohorts within a school to identify how religion influences mental health in a sample of US adolescents. They find that religion plays an important causal role in promoting mental health.
A lottery for attending the Haj
David Clingingsmith, Asim Khwaja, and Michael Kremer. They look at the effects of attending the Hajj—the pilgrimage to Mecca that Muslims are expected to make at least once during their lifetime. To study how attending the Hajj affects people’s values, Clingingsmith, Khwaja, and Kremer use a Pakistani lottery that allocates Hajj visas; they find that participation in the Hajj leads to greater acceptance of female education and employment. More generally, Hajj lottery winners show both increased Islamic observance and greater belief in equality and harmony among all religions.
Distance from Wittenberg
The great social scientist Max Weber famously considered whether a Protestant ethic for work might drive the difference between economic wellbeing in Protestant and Catholic communities. Becker and Woessmann take up this association in several steps. First, they put it to a careful test in historic Prussia, exploiting the fact that Protestantism expanded from its birthplace in Wittenberg (a previously unimportant town) in a pattern akin to concentric circles. Moving away from Wittenberg, you encounter all sorts of terrain and all types of communities—but places farther from Wittenberg are less likely to be Protestant, all else equal. Becker and Woessmann then confirm that distance from Wittenberg appears unrelated to various controls (such as the presence of schools in the 1500s, before the reformation), but centuries later it does predict income and economic circumstance—being closer to Wittenberg (and therefore more Protestant) is better for economic wellbeing. This suggests that the link between GDP and Protestant affiliation is more than a simple association. Does this mean Weber was right? Not quite. The final step of Becker and Woessmann’s study shows that variation in literacy can largely explain the economic gains of Protestantism. It appears that the Protestant emphasis that everyone should be able to read the Bible (and thus be able to read), rather than a “noncognitive” work ethic, can explain why Protestant societies had higher economic productivity.
Interaction of religion with laws about alcohol and gambling
Looking at the United States, Jonathan Gruber and I investigated this by looking at the repeal of “blue laws” that restrict economic activity on a certain day of the week (often Sunday).40 Most recent blue laws are narrow in focus—for example, alcohol can’t be sold at grocery stores before noon on Sundays. But not that long ago, many states had strong blue laws that prohibited most Sunday economic activity. A Supreme Court ruling in 1961 provided a test by which these laws could be repealed, and many were consequently undone. Gruber and I show that when such laws are undone, religiosity declines, and that risky behavior such as heavy drinking increases— but the increases are driven by those who report having been religious before the repeal occurred. … Religious rules appear to be effective in discouraging heavy drinking and gambling. The results [from another study] often indicate that the most religious individuals are those who are likeliest to substitute: it’s the most religious groups whose religious giving declines when casinos open or when commerce is allowed on Sundays, and it’s the most religious individuals who are likely to start drinking heavily when the legal drinking age changes.
Figuring out causal connections from religion to life and economic outcomes is a challenging research project. But the weight of the evidence Hungerman discusses–only a bit of which I\’ve mentioned here–is that those who end up being exposed to religion do seem to experience measurable benefits, which in a broad sense take the form of bolstering a person\’s confidence and determination in following a path of learning, saving, and work–and avoiding being derailed by overindulgence in counterproductive habits.